Thinking about

supply chains

Jeremy Baskin
Cambridge Programme for Industry
November 2006
 Supply chain management
• What worries procurement teams most?
– cost
– timeliness
– consistent quality

• Impact on poverty?

• Two (partly related) approaches

– ethical trading
– fair trading
 Manufacturing in developing countries
Asia produces
• 90% of sportswear
• 75% of footwear
• 70% of clothes (50%
in China)
• 65% of toys (50% in
China alone)

• 70% of all kitchen

appliances are
made in China
The ‘sweatshop’ charge
 The ‘ethical
trade’ response
• Labour standards focus
• Compliance and codes
• Associated auditing/ inspection
• Some collaborative multi-
stakeholder initiatives
– ETI, FLA, SAI
• Pockets of advanced practice
– greater transparency
– support/training combined with
inspection and stick
– suppliers of suppliers …
• Even some previously hostile cos.
adopting
Some issues with ethical trade
• risk and reputation emphasis; and compliance focus
• consumer interest – high or low?
• mixed impact assessments
– mainly H&S improvements
– less impact on employment conditions
– permanent and regular workers benefit most
– migrant and contract workers saw little change or
worsening conditions
• many suppliers see codes as a nuisance to be ‘got
around’
• poverty impacts ? could they be improved?
Fair trade
• mainly agric. products from
developing country producers
• approach
– fair and stable prices
– social premium (getting more to
producers)
– product labelling
– redressing power imbalances
• a growing market
– but still relatively small
– and entering mainstream
 Some issues with fair trade
• limited to being a niche product?
... and to agricultural production?
• poverty impacts relatively good
– but still underlying crop price fluctuations and global inter-
country imbalances
• open to challenges including:
– producer share of the premium
– sustainability of the model
– reputation risk if label claims exceed consumer
expectations
• connections to ethical trade possible?
 Some overall questions
• Is all this more than good procurement
practice?
– longer-term relationships
– knowledge transfer
– transparency
– on-time payments
• Are there other models?
• How to maximise positive corporate impacts
on poverty through the value chain?