These thoughts on the development and implementation of a sustainability strategy in an agricultural supply-chain have been developed in the course of the work Blue North does in the sustainability field.
Retailers hold a position of significant strength and influence within a supply-chain and are most often the initiators of programs aimed at improving the sustainability performance of products and supply-chains. It is then often left to key players in the supply-chain to interpret, implement and deliver the “sustainability improvements” sought by the retailer.
In formulating a strategic response and developing a sustainability strategy it is critical to start from a system-wide perspective. From this vantage point two key features, of great significance to the system’s sustainability, become apparent:
The vertical green bar represents the broad agricultural-base: the many farms that are the source of the product. The horizontal blue bar represents the physical supply-chain that connects the source to the end-consumer. Each of these two features has specific characteristics that have important implications for the development of a sustainability strategy. What are these characteristics?
The following characteristics are inherent in the agricultural base:
- It is the managed interface between the highly complex natural environment and mankind’s food/fiber production requirements.
- Each farm is a unique combination of “place” and “person”(the farmer) – both of which are highly variable:
- The biophysical features within and between farms differ significantly, characterized by differences in soil, slope, aspect, microclimate etc.
- Farmers (and farm-management teams) differ significantly in terms of attitudes to technology, knowledge, experience, attitudes to risk etc.
- The unique interaction between “place” and “person” at each farm results in the accumulation of farm-specific knowledge and practice. This determines the success of the farming enterprise given its unique set of variables and constraints. This knowledge and practice is of immense value in moving towards sustainable farming practices.
- Farming entities exert the largest impact on the environmental ‘big hitters’, relative to the rest of the system, with impacts to water, soil, carbon, energy, and biodiversity.
- Similarly, farming entities exert the most significant social impact of the entire system, including impacts on rural economies & communities, employment, ethical trade, and food security.
With regards to the supply chain, the following characteristics are inherent:
- It is a major industrial process, with a concentration of specific infrastructure, resources and processes.
- The parties that employ this infrastructure and these resources are independent legal entities, but are linked through an inter-dependent process and a shared economic interest.
- The operational performance of the supply-chain as a whole is governed by a set of shared “rules” or modes of operation, which are often unstated.
- The suitability of these “rules” and the effectiveness of the joint efforts of entities within the supply-chain in delivering their inter-dependent processes manifests in the “flow” of product through the supply-chain. For example, the more dysfunctional the rules, and hence collaboration, the more disrupted the “flow” within the supply chain (giving rise to long lead-times, high stock levels, high waste, etc.).
- The supply-chain, through its impacts on “flow”, exerts the most significant impact on the economic performance of the whole system and each party within it, including the agricultural-base.
There are two important insights gained from regarding the system as described above. Firstly, in order to meaningfully address the economic, social and environmental dimensions of sustainability, the sustainability strategy must embrace both the agricultural-base and supply-chain components of the system. Secondly, each of these two components requires a specific approach tailored to the nature of each – in short, each has a distinct leverage point that needs to be appropriately exploited in order to deliver the required change and improvement.
What are these leverage points? In other words, what are the ‘key factors’ critical to delivering the required improvement that forms the basis of a sustainability strategy:
- In order to deliver real improvement in the environmental and social performance of the system we must secure the buy-in and commitment of the farmers that make up the agricultural base.
- In order to deliver real improvement in the economic performance of the system we must challenge and change the supply-chain rules that disrupt “flow”.
The first leverage point calls for a “bottom-up” approach – one that is built on a deep respect for the knowledge that is accumulated at farm-level, and which seeks to enhance and complement this knowledge.
The second leverage point calls for a supply-chain approach that encourages the adoption of global as opposed to local optimization goals, that enhance information sharing, and which enable a systemic coordination of effort across the supply chain.
Each of these leverage points will be explored in greater detail in future postings. The final word for this post is that this two-pronged approach to the development and implementation of a sustainability strategy unlocks a virtuous cycle that delivers genuine, lasting and significant gains in the economic, social and environmental performance of the whole system. Is this not what we are after?