By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE | 0 | 0 | July 25, 2014
Can’t start your day without a cup of joe? It might take you two cups to think through the complexities of the coffee supply chain. The July 16 issue of Forbes lays it all out, complete with a diagram. It turns out rethinking the coffee supply chain could boost coffee farmers’ income 400 percent.
Vega Coffee has launched a Kickstarter campaign that will help train farmers to roast and package their own beans instead of relying on middlemen. Anne Field reports 80 percent of coffee farmers—or 20 million people—are trapped in a cycle of subsistence farming. Many of these farmers are in remote areas, which forces them to rely on middlemen for exporting.
“And we're not just talking about a few middlemen,” Field writes. “In many cases, the farmers grow the beans, then sort, grade, and polish them, among other steps. Then they take the stuff to a cooperative, which sends it to a larger entity that's an aggregate of cooperatives. It goes next to an exporter, various certification groups, coffee traders, and labelers, among many others. It takes six months to get coffee from the farm to the consumer.”
With all those players, farmers wind up earning about $1 to $1.30 per pound of coffee, when it can cost final customers in the United States up to $20. Vega’s founders want to cut out many of the intermediaries, potentially boosting farmers’ profits up to four times what they typically receive.
When Vega’s co-founders, Noushin Ketabi and Rob Terenzi, first started considering how to make a long-term, positive impact on coffee farming, they decided the most sustainable method would be a for-profit enterprise that could serve as a model for the whole industry. “They pinpointed an overhaul of the supply chain as the key and, with their own savings and relying on their many contacts, moved to Nicaragua to start Vega early this year,” Field writes.
The first group of farmers will be trained to roast their own coffee using Vega-designed equipment that uses less fuel than a regular roaster. Then, the first group will train the second group, and so on.
Supply chains for society
I’ve written before about the importance of supply chain social responsibility, which is defined as follows in the APICS Operations Management Body of Knowledge Framework: “Social responsibility relates to the areas of sustainability and ethics as they pertain to the communities where the organization does business. It further extends into how the organization supports its communities and encourages its workers to follow suit.”
Consider how Vega Coffee is taking this idea further. Now consider how you as supply chain professionals might take your careers further by expanding your career definitions. APICS can help you think about the possibilities. APICS 2014 features several sessions that highlight supply chains in unconventional areas. For example, attendees will hear from Claire Bloom, CIRM, about using smart supply chain management to feed 34 million hungry children in America who don’t receive school breakfasts and lunches over the weekends. In another session, Charlie Villaseñor will lead a discussion about improving supply chain relief efforts in situations like Typhoon Haiyan in the Philippines and Hurricane Katrina in the United States.
APICS 2014 will be held October 19–21, in New Orleans, Louisiana. Visit apicsconference.org to view more details and to register.