Building a Sustainable Supply Chain

As companies increasingly move their supply bases to emerging economies, they maybe exposed to increasing risk of supply disruptions. In particular, they can be subjected to the risk of their suppliers going out of business or changing their lines of business due to the rapid changes in the socio-economic development of these economies. This is especially the case when we are talking about emerging economies in underdeveloped countries such as Africa, parts of East Asia like Indonesia, Central America and parts of South America, In industries requiring raw materials that come from natural resources - mining and agriculture, for example - many companies do not have a choice but to source from the emerging economies endowed with such resources. In such situations, we need to pay attention to the dimension of sustainability of supply as a business objective in managing the supply chain. Efficiency in cost and time is simply not sufficient. What can we do to assure supply in the long term? The key is that we must invest in the suppliers, giving them assistances and incentives, so that they could be successful in their business, and hence, be sustainable suppliers. Otherwise, the cost of not having sufficient supply in the long run, or the cost of having to develop new supply sources, could be excessive. In this chapter, we describe how the world’s leading coffee company develops its supply chain to be sustainable. To build a sustainable supply chain, Starbucks helped to enable their suppliers to have equitable returns in their business, be sound global citizens of the environment, and have employees whose welfare is improving over time. The sustainable supply chain has also led to Starbucks having a socially responsible supply chain.