Your recently ordered sofa might take several months to be delivered because the raw materials for the cushion stuffing are in short supply. Or, that bathroom remodel is taking extra months because the fixtures you ordered are on back order. Food, daily household items, and wares—everything is starting to feel scarce and expensive.
If you’ve been wondering about this, you aren’t alone. The pandemic has created myriad problems in healthcare, economic, and supply chain systems. With labor and supply shortages during the pandemic having disrupted so many global supply chains, I wondered: “Is there another way to approach the supply chain? What if supply chains were aligned with community values?”
Values-based Value Chains Defined
In the local food sector, there have been great strides in many places toward what is called “values-based value chains.” Now might be an opportune time to apply a similar approach to other sectors.
The concept of a values-based value chain is easiest to understand through the lens of the food system and defined as a value chain (the goods and services distribution chain) approach that seeks and values input from all stakeholders in an equitable manner to ensure fair prices, wages, and support for the entire system.
For instance, a values-based value chain in the food sector considers the following factors:
- The quality of the soil in which a tomato is grown, and whether it’s sustainably farmed without chemicals
- The farmer who plants and tends the tomato plant, and the fair labor wages that farmer and the laborers should be receiving
- The true cost of producing the tomato (the cost of the organic or heirloom seed, labor costs, processing costs, and delivery and distribution costs)
- The amount a chef or restauranteur is willing to pay for the tomato and the price these businesses can reasonably charge for it in a menu item
Farmers get together and discuss prices with processors and value-added producers and work with chefs and restaurant owners to set prices and discuss what is needed on both sides of the food market equation. This creates strong relationships and trust. It helps producers and consumers to stop thinking about food as a thing and more as a relationship.
It’s a symbiotic relationship with equal value given to all participants along the chain. And it is a system that values fair wages and sustainable practices transparently. If you’ve eaten at a local café that has committed to this type of local sourcing, you’ve likely seen a list of farmers or food vendors on their menu. You’ve probably thought about seeking out those farmers yourself at the farmers’ market because of this transparency. And you may have agreed to pay more than you would at a local café that uses a large-scale food distributor that sources from large agricultural companies for the lowest prices possible. Even you, as the eater in this chain, are a stakeholder in this system, having sought out a more conscious café for brunch.
In a traditional value chain—read, the extant supply chain that is currently coming to a standstill—the “value” is about pricing and low or competitive costs. In contrast, the values-based value chain is about ethics, standards, and social impacts. If the overarching goal of a traditional value chain is to deliver the most value for the least cost to create a competitive advantage, a values-based value chain has a different goal—namely, delivering on the most values in terms of impact on people, the planet, and production.
Social Impact versus Values-based Value Chain
Values-based value chains could be a pathway to a better future, and could be applied to nonprofit enterprises and small businesses, but where to start? In my experience as a business consultant, I would suggest that it helps to start small and localized.
Currently, most nonprofits and social enterprises do not apply the values-based value chain to their services. While phrases like “social impact” and “triple bottom line” abound, truth be told, there are no hard and fast rules for how to organize a supply chain in your business strategy to achieve social impact.
If all nonprofits and social enterprises evaluated where they sourced their products from and demanded values-based value chains, a shift might become visible, along with greater impact in local, regional, and global communities.
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While the B Lab certifications for sustainable businesses that track environmental, social, and community impact are effective for larger companies and nonprofits, the process can be lengthy and time-consuming for small, locally owned businesses that intend to have a social impact through their fair wages and sourcing protocols. Some of those certified large companies have departments dedicated to sustainability and social impact measurement. Small, locally owned businesses and nonprofits often can’t afford the certification, nor do they have the resources to continue to implement or track their certification standards.
One way to achieve values-based results in supply chains for a small, locally owned business or social enterprise is to implement a questionnaire for a potential client or vendor that asks specific questions about their values and culture to determine if there is alignment. A questionnaire that reflects the values-based value chain circulated among the social impact and social enterprise sector could have quite an effect. Asking these questions sets a standard of practice from the get-go, with embedded values that are ethical and sustainable.
Putting the Values-based Value Chain to Work in Other Sectors
As noted above, the values-based value chain has become a standard in many local food systems, so how might it apply elsewhere? Furniturecycle is a solutions lab working on this very problem for the furniture industry and is catalyzing systems change within the industry. Jamie Facciola, the founder of Furniturecycle, is a board member for the National Upholstery Association and a member of the Sustainable Furnishings Alliance. Facciola believes that “in a circular economy, downstream is the new upstream. Orphaned, imperfect furniture is a decentralized problem that needs a localized, place-based solution.”
Perhaps during the pandemic your sofa wore out. If so, it’s likely you put it out on the curb, hoping it would go to a good home for free or get picked up by the local waste truck to go…where? It ends up in a landfill.
Typically, US consumers are disconnected from the sources of products. Especially in the consumer goods sector, consumers don’t know where things come from or how they are made or produced. It’s common for US consumers not to think about the people who produce what they consume. And it is even more common not to think about where those products end up after they have been used and discarded.
This is where Furniturecycle comes in. Facciola is working tirelessly to educate through social media and in sustainability conferences and discussion rooms about how the industry needs to think about furniture waste differently and how all stakeholders can have equitable shared input in the sector.
According to Facciola, an award-winning social entrepreneur, the most important pieces of values-based value chains for the furniture sector are:
- Borrowing from existing models (such as the local food sector)
- Bringing it all forward—the purpose and intent with reusing furniture (transparency)
- Backfilling the pieces that are missing (education)
- Examining how people are paid (labor, fair wages)
- Examining how workers are treated (working conditions)
- Understanding whether the use is residential or commercial (which can inform consumer campaigns)
Agriculture Marketing Service, a branch of the United States Department of Agriculture (USDA), found in its 2014 report, Food Value Chains: Creating Shared Value To Enhance Marketing Success, that three key tasks are often critical for the businesses that engage in values-based value chains:
- Reconceiving products and markets by identifying new products and services that meet social needs or serve overlooked customer segments
- Redefining productivity in the value chain, which may require new choices in areas such as production, marketing, and distribution and create demand for equipment and technologies that save energy, conserve resources, and support employees
- Building supportive industry clusters at the company’s locations to enable achievement of social mission objectives through an enhancement in local procurement and reliance on less geographically dispersed supply chains
For nonprofits and social enterprises seeking to support local economies, organizing outside the food sector today is parallel in some ways to the situation many local advocates had once faced in the food sector, back when conscious nonprofit activists saw value in discarded produce and began creating education campaigns and programs about how to turn that ugly, bruised, Grade-B tomato into a valued, viable product.
With supply chains collapsing, can communities rethink their supply chains and apply a value-based framework to other sectors? It seems likely that adopting the now-normalized model of local food systems into other sectors could be successful. It will take effort and accountability on all sides of the system, including consumers. But it could prove to be at least a small step toward a more sustainable future.