Jeff’s NewsCloud Journal

America’s Supply Chain Transparency Problem

September 18th, 2007 | by jeff | | Post to NewsCloud »

While America’s food, drug and toy manufacturers struggle with a lack of transparency in their supply chain, American consumers live with the consequences of poisoned food, lead coated toys and sick and deceased pets.

Recently, I traveled to Peru with American importer Equal Exchange and saw a much different kind of supply chain (watch my trip slide show). Equal Exchange is a twenty-one year old worker-owned cooperative that imports and sells Fair Trade coffee, chocolate and tea. Equal Exchange doesn’t have problems with supply chain transparency because the Fair Trade certification process requires it. In many cases, Equal Exchange employees know the farmers and exporters personally and have stayed in their homes.

On my trip, I stayed two nights with Raul Muños, a coffee farmer in a small village called Montero. I picked coffee berries in his fields. I helped him de-pulp the berries and saw where he and his fellow villagers dry and store their beans. I traveled the same dirt roads that trucks use to carry the beans to his cooperative, CEPICAFE, in the city of Piura. There, I met the sons and daughters of other farmers who run CEPICAFE. I also visited its newly constructed factory that sorts the beans for inspection and export to Equal Exchange’s roasting facility in Massachusetts. The next time I saw roasted coffee beans in the grinder at my neighborhood coffee shop in Seattle, I knew every step that its Fair Trade counterparts had traveled.

I’m just a minority investor in Equal Exchange. If I can exercise this level of oversight during a weeklong vacation, I expect the highly compensated CEOs of American corporations to do as much, if not more with their supply chains.

The New York Times reported that The Walt Disney Company doesn’t have the contractual rights to inspect the manufacturers of its product licensees. On the contrary, if Equal Exchange’s Quality Control Manager, Beth Ann Milardo, has a concern with a batch of coffee, she just picks up the phone and calls her contacts at CEPICAFE or raises the issue on one of her regular visits.

In fact, Equal Exchange proactively lends capital to CEPICAFE to assist it in building infrastructure that will improve its coffee quality, like the factory I visited. Achieving quality (and safety) is a partnership encouraged by the Fair Trade certification process.

On the other hand, Toys “R” Us President Ron Boire told the New York Times that by hiring outside companies to test for the safety of toys after they’ve already made it to store shelves (and into the hands of children) would help him “put my head on the pillow and say, ‘I’ve done everything I can’” It seems to me that Mr. Boire and those like him are seeking quality and product safety backwards, if not incompetently.

Equal Exchange sets aside a portion of every new employee’s paycheck until they have saved enough to purchase a share of the company’s stock. I learned the value of employee ownership during my eight years at Microsoft. Watching the value of our stock options rise gave my colleagues and me a strong incentive to work diligently. I suspect that if Mattel’s employees held an ownership share of the company, lead paint would never have entered its supply chain.

While we should be able to trust Federal regulators to safeguard our food, drugs and the toys we give our children, it’s clear right now that we can’t. The Fair Trade certification provides me additional assurance of the quality and safety of the products I buy.

While I can’t buy everything I need from Fair Trade suppliers, the list of available products grows every day. On my trip, I saw supply chains of Fair Trade sugar (its export is currently limited by American trade restrictions) and jam. A friend of mine recently joined a Fair Trade banana importer and Equal Exchange recently began selling Fair Trade pecans produced by American farmers.

Last year, Britain’s Mail reported that Chinese factory workers, subcontracted by Apple to manufacture its popular iPod, were working more than 15 hours a day, living in dormitories that prohibit outside visitors and earning less than $50 per month. Meanwhile, Greenpeace criticized the company for its poor environmental practices. I appreciate that the Fair Trade certification process not only guarantees fair labor conditions but also environmentally sustainable practices.

While the idea of a Fair Trade iPod or toothpaste or pet food may sound silly, the alternative keeps proving itself unthinkable.

Watch the slide show from my trip to Peru with Equal Exchange

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