I drink fair trade coffee. Until this weekend, I never thought too much about it. On Saturday I started reading The Practitioner’s Guide to Governance as Leadership, by Cathy A. Trower. Richard Chait, professor emeritus, Harvard Graduate School of Education, writes in the foreword that governance practiced at the highest level allows boards to “find, frame, and focus on matters of paramount importance to the organization’s current and future welfare.” That got me thinking.
I googled “supply chain governance” and the most prominent results were related to the fair trade coffee movement. The fair trade movement began in the 1960s as a way to create supply chains in which small producers could receive a fair price on their labor. In 1988, an organization based in the Netherlends created a labeling standard for coffee produced by supply chains meeting certain fair trade standards. In 1998 the German organization FLO began to administer a supply chain certification process. This certification process is an interesting example of supply chain governance.
I am sure there are many other examples of third-party organizations involved in some form of supply chain governance. Yet I wonder if supply chain governance, like most governance, often takes the form of a contract between parties? These relationships are likely to be quid pro quo rather than based on a shared set of standards outlining common values and purpose. If we elevate supply chain governance to finding, framing, and focusing on the issues that matter most to successful relationships between suppliers and producers, will we elevate the performance of the supply chain?
How do you define supply chain governance? What examples can you share so that others may learn? Can any readers illustrate how excellent supply chain governance leads to excellent performance and results?