Supply Chain City


During 2019 I carried out an investigation into the supply chain of coffee in Kenya and the Netherlands. This essay outlines a potential future for supply chains based on the research, it is focused on environmental responsibility and equitable shared value.

What is Supply Chain City? (SSC)

Supply Chain City is a fully autonomous socioeconomic entity with no fixed geographic borders. It behaves as a community, centred around common economic and social goals that are decided by all its citizens. The city’s operations take place across many territories and nations but SCC itself asserts no claim to any region wether land or sea. As a self governing entity SCC designs its own legislation and judiciary systems, similar to the Silicon Valley ‘City States’ of the early 21st Century. When setting up operations in a new nation or territory co-designed systems are created to ensure relations with said region are balanced for the total environment. Its economic goals refer to the sustainable management of its environmental resources. Economics being defined as the rules that govern interaction with the total environment. Its social goals relate to the development of balanced cultural dynamics that help the citizens to co-exist in relative peace with each other and nations.

The early days

It is worth noting that Supply Chain City was started around one commodity in particular, coffee, which has contributed to its development. When the city was first founded there were many legal and political barriers to efficient and balanced global trade. One specific example overcome by SCC, and the spark to its formation, were the various regulation systems imposed on producing countries by consuming countries. They made it impossible for producing countries to receive a fair cut of the profits of coffee trade. Ways around regulation existed, for example the ‘blue labelling’ system which meant a producing country company could sell their product processed for consumption under the brand of another company in the importing country. But profits were still unfair. In the end the only option was for the Micro Business Alliance, that made up a loose community along the chain, to officially declare themselves an autonomous socioeconomic entity. That action is now recognised by over 90% of the worlds nations, but it took several decades to reach this point. The distinction also ended decades of restrictions placed upon the Micro Business Alliance by various national governments, for example the use of a government controlled auctioning system to buy and sell coffee.

Living in SCC today

Today the entirety of SCC’s constitutional system is stored digitally. Each device found in the city is connected to the Supply(Block)Chain, an online file of every economic action that takes place within the system. From the weighing of a kilo of green coffee beans to the temperature of a espresso shot. The Supply(Block)Chain is also used to deliver credits to the citizens based on their contributions to total production. The SupCred digital currency is exchangeable with any currency worldwide. Citizens are also able to exist in one or multiple other social systems, for example a sovereign nation, the ideology of SCC is highly compatible with most popular forms. You can become a citizen of SCC through an economic merger, and with your unique Supply(Block)Chain number are afforded rights that can be called upon anywhere on the Earth. Many citizens joined in the early days through a mass merger of the initial founding micro businesses but nowadays individuals drift in one by one.

The city is organised into links, each one with its own economic function which contributes to the chain as a whole. For example the roasting link is responsible for ensuring coffee is processed for consumption at a rate that balances with demand and to taste specification. The communal focus on economic activity is inspired by the knowledge of tribes in Kenya, each having a unique craft related directly to their local environment or bioregion. Another example of this sort of social organisation could be found in the urban villages of many East Asian countries where manufacture was a huge industry. There are some links that are easier to join based on your own geographic location but none are out of reach for any citizen through migration. The links of SCC are: Producers, Processors, Transporters, Consumers, Stewards and the City Council. One link which does not have a conventional laborious job is the City Council. They are a rotating assembly of representatives and are responsible for monitoring the SCC system and researching improvements. The representatives that make up the council come from the other links and are rotated every 6 months at random. They have no political function and are solely concerned with the efficient and sustainable management of resources. In this way SCC cannot interact with nations on a political level, purely an economic one.

The city limits extend to where ever one or more of its citizens are at any moment in time. Its streets are long and winding, its homes are diverse and separated, its community spaces are primarily portable. The city is connected through digital space, but also maintains a strong physical network through a culture of sending physical objects along the length of the city. Digital connections are used in real time rather than being prerecorded to prevent citizens from getting lost in a mess of online content. Primarily this manifests as audio visual information on the popular Supply Chain Broadcast (SCB) network, which is aired daily to each citizen. SCB is run by a link of it’s own and much like the city council is reshuffled every month to ensure unbiased media.

The people of Supply Chain City

Each community in Supply Chain City is called a link, they exist around a certain part of the production process. They all work to balance their relationships with the environment they inhabit as well as other local communities.

Farmers work the soil to grow the coffee cherries that form SCCs foundation. They are paid monthly to ensure a stable economic situation at origin. As agronomists they monitor ecosystem health ensure that production is sustainable, encouraging the use of permaculture techniques such as crop rotation.

Millers process coffee cherries under specific conditions to ensure the end product is fit for consumption. They are pulped, washed, fermented and dried to develop the flavours of the coffee. Digital scales weigh the farmers crop to ensure no price fixing can take place. The excess water, which carries waste, is cleaned by a wetland planted near to the Wet Mill.

Roasters receive raw product via the Transporters, and process in line with Consumers orders as well as their own formulations. They use a variety of techniques to cater for diverse markets from extra dark roasts to green bean health crazes. The roasting takes place mostly in the producing country to balance income. Excess heat from processing is used to power the installation.

Recyclers are responsible for turning the systems organic waste into biofuel which can be used to power the network.

Global couriers are responsible for moving product through the city. Different groups of Transporters exist in separate regions, they mostly stick to one section of the city but sometimes exchange positions with their counterparts or even members of other links. Some travel long stretches between Northern Europe and Southern Africa but others operate locally in major cities where Consumers and Producers are located. Their cargo bikes are powered by solar and biofuel. They have been known to modify their bikes to carry out tasks unique to the environments they work in, for example a bean grading attachment for Producing areas and a freezer system for Consuming areas. A plane is used on the longer stretches of the trip to ensure freshness.

Baristas order coffee via the city which they sell for a profit to citizens of different nation states and territories. To do this they run spaces where people can drink coffee and relax or work, they also serve as education stations. Some Consumers are also individuals with a strong passion for SCCs products. These locations are key in sustaining SCC because they serve as a connection between the city and other nations. Information about consumption is recorded in the Supply(Block)Chain. Used coffee grounds are collected by local Processors to be turned into biofuel and Consumers receive a discount for each kilo returned.

Stewards are responsible for Supply Chain Broadcast. This is how citizens stay up to date on what is happening along the city, it is a digital content network with daily programming. The Stewards travel to each link to create content for Supply Chain Broadcast. They are, like the City Council, composed of people from different links to reduce bias in media coverage, the rotation is on a monthly basis. They make sure that each link along the chain is aware of how the others are doing and how they all effect each other. All of the information they collect is archived in the City Council’s forecasting machines via the Supply(Block) Chain. They have a research and development department which designed the Containerscope every citizen is given upon onboarding to the city.

The city council have expertise in all areas of the city due to the fact that they are made up of representatives from each link. They are well placed to suggest innovative improvements to complex issues along the city. For example creating systems that allow Producers and Consumers to exchange product directly without Electric cargo bikes are the most efficient local transportation solution.

Selected interviews and references

We heard several times, mostly in cafes and from marketers that the reason people like to work in the coffee industry is the joy exchange that can take place over a cup of coffee. This simple bean certainly has power to bring people together, but like any major global industry coffee professionals are happy to admit that there are shortcomings in the coffee supply chain.

To start at the beginning, one key issue is that most rural coffee farmers are given limited information on how to make sure their crop is attractive to buyers. They rely on a system of co- operatives and marketing agents to sell their product, meaning they receive less money than they should. The price a farmer receives for a kilo of coffee cherries is about 30-40 Euro cents. To give you an idea of what this means, Kanaru who is a farmer we met in Murkewe-ini, harvested 1000 kilos last year. This is one reason why Vava Angwenyi founded a social enterprise seeking to ‘cause positive social and economic disruption within the coffee industry and create sustainable livelihoods for smallholder farmers as well as integrate more women and youth within the entire supply chain’. Whilst multinational coffee producers also get involved in corporate social responsibility (CSR) projects, many Kenyans we met asserted that these are very rarely integrated properly into existing communities and so fall short of their targets. Vava’s approach is much more in line with Margarita Esteves-Abe’s idea that ‘social protection does not always mean politics against markets, social protection aids the market by helping economic actors to overcome market failures’ (Varieties of Capitalism, 2001, p145). This suggests that social change should be the driving force of the business, rather than an after thought used to wash over the problems multinational commerce undeniably creates.

Ernst Friedrich Schumacher points out another distinction that causes tension in supply chains, one between goods and people. If we focus on selling products we loose a connection to the people who make them possible, and exploitative conditions are obscured from consumers. ‘If it is people - which particular people? Who are they? Where are they? How do we communicate with them? People raise questions like these. Goods, on the other hand, do not raise many questions. Particularly when econometricians deal with them, goods cease to be anything identifiable, and become GNP, imports, exports, savings, investment, infrastructure, or what not. Impressive models can be built out of these abstractions, but it is a rarity for them to leave any room for actual people’ (Small is Beautiful, Blond & Briggs 1973, pg. 186).

This limited connection with producers was certainly felt by Kanaru who had no knowledge of the supply chain past the co- operative Wet Mill where he sells his coffee, this in turn means he has no agency over the system as a whole. Esteves-Abe reminds us through the idea of ‘a relational view of the firm’ that ‘because its capabilities are ultimately relational, a firm’s success depends on it’s ability to coordinate with a wide range of actors’ (Varieties of Capitalism, Oxford University Press 2001, p6). Might the coffee industry become more robust if it were to fully integrate producers?

Steps are certainly being taken in this direction, for example Kenya Coffee Co-operative Exporters are a group of Kenyan processing co-operatives that are trying to make a foothold in the international market which is heavily dominated by multinational commodity buyers. Naomi at KCCE explained that they have a strong idea of what producers go through in the farming process and so can support them better.

However this is not without its issues, a major one is that export of roasted coffee from Kenya is difficult and convoluted due to European food regulations and high prices of air freight (which is necessary for freshness). The roasting process adds the most value to the coffee as it renders it consumable, but the system is set up in such a way that roasting cannot happen at origin, meaning the vast majority of coffee profits stay in Europe or America where there are large consumer markets. KCCE is taking steps to improve this situation by encouraging the formation of a market for coffee in Kenya where it has never been popular, they are focusing on the young urban generation.

Along this line of thinking Attac and Civic City confirm that ‘more and more initiatives are promoting short supply chains to link production and marketing, establishing direct connections between producers with local consumers. This creates fair relations on a human scale: producers benefit from stable revenues and pre-financing investments, while consumers can be confident about product quality, as well as sustainable production processes. Local trading systems make it possible to build up economic solidarity in a specific region. (Our World to Change! Lars Muller Publishers, 2017 pg. 101).

Sustainability is a concern in the coffee supply chain, with its reliance on warmer climates. John Thackara’s idea of bioregions (How to Thrive in the Next Economy, Thames and Hudson, 2015, p28) serves as an important blueprint for environmentally orientated improvements to the supply chain. It’s focus on developing legislative regions based on environmental characteristics (sand dune scrublands or a heavily forested mountain region for example) means that concerns for ecosystem health can rise to the fore.

The other end of the supply chain is not without complications. Stean, a Kenyan who set up an Amsterdam based coffee roasters with close links to farmers in Rwanda, talked to us about consumer coffee culture in the Netherlands. The older generations have grown up with a taste for brands like Douwe Egberts, who blend their coffee from many different origins in a dark roast. The younger generations are hooked on speciality coffee served by bitter shots in trendy cafes, a system watched over by the Speciality Coffee Association of America and their expensive accreditations. The farmers Stean works with in Rwanda encounter a similar issue, whilst they farm using organic techniques, their coffee cannot be certified as it costs $10,000 a year. These factors mean that coffee is often seen as an exclusive drink, preventing fairer business models from becoming mainstream practice. Edward T. Hall gives an apt description of this behaviour, ‘it is not man who is crazy so much as his institutions and those culture patterns that determine his behaviour. We in the West are alienated from ourselves and from nature’ (Beyond Culture, Anchor Double Day 1976, pg. 11).

The Micro Business Alliance

The Micro Business Alliance (c.2020) started the move towards SCCs separation from conventional structures of state and industrial control. You can read here the initial agreements, ideas and social contracts of a business that was designed to act as a community for its members, a way to bring them together in balanced production.

Resources

- Coffee plants
- Sunlight
- Water
- Plant care
- Processing machinery
- Logistics
- Packaging
- People

Activities

- Producing coffee
- Selling coffee
- Producing coffee oil fuel
- Selling coffee oil fuel
- Producing a broadcast
- Running experiences
- Co-designing innovation

Stakeholders

- Farmers
- Roasters
- Exporters
- Marketers
- Transporters
- Customers

Process

1. Customers buy a percentage of Farmers crop
2. Customers pay Farmers monthly
3. Beans are processed at a local Co-operative Wet Mill
4. Mobile Grader processes yields at Wet Mill
5. Payment made to Farmers directly via Mpesa or cash
6. Customer receives their percentage of all grades
7. Farmers are never left with unsold crop
8. Beans are driven to Nairobi
9. Beans are roasted to specification in Nairobi
10. Beans are delivered to Customers by cargo bike

Customers

- Aimed at cafes and co-working spaces
- Expanding to the subscription delivery market

Communication Channels

- Supply Chain Broadcast throughout the season
- Installation and tour experiences

Expenditure

- Shipping, scaling up means lower cost per kg
- Farmer welfare, scaling up means more support
- Marketing, scaling up means increased costs
- Technology, change machinery to Blockchain

Investment

- In farmers, to develop a robust system with them
- In realising a coffee fuel powered supply chain

Value Proposition

- Coffee can be fair to people and the environment
- Supply chains can emphatically connect us
- Blockchain collects and shares data via packaging
- High quality coffee created 21st century style

Revenue

- Coffee 80%, Experiences 15%, Coffee Fuel 5%