BoP insights in smallholder supply chains Building loyalty and productivity through better supplier feedback

Transcription

1 BoP insights in smallholder supply chains Building loyalty and productivity through better supplier feedback Zamacom, Côte d Ivoire Cocoa Sector Pilot Project Alexis Geaneotes and Marcos Vaena Inclusive Business Models Group, IFC

2 What is BoP insight? The collection, deployment and interpretation of information that allows an organization to acquire, develop and retain their relationship with BoP actors (e.g as producers, distributors or consumers) Its main purpose is to understand the underlying mindsets, moods, motivation, desires, aspirations, and motivations that trigger certain attitude and actions 2

3 Some common issues faced by companies operating in low income markets Insufficient or inexistent market data on the BoP Assumption of BoP preferences (not evidence based) Significant investments in developing new business models/reaching new markets, but often weak or no evidence on impact, causal relationships of specific interventions Challenges in building loyalty 3

4 But why bother? Identify, understand, assess and engage BoP actors in co-creating shared value propositions BoP is not homogeneous understand market segmentation, individual preferences, aspirations Refine business model, improve efficiency Measuring performance and impact Build loyalty Risk management Perception Reality 4

5 Some Questions What do people want? What do they think of us? How are we performing? How can we improve? How can we build loyalty? 5

6 Cocoa Smallholder Survey, Côte d Ivoire Project Snapshot: Côte d Ivoire: 40% of global supply of cocoa IFC Client s supply chain:15,000 smallholder farmers Limited data available on impact of sustainability efforts on farmers, as well as farmers perceptions. Survey of 1,600+ farmers, across 2 regions (49 villages) to verify perception and performance of suppliers vis-à-vis sustainability investments made to date. Value to Client Helps the client (Ecom/Zamacom) understand supplier income levels, needs, satisfaction as well as perception of relationship with Zamacom. Elicits insights on the value proposition that Zamacom provides to farmers, and how they can tailor/target service offerings to ensure a stable and productive supply chain (risk management). Value to IFC Test innovative, cost-efficient survey instruments for IFC clients to assess their development impact Pilot metrics that could yield performance monitoring systems that are both useful to ECOM (and farmers) business model and IFC 6

7 Field Survey Methodology Sample selection Field Interviews Data Analysis Discuss results w/ client 7

8 Market Segmentation Quantitative / Objective Demographic data: Age, gender, family size, ethnic group, literacy levels Farm level data: Age of trees, location, coop affiliation, type of crops, farm area, productivity levels, farm related income, ownership format, cost of inputs Living conditions: access to water, energy source, distance to school/clinics Qualitative / Subjective Perceptions, Motivations, Satisfactions, Aspirations Brand awareness Future outlook Desired end-state: Better understanding of drivers of loyalty and productivity Develop Farmer Profiles (e.g. entrepreneur, survivor, innovator, fatalist) Identify key risk factors to the business Integrate into management information systems (feedback loop) 8

9 Key questions to be answered through the survey Categorization Can we get a better understanding of the differences between farmers? Is there some way we can segment farmers (e.g., motivations) and correlate farmer profiles with performance to better target services (e.g. trainings, yield improvements, credit)? Performance Is our field program doing what we say it is doing? Is it making a difference in yields? Is it making a difference in farmer deliveries to their coops and to Zamacom? Perception of value What types of information/ services do farmers most value? How does farmers perceive Zamacom services in general and vs other programs? Improvement How can we serve farmers better? Can we tailor our training and more advanced services based on farmer categorization, needs, and perceptions? 9

10 So what did we find? (preliminary analysis) 10

11 Ivorian Cocoa Farmer Profile Male dominant (90%) Aging Population (60% over 40 y.o.) High levels of Illiteracy (60%, 79% for women) Large family size (75% 6+ household members) Life of hardship: 64% depend on well water 70% use pit latrines 95% use wood as fuel 50% earn less than $3/day 90% are landowners, but only 50% hold title 11

12 How do farmers perceive their occupation? On a more positive note: Fatalistic attitude 83% say its their destiny to be a farmer (not by choice) 68% would not have been a farmer if given a choice 70% would not want their children to become farmers 70% perceive life as difficult 90% say they are satisfied with the relationship with the buyer 96% say life has improved as a result of this relationship 12

13 Systemic Supply Chain Risks Identified Aging population: 60% of farmers are over 40 years old, 30% over 50 y.o. Highly vulnerable population: 50% of farmers can t make ends meet Over 25% of trees are at end of biological life (30+ years) Competition with other crops (rubber) 13

14 Other interesting (early) findings Correlation of productivity with ethnical group affiliation (confirms anecdotal evidence of reputation) Low levels of specialization (farmers hedge risk by growing multiple crops) Geographic correlation to productivity is clear (externalities soil, climate) Positive Impact of training programs on productivity Higher farmer satisfaction compared to competition 14

15 Preliminary findings show correlation between certification program and productivity levels 0-5 s/h 5-10 s/h s/h plus de 15 s/h 4% 4% 2% 7% 20% 32% 57% 74% certified farmers non-certified farmers N=639 N= s/ ha 3.59 s/ ha Source: Survey of 1637 farmers; OnPoint analysis

16 But productivity across cooperatives are highly different 0-5 s/h 5-10 s/h s/h >15 s/h 1% 3% 33% 7% 27% 0% 0% 19% 3% 10% 19% 11% 11% 0% 8% 8% 0% 0% 3% 17% 40% 13% 0% 1% 0% 0% 2% 30% 7% 6% 8% 0% 11% 13% 0% 6% 29% 7% 21% 2% 5% 17% 43% 27% 100% 44% 100% 44% 50% 97% 34% 42% 29% 63% 40% 81% 68% 33% 40% 83% 57% 38% 70% 50% 49% 38% 65% 43% 76% 0% coopatd ca2b cabb caeb caetd capcb capo covimea la case cat ciam coasab ecoopad coopagro coopalba ecamom ecafbi ecam ecab Source: Survey of 1637 farmers; OnPoint analysis

17 Next steps 17

18 Virtuous Cycle - Farmer Feedback Loop 1. Farmer Survey (baseline) 6. Field monitoring 2. Data Analysis / Segmentation 5. Improved Results 3. Recommendations 4. Corrective Action 18

19 Loyalty Programs Club de Productores 19

20 Key Messages Don t assume you know until you do your homework The BoP is not homogeneous, understand segmentation Incorporate feedback mechanism into MIS Be prepared to adapt (and how to best allocate resources) according to the feedback received Change gears from working for to working with (mutual value creation) Don t loose touch of the human dimension of the market 20

21 Thank You! 21