Ethical ‘sales chains’: ideas and concepts for Intersection Traders

Coffee folks talk a lot about the ethics of their supply chains (see more on the general misunderstandings that involves here). This refers to the procurement of green or roasted coffee beans from green bean traders and/or from processors based in source countries. For the most part, these ethical claims are just that – claims with little to no basis in reality (see here).

Few coffee retailers or roasted coffee suppliers talk about the ethics of their sales chains. These are the activities, after roasting of coffee, that provide you with your coffee whether that is in roasted bean format or in your cup of coffee from your favourite café.

As with the ethics for supply chains, ethics in sales chains are not ‘automatic’. Just because you are not unethical, doesn’t mean that your sales chain is ethical. So how can we ‘do’ better in sales chains?

Our perspective is similar to how we view important goals regarding ethics in the procurement side of our supply chain. Specifically, we view important goals in our sales chain as being:

• To generate opportunities for disadvantaged individuals to gain benefits from playing roles in our sales chain

• To ensure that our recruitment process for sales chain activities is inclusive in that it includes target disadvantaged cohorts and measures success in terms of that inclusion and the associated benefits it generates for those people

• To ensure that our sales chain program is scalable, financially sustainable and cost effective to ensure that we can maximise its resilience and ability to generate benefits far into the future.

To support these outcomes there are a range of approaches to consider. The ones we’ve considered with their relative benefits and shortcomings are shown below.

Approach	Benefits	Limitations
Traditional model:  Run a standard coffee sales chain with a large centralised roastery (wholesale roasted beans to cafes/offices and retail bagged roasted beans via post/shopfront. Employ people with disability in the roastery.	Relatively straightforward to implement. Uses existing approaches to sales that are proven. Very strong control of quality through centralised roasting.	Low scalability – limited employment opportunities. Existing sales chains approaches are extremely competitive with limited ability to generate value and high levels of risk.
Catchment micro-entrepreneurs: Use a distributed sales chain with catchments based on online sales supported by people with disability as micro-entrepreneurs that package, label and distribute coffee to customers	Potentially highly scalable in terms of both sales and participation amongst people with disability/ disadvantaged cohorts. High potential value to participants in addition to value from greater engagement with their local community. Potential for creation of an investable, independent, social enterprise fully focused on social benefits in Australia but also supporting the procurement chain through purchases of wholesale roasted coffee at scale. Highly testable – we don’t need to invest a lot to test this as a concept and scaling can occur gradually. Very strong control of quality through centralised roasting.	It's a new concept that will require testing both in terms of operational aspects and in terms of potential demand. Marketing to grow awareness and shift coffee purchasing behaviour is critical at an early stage. Requires a unique approach to web-based sales (but this is minor).
Catchment micro-roasters: Distributed small roasters targeting groups of people with disability, community groups, etc. as micro business owners who run their own catchment-level distribution programs.	Potentially highly scalable. Greater flexibility in targeting community-focused groups instead of individuals/households.	Substantial difficulties and complexities in quality assurance with roasting being extremely important to quality. Same risks/difficulties as for the catchment micro-entrepreneurs model. It also involves substantial training and capital investment for each micro-roaster and is a technology that is only just being developed so is highly costly.

Our view is that the second option, catchment-based micro-entrepreneurs, presents the most viable and high impact pathway for a future sales chain innovation. We’ll be looking to trial this in 2025 and will be seeking social impact investment partners to assist us in an initial trial and then to grow this out to a pilot program. We have developed the business case for this approach – one that includes low risk, low to no investment costs, and which provides substantial potential upside to micro-entrepreneur partners and social impact investment partners.

Interested potential partners can contact Dr Daniel Gregg at hello@intersectiontraders.com to discuss supporting our pilot, associated research, and marketing to launch the program. All benefits of the program will be retained within Australia.