Harvard Case - Nest and Allpa Peru: Rendering Transparent Artisan Supply Chains
"Nest and Allpa Peru: Rendering Transparent Artisan Supply Chains" Harvard business case study is written by Caroline Daniels. It deals with the challenges in the field of Entrepreneurship. The case study is 15 page(s) long and it was first published on : Jun 8, 2023
At Fern Fort University, we recommend that Nest and Allpa Peru prioritize a strategic growth strategy focused on enhancing its supply chain transparency and expanding its market reach through a combination of digital innovation, strategic partnerships, and responsible business practices. This approach will solidify Nest?s position as a leader in the ethical and sustainable artisanal goods market, attracting a wider consumer base and fostering long-term growth.
2. Background
Nest, a non-profit organization, and Allpa Peru, a for-profit social enterprise, have partnered to create a transparent and ethical supply chain for handcrafted goods from Peruvian artisans. Nest provides market access and support to artisans, while Allpa Peru focuses on building a sustainable business model. The case study highlights the challenges faced by both organizations in scaling their operations and achieving financial sustainability while maintaining their commitment to ethical sourcing and fair trade practices.
The main protagonists of the case study are:
- Nest: A non-profit organization dedicated to empowering artisans around the world by connecting them to global markets.
- Allpa Peru: A for-profit social enterprise that partners with Nest to create a sustainable supply chain for Peruvian artisans.
- The artisans: The primary beneficiaries of the partnership, who receive fair compensation and opportunities to develop their craft.
3. Analysis of the Case Study
The case study presents several key challenges and opportunities for Nest and Allpa Peru. A SWOT analysis can be used to frame the key issues:
Strengths:
- Strong mission and values: Both organizations are deeply committed to ethical sourcing, fair trade practices, and empowering artisans.
- Unique value proposition: Nest and Allpa Peru offer a transparent and traceable supply chain, appealing to consumers increasingly concerned about the origins and ethical production of their purchases.
- Growing market demand: There is a rising global demand for handcrafted and ethically sourced goods, particularly among younger consumers.
- Strong partnerships: Nest has established relationships with major retailers and brands, providing access to a wider market.
Weaknesses:
- Limited resources: Both organizations face challenges in scaling their operations due to limited funding and staff.
- Lack of brand awareness: Nest and Allpa Peru need to increase their brand visibility and reach a broader audience.
- Operational inefficiencies: The current supply chain processes are manual and inefficient, limiting scalability.
- Limited data and analytics: The organizations lack comprehensive data on their supply chain and consumer preferences, hindering informed decision-making.
Opportunities:
- Expand online presence: Leveraging e-commerce platforms and digital marketing to reach a wider audience and increase sales.
- Develop innovative business models: Explore new revenue streams and partnerships to enhance financial sustainability.
- Invest in technology: Utilize technology to improve supply chain transparency, streamline operations, and enhance data collection.
- Build strategic partnerships: Collaborate with other organizations, retailers, and brands to expand market reach and access new resources.
Threats:
- Competition: The market for handcrafted goods is becoming increasingly competitive, with new players emerging.
- Economic volatility: Global economic fluctuations can impact consumer spending and demand for artisanal goods.
- Ethical concerns: Maintaining transparency and ethical sourcing practices is crucial to avoid reputational damage.
- Technological disruption: Emerging technologies could disrupt the current business model and require adaptation.
4. Recommendations
To address the challenges and capitalize on opportunities, Nest and Allpa Peru should implement the following recommendations:
1. Enhance Supply Chain Transparency and Traceability:
- Invest in technology: Implement a robust technology platform that allows for real-time tracking of products, artisans, and production processes. This could involve using blockchain technology, GPS tracking, and digital documentation systems.
- Develop a digital storytelling platform: Create a website and mobile application that showcases the stories of the artisans, their craft, and the journey of the products. This will enhance consumer engagement and trust.
- Implement a certification program: Develop a certification program that verifies the ethical and sustainable practices of the artisans and the supply chain. This will provide assurance to consumers and strengthen brand reputation.
2. Expand Market Reach and Brand Awareness:
- Develop a multi-channel marketing strategy: Utilize a combination of online and offline marketing channels, including social media, content marketing, influencer partnerships, and targeted advertising.
- Partner with retailers and brands: Expand existing partnerships with retailers and brands, and explore new collaborations to reach a wider audience.
- Develop a direct-to-consumer strategy: Establish an online store and explore direct-to-consumer sales channels to increase brand control and customer engagement.
- Participate in trade shows and events: Showcase products and build relationships with potential buyers at industry events and trade shows.
3. Foster Financial Sustainability and Growth:
- Develop a diversified revenue model: Explore new revenue streams beyond product sales, such as workshops, online courses, and licensing agreements.
- Seek strategic investors: Attract investors who align with the mission and values of the organizations, providing financial resources and expertise.
- Implement a robust financial management system: Develop a comprehensive budget, track expenses, and analyze financial performance to ensure long-term sustainability.
- Explore innovative financing options: Consider crowdfunding, impact investing, and other alternative financing mechanisms to secure funding for growth initiatives.
4. Enhance Organizational Capacity and Collaboration:
- Invest in staff development: Provide training and development opportunities for staff to enhance their skills and knowledge.
- Build a strong team culture: Foster a culture of collaboration, transparency, and shared values among staff and partners.
- Develop a clear organizational structure: Define roles and responsibilities, and establish clear communication channels to improve efficiency and effectiveness.
- Implement a data-driven decision-making framework: Utilize data and analytics to inform strategic decisions, track progress, and identify areas for improvement.
5. Basis of Recommendations
These recommendations align with Nest and Allpa Peru?s core competencies and mission of empowering artisans and promoting ethical sourcing. They also address the needs of external customers seeking transparency and traceability in their purchases and internal clients, the artisans, who benefit from increased market access and fair compensation.
The recommendations are based on the following assumptions:
- Growing demand for ethical and sustainable products: Consumers are increasingly interested in knowing the origin and ethical production practices of the products they purchase.
- Technological advancements: Technology will continue to play a crucial role in enhancing supply chain transparency and efficiency.
- Strategic partnerships: Collaboration with retailers, brands, and other organizations will be essential for market expansion and resource mobilization.
- Financial sustainability: Nest and Allpa Peru need to develop a sustainable business model that can support long-term growth and impact.
6. Conclusion
By implementing these recommendations, Nest and Allpa Peru can solidify their position as leaders in the ethical and sustainable artisanal goods market. This will attract a wider consumer base, enhance brand reputation, and foster long-term growth and impact. The organizations can leverage technology, strategic partnerships, and responsible business practices to create a thriving ecosystem that empowers artisans and connects them to a global market.
7. Discussion
Other alternatives not selected include:
- Focusing solely on the non-profit model: This would limit the organization?s ability to scale and achieve financial sustainability, potentially hindering its impact.
- Merging with another organization: While this could provide access to resources and expertise, it could also lead to a loss of autonomy and compromise the organization?s mission.
Key risks associated with the recommendations include:
- Technology adoption challenges: Implementing new technology systems can be complex and costly, requiring significant investment and expertise.
- Market competition: The market for handcrafted goods is becoming increasingly competitive, requiring continuous innovation and adaptation.
- Maintaining ethical standards: Ensuring ethical sourcing and fair trade practices across the supply chain is crucial to avoid reputational damage.
8. Next Steps
To implement these recommendations, Nest and Allpa Peru should take the following steps:
- Develop a comprehensive strategic plan: Outline the specific goals, strategies, and timelines for each recommendation.
- Secure funding: Identify funding sources and develop a fundraising plan to support the implementation of the recommendations.
- Build a strong team: Recruit and develop skilled staff with expertise in technology, marketing, finance, and operations.
- Develop a communication plan: Communicate the recommendations and progress to stakeholders, including artisans, partners, and consumers.
- Monitor and evaluate progress: Regularly track key performance indicators (KPIs) and make adjustments as needed to ensure the effectiveness of the recommendations.
By following these recommendations and taking a strategic approach to growth, Nest and Allpa Peru can create a sustainable and impactful business model that empowers artisans, promotes ethical sourcing, and connects consumers with authentic and handcrafted goods.
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Case Description
The Nest and Allpa Peru Case focuses on the issue of making supply chains transparent beyond the factory walls through to the artisan level. Retailers in the home fashion industry are increasingly under pressure by customers and investors to provide complete value chain transparency to demonstrate that they are acting responsibly in moving toward sustainability objectives in both environmental and equitable work practices. While many retailers are taking increased responsibility for sustainable and equitable work practices in manufacturing factories, artisan work carried out beyond the factory walls is difficult to track and most often left unmeasured. This gap in the fashion industry's capability to create full transparency throughout the value chain prohibits retailers from being able to certify that they have full value chain transparency. Nest provides a methodology for companies to understand and manage their artisan work compliance with ethical work practices. Nest works with retailers and their suppliers to create management practices to measure and manage artisan work to enable full supply chain transparency. As the push for sustainability in terms of environmental and equitable work practices increases both from customers and industry practitioners, there is a need for designing and building a credible method for how to measure and manage the artisan work process. The case illustrates that for each fashion company to build this process themselves would be prohibitively costly both in terms of time and financial investment. Nest is an organization that is working toward providing a means for companies to ensure that equitable work practices are followed for artisan work. The case examines how Nest fills this gap, describing how Rebecca van Bergen, CEO of Nest, and her Compliance Team, led by Sarah Otto, provide a credible process for designing, tracking, and certifying compliance of artisan work.
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