English Tea Shop: creating shared worth, the right way | SCM

English Tea Shop: creating shared value, the right way | SCM

Suranga Herath, CEO of the English Tea Shop, discusses the significance of sustainability, transparency and creating shared worth at each degree of the provide chain.

It’s uncommon to see a profitable firm, working a tried and examined enterprise mannequin, flip round and utterly reinvent itself. The previous adage “If it ain’t broke, don’t fix it,” involves thoughts; why topic your enterprise to radical upheaval and the dangers therein? Because it’s the right factor to do. “We wanted to find a model that empowered people,” remembers Suranga Herath, CEO of English Tea Shop. “We had been a manufacturing home earlier than English Tea Shop was born, a really atypical tea enterprise that packed all kinds of manufacturers. It was that type of an organization as a result of we thought enterprise was merely about functionality and maximising sources.”

In 2008, Herath’s firm was packing 70 completely different manufacturers of tea for exportation to the US, UK and Europe. In 2010, the firm made the transfer from Sri Lanka to the UK. “That was the moment of truth for us,” says Herath. “Coming from Sri Lanka, a nation famed for its tea and spices, we had this huge passion for people, naturally, because it’s a very labour-intensive industry. We realised that the traditional tea industry didn’t empower the people at the bottom of the pyramid. That needed to change.” The right plan of action was, for Herath, apparent and crucial, no matter its challenges.

“The shift was very risky. It was a huge transformation from being an ordinary, conventional business, to leaving the auction system, leaving the large plantation companies that supplied us and moving to a very small number of small-scale suppliers of tea and ingredients, with the goal of becoming 100% organic, which we accomplished within two years,” says Herath. Nine years later, English Tea Shop has grown 65% yearly over the previous seven years, and final yr reported revenues in extra of US$28mn throughout greater than 50 markets. We spoke to Herath about his quest to empower folks at each level in the provide chain, assure transparency and equity, and rework the lives of 1000’s of small-scale farmers throughout Sri Lanka, India, New Zealand, South Africa and past.

“We enhance transparency and fairness along our value chain by creating shared value,” explains Herath. English Tea Shop’s mannequin stems from the work of Harvard Business School Professor, Michael Porter. “This is the principle on which we run our business. In essence, this means that by being an ethically-minded business, we not only help improve the world around us but also help our business to grow sustainably,” says Herath in an interview with the Soil Association. He continues: “Which is why we work closely with the farmers who grow our organic tea, they provide constant inspiration as we see the challenges they face on a daily basis. Their hard work and dedication make us strive for success because as we succeed, they succeed.” Porter himself notes that “Shared value is not social responsibility, philanthropy, or sustainability, but a new way for companies to achieve economic success.”


English Tea Shop’s subsequent step in creating shared worth throughout its provide chain entails a partnership with the Soil Association, a certification non-profit based mostly in Bristol. “They’re leading from the front and we’re helping fund their efforts to build a platform,” says Herath. “English Tea Shop is one of the pioneer brands that is going to be tested on the model. All our supplies, the entire value chain will be a guinea pig for a process that, hopefully, creates transactional transparency from farm to cup.”

Herath sees the elevated transparency in his provide chain as a possibility to concurrently function in a extra moral way and create worth for the firm. He notes that the remainder of the market is taking notice. “The rise of the CPO role, as well as the dramatically increased focus on supply chain management and the entire procure to pay process, has been elevated. And it’s in response to market demand, because the market is demanding prominence, authenticity, transparency. That’s what’s elevated the procurement function as a whole,” Herath posits. “Of course, for our business, it was just natural. We are, I think, a perfect example of how the procurement process has evolved.” Thinking again to the public sale technique that English Tea Shop used to make use of, Herath displays that, “nine years down the line, what we now have is a very complex supply chain management system, a big team led by master blenders and procurement specialists, adopting new technology. I think the requirement was clearly for a process, leadership and people that create win-win solutions. It’s no longer just about going to the sources and buying tea. This is about finding better yields for both parties, achieving better quality, better efficiency, saving in every possible way for both sides, and knowing very well that we’re entering into long-term relationships.”

From the very starting, English Tea Shop has cultivated its small community of growers by investing in expertise and sharing data, working to persuade different growers to take up natural farming practices. “We had to inspire other people to buy into organic small farming to expand our supply base,” says Herath. “From the simplest things, like giving suppliers a long-term contract, to building big storage facilities to hold stocks because we didn’t have the luxury of working off an auction that gave us weekly demand.” The course of labored, and English Tea Shop’s constructive influence on its growers’ lives has continued to unfold. “In 2018, we launched a sustainability impact report. The results showed that we had impacted over 1,352 farmer families, in terms of investing in them, paying for their organic and Fairtrade certifications, paying for their new technologies, supplying them with irrigation solutions, and building and helping them develop regional schools.” Herath maintains that this type of funding at the base of the pyramid is important to the creation of shared worth. “If you don’t do these things, then our kind of model cannot be a success, because how do you expect small farmers to be planning or taking risks without that support? It so unfair,” he says. “We had to take the risk, we had to take the burden, and we had to build those growers’ capabilities to ensure they could be sustainable and the brand is sustainable.”

Looking to the future, Herath and English Tea Shop aren’t content material to relaxation on their laurels. “We’re on a mission to improve upon our energy use and reduce waste. For 2020, we’ve set ourselves the goal of being completely free from single-use plastic. This year we’ve already completely revamped our core ranges; they’re now plastic free and non-GMO.” Herath concludes: “We want to be the leading independent tea brand, and be known for our own unique creating shared value model. We’ve just entered China, we got into Chile last year and we’re working on Brazil now. We want to keep expanding, but we want to do it the right way.”

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