McCormick+Schmitz Handbook for value chain research on - PACA

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A <strong>chain</strong> map containing earnings data is useful in showing variations along and across <strong>chain</strong>s, but the averages can hide enormous differences. It is there<strong>for</strong>e useful in commenting on such a map to give the range of earnings in those stages or <strong>chain</strong>s which are of greatest concern. For example, earnings data of homeworkers may show that Agnes earns twice as much as Maria while earnings in the factory may differ by a factor of 4. 9.3 Identifying relationships and leverage points In Chapter 8 we introduced the symbols that can be used <strong>for</strong> mapping relationships between enterprises. Sometimes it is possible to depict the type of relationship in the course of the initial interviews. Often, however, one needs to probe deeper. In what follows, we set out how to do this. The most thorough way to judge what type of relationships prevail in the various parts of the <strong>chain</strong> is to ask mirror questions to both sides: supplier of cloth and the garment manufacturer, the homeworker and the manufacturer, the buyer and the manufacturer, etc. If you find that there are variations in any one link, indicate in the diagram which is the typical or dominant relationship and explain the variations in the text. The following indicators (to be explored in the interviews) help you to identify the type of relationship. We use the terms ‘supplier’ and ‘customer’ to denote the two parties to the relationship. Indicators of market-based or arms-length relationship: Many customers/many suppliers Repeat transactions possible, but in<strong>for</strong>mation flows limited No technical assistance. Indicators of balanced network: Supplier has various customers If supplier has few customers, customer has few suppliers Intense in<strong>for</strong>mation flow in both directions Both sides have capabilities which are hard to substitute. Commitment to solve problems through negotiation rather than threat or exit. 55
Indicators of directed network: Main customer takes at least 50% of output Customer defines the product (design and technical specification) Monitoring of supplier per<strong>for</strong>mance by customer Supplier’s exit options are more restricted than customer’s Customer provides technical assistance Customer knows more about the supplier’s costs and capabilities then supplier knows about customer’s. Indicators of hierarchy: Vertical integration of several <strong>chain</strong> stages within the firm Supplying establishment owned by customer or vice versa Very limited autonomy to take decisions at the local level. Having to consult with or obtain permission from ‘headquarters’. Collecting the in<strong>for</strong>mation <strong>for</strong> some of these indicators can be very time consuming. So make sure that you actually need the in<strong>for</strong>mation. Knowing the type of relationships is often important <strong>for</strong> two questions: first, who pulls the strings in the <strong>chain</strong>? If an external agent, e.g. the <strong>for</strong>eign buyer, dominates the <strong>chain</strong> it will be very difficult <strong>for</strong> local organisations to bring about change – unless they can enlist the support of the buyer. This leads us to the second question: are there convenient leverage points? In other words, is there a point in the <strong>chain</strong> where a small amount of pressure can generate a big effect elsewhere in the <strong>chain</strong>? The practical use of such leverage points is discussed later in Part III “Making an Impact”. In this Part II we concentrate on “Methodology”. To identify the leverage point you use two methods. The <strong>chain</strong> map which includes enterprise numbers (Figure 9.2) gives you the gearing ratio at different points in the <strong>chain</strong>. For example, if 200 producers confront 4 buyers, the gearing ratio is 200:4. This suggests a potential leverage point. How effective it is likely to be, can only be judged from the qualitative interviews. If you are lucky, you find a key in<strong>for</strong>mant who can provide you with a summary analysis. If not, you will have to piece together the analysis on the basis of a number of interviews with both producers and buyers. 56
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MANUAL FOR VALUE CHAIN RESEARCH ON
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10.1 Mapping homeworkers 57 10.2 Ma
Page 5 and 6: List of Boxes Box 1.1: Maria: A hom
Page 7 and 8: Introduction In developed and devel
Page 9 and 10: to understand the situation of home
Page 11 and 12: Part I. Homeworkers in Value Chains
Page 13 and 14: Box 1.2: Agnes: A homeworker moving
Page 15 and 16: no contact with the main contractor
Page 17 and 18: A value ch
Page 19 and 20: dominate certain value</str
Page 21 and 22: • Finding leverage points <strong
Page 23 and 24: Figure 4.1: Triangle manufacturing
Page 25 and 26: Table 4.1: Types of buyers, quality
Page 27 and 28: 5. The new retailing and its implic
Page 29 and 30: ut more frequent orders. Manufactur
Page 31 and 32: which demand limited skills and are
Page 33 and 34: In this manual, we are dealing main
Page 35 and 36: Part II. Methodology This third par
Page 37 and 38: 8.2 Initial and final map Mapping a
Page 39 and 40: kinds of connections between the va
Page 41 and 42: • directed network: firms <strong
Page 43 and 44: local hotel these suppliers and buy
Page 45 and 46: the designs in the various stages?
Page 47 and 48: Figure 9.1: Chain map - workers' ho
Page 49 and 50: you prefer, you can double count, t
Page 51 and 52: If a significant percentage of the
Page 53 and 54: garment industry according to the i
Page 55: Figure 9.3: Chain map - share of fe
Page 59 and 60: Figure 10.1 : Network of homeworker
Page 61 and 62: for the executive
Page 63 and 64: Figure 10.3 : Producer services <st
Page 65 and 66: Figure 10.4 : Wages and skill short
Page 67 and 68: producers all over the world. This
Page 69 and 70: Long-term, quality growth has alway
Page 71 and 72: Such differences emerge clearly if
Page 73 and 74: it may well be worth recording them
Page 75 and 76: it is useful to present the results
Page 77 and 78: Figure 12.3 : Sub-contractor networ
Page 79 and 80: 13.2 Observing Here are some of the
Page 81 and 82: A good research de
Page 83 and 84: A major concern in the protection o
Page 85 and 86: Buyers’ expectations Producers’
Page 87 and 88: 15. Working with public agencies Th
Page 89 and 90: useful source of infor</str
Page 91 and 92: In order to assess the impact of su
Page 93 and 94: The first step is to gather basic i
Page 95 and 96: In step one, the research</
Page 97 and 98: is to examine how such differences
Page 99 and 100: Let us start with the latter, askin
Page 101 and 102: You may want to investigate what ty
Page 103 and 104: Given that home-workers are often c
Page 105 and 106: usiness schools and technology inst
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A second reason for</strong
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individuals can also be ordinary pe
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In answering the first question, th
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Obtaining or creating the sampling
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selection of a few illustrative cas
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The coding of open-ended questions
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You will also need to analyse the q
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The third step is data collection.
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the society. Neilson (1990: 20) cla
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Casson, Mark, and Robert Price. 198
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Kaplinsky, Raphael. 1998. “Global
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Wilson, Fiona. 1991. Sweaters: Gend
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Business forums de
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