Living Magazine English Living Magazine 2017 | Page 32

Businesses run on the products they sell. It’s the most basic principle of commerce: people pay a business in exchange for something that would otherwise be unattainable. Those products, however, have to originate somewhere, and that’s where supply chain comes in. Supply chains entail how products are originally produced, processed, and then arrive to the consumer. dōTERRA’s supply chains, in general, start in the individual fields, forests, and groves where the plant material is harvested. The plant material is then steam distilled, or in the case of citrus oils, cold pressed, and then transferred along the supply chain where these essential oils are either used as ingredients in blends or other products, or for our single oils bottled as the end product. As we continue along the supply chain, once the products are bottled, they are delivered to fulfillment centers and then sent out to retail locations or vendors, ultimately arriving in the hands of the end consumer. Typically, businesses strive to simplify their supply chains in order to save money and increase profits. Many companies contract with as few third party suppliers as possible. dōTERRA, however, develops relationships with the actual growers and distillers in each of our essential oils’ supply chains. “The danger of working with just one or even a handful of third-party supply companies to source our oils,” explains Tim Valentiner, the Director of Strategic Sourcing for dōTERRA, “is that we would be at the mercy of those companies. 32 / EUROPE LIVING MAGAZINE We would have very limited visibility as to where the oils come from and who is actually producing them. “On the other hand, by working with the individual farmers and distillers, we know—intimately—who we are working with and the quality they produce. We can see their production capacity, and know much more effectively and timely about potential production, weather, or other challenges before they become problems. And most importantly, we can help provide the sourcing commitments, resources, and other tools they need to increase their capacity to grow with us. This completely changes the playing field for the small-scale farmer and distiller partners we are working with around the world.” Relationships It would, in fact, simplify things a great deal for dōTERRA to work with one company to supply our oils. But where efficiency and profitability might increase, we would fail in our vision of helping people throughout the world. “It’s an incredible challenge,” states Valentiner. “Where many companies are focused on sourcing raw material for maybe one or two products, we’re sourcing over 100 different oils from at least as many locations in 40+ countries. That’s a lot of partnerships to maintain, but it’s worth it for the good we are accomplishing.” When dōTERRA enters into a partnership with local farmers and artisan distillers, it’s not simply an agreement to purchase raw materials. dōTERRA guarantees first that these groups will receive timely and fair payments—something they are not always accustomed to. Because they are often at the mercy of middlemen, farmers and distillers have to settle for fluctuating prices and uncertain schedules. Instead, dōTERRA commits to a schedule and price, allowing these communities to plan ahead and improve their lives. The dōTERRA Co-Impact Sourcing® model also helps provide the resources and training necessary to improve production, which fuels even more change. In tandem with Co-Impact Sourcing, the dōTERRA Healing Hands Foundation™ steps in to help the people and communities where our essential oils are produced. Medical supplies, schools, microloans, water systems—the dōTERRA Healing Hands Foundation projects work to raise the standard of living for everyone. The introduction of industry into these communities has a lasting effect, creating opportunity and freeing people from the poverty cycle. “We estimate that through our Co-Impact Sourcing initiatives in just 10 countries so far, we have created or are supporting 18,400 jobs in rural areas,” says Valentiner. “We also estimate that this number will grow to nearly 40,000+ jobs by 2020—and this is just from our ‘co-impact sourced’ oils. That’s just a portion of our overall oil sourcing needs.” This commitment to working with the originators of our oils engenders loyalty. As they see dōTERRA investing in them and their communities, they become just as invested in our success and work diligently to provide only the best oils for dōTERRA. “From a sourcing perspective,” states Dave Stirling, dōTERRA Founder and CEO, “we have tremendous potential to do much good in a very sustainable way in some of the poorest areas of the poorest countries in the world. And that is very exciting. But it is complex, difficult, nuanced, and requires a lot of effort and focus to make it happen effectively. We are 100 percent committed. Our vision is to one day arrive at the point where all of our oils—that make sense to be—are sourced through our Co-Impact Sourcing model.” Source to You “Modern consumers want to know where their products come from,” states Emily Wright, Founder and Executive Vice- President of sales and marketing. “They want soc ially responsible and sustainable products. We feel the same way. We’re striving to put that human face with each dōTERRA oil that goes out to our worldwide base of customers.” The ability to trace a product to its origins is vital in maintaining quality. Contracting with another company to provide oils poses several risks. Should yield drop, the temptation would be to add fillers to increase supply. But that drops the quality of the oils. Working directly with the farmers and distillers ensures that our high, CPTG® quality requirements are met. Working at a grassroots level also helps prevent problems. “Building partnerships with farmers and distillers gives us access to on-the-ground, hands-on information,” explains Valentiner. “We know when there’s been a poor harvest, or if there is a problem with the plants. Knowing in advance allows us to develop strategies that meet both demand and quality. Working with middle­men sometimes results in not finding out about a problem until the last possible moment. So instead of having a curable challenge, we have a crisis. Being directly involved in the supply chains helps prevent as much as possible those kinds of supply problems.” Insight “Poverty is extensive and economic opportunity limited in the rural areas where we source many of our oils,” explains Wright. “We have a reach into more than 40 countries, half of which are considered developing countries. We have a tremen­dous opportunity to bring sustainable economic development into many rural areas. This is a shift in develop­ment where we are no longer just a charity or a philanthropy, but rather a means of achieving meaningful, sustainable impact. What we’re seeing is that our Independent Product Consultants often buy our oils not just for the health benefits, but for the opportunity to benefit the people and communities where our essential oils are produced.” It may seem as though dōTERRA needlessly complicates its supply chain, but what we don’t see when looking at just the facts is the impact on real people. Using direct sourcing as a strategy, including the Co-Impact Sourcing model, allows for more communities around the world—some in desperate need of help—to be positively impacted. “Really what we’re accomplishing with Co-Impact Sourcing,” states Stirling, “is benefitting the ends of the supply chain: those who produce the raw materials, and those who consume the end product. We’re improving the farmers’ lives and providing them a better future while also changing the lives of the end consumer with the purest, most potent and beneficial essential oils. Does it cost us more in the middle of the chain? Sure. But the results are worth it.” doterra.com / 33