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.
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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.”
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