Supercompra: Sourcing from Small Andean Farmers

Grupo Mazaplan, a Mexican giant, entered the Ecuadorian market by purchasing controlling interest in Supercompra, a large local retailing company. Juan Pedro Zapata, Supercompra's incoming CEO discarded a purchasing model whereby a central company office sourced all produce from national distributors who then made direct deliveries to points of sale, and substituted it with another featuring decentralized company units called "proximity platforms" located in various parts of the country, which bought produce directly from local farmers. The first platform was established in the Andean region, where farmers were smallholders. The case looks at the difficulties faced by companies when trying to develop commercial relations with low-income suppliers through market mechanisms, and elaborates on how Supercompra handled these relationships. It is chronologically situated in March 2006, the moment when Supercompra must decide how to proceed regarding its relationship with its low income suppliers: 1) allow relations with small Pallatanga growers to dwindle away, discontinuing further efforts and resources invested in organizing them, and dedicating efforts entirely to building relationships with local middlemen and larger commercial farmers; 2) continue to work on the relationship with small growers, but reframe it as a social or CSR initiative; or, 3) allocate more efforts and financial resources to building stable and solid business relationships with small producers, which would imply making a major investment, and dedicating additional time and effort organizing and fostering small farmers with the hope of achieving profitable commercial relations with them within a few years.

• Corporate social responsibility
• Sourcing
• Suppliers