Business matchmaking in the supply chain -- organic

Farmers with the Texas Organic Cotton Marketing Cooperative (TOCMC) grow enough organic cotton each year to make 6.1 million T-shirts. These growers spare the environment millions of pounds of chemicals, claims the Sustainable Cotton Project, because growing organic cotton for a single T-shirt requires one-third of a pound less chemical than does growing the same amount of conventional cotton.

But between 1993 and 2003, the Lubbock-based cooperative couldn't find enough buyers for its premium product. As a result, TOCMC wound up selling much of its harvest at suboptimal prices to manufacturers who would have been just as happy with cheaper, nonorganic cotton.

Two years later, TOCMC's sales had increased 50 percent, and all of its buyers wanted - and were willing to pay for - organic cotton.

The cooperative credits these gains to Organic Exchange, an Oakland, Calif.-based nonprofit that plays matchmaker to buyers and sellers of organic fibers. The nonprofit also teaches businesses how to and why they should go organic.

Organic Exchange nurtures an online network of retailers, manufacturers, and farmers who are devoted to increasing the market for organic fibers.

The organization has also developed an online tracking system that traces organic cotton's journey through the entire supply chain, from the field to the store rack. In the past, more finished goods were traced back to a single organic cotton bale than one bale could actually produce - in other words, organic cotton was being double-counted. Now any supply chain partner can verify and trace organic cotton throughout the chain, eliminating the possibility of double-counting or losing track of organic material.

Unlike many organizations that regard organic agriculture as a government or nonprofit project, Organic Exchange views it as a market issue, and so engages market participants. The organization's business partners, which it calls sponsors, pay to be a part of its matchmaking network. And while the track and trace system is open to everyone, it displays information only about sponsors. Because sponsors are willing to pay up to $25,000 for these services, the Organic Exchange is poised to become 100 percent self-sustaining - that is, not reliant on foundation or government funding - by 2010.

The organization also seems well on its way to meeting its other goal: increase organic cotton's share of global cotton production to 10 percent by 2013. Organic Exchange sponsors don't just pay their dues, post their name on some Web sites, and then go back to business as usual. Instead, they work with Organic Exchange to set and meet their goals for using organic fibers.

To drum up support for ecologically sound cotton, Organic Exchange first identified big-name companies with a history of innovation and large profit margins, since at the time organic cotton was more expensive than conventional cotton.

-- as with any potential partner, was first to identify the business's priorities

Nordstrom was beginning its triple-bottom-line (profit, social responsibility, and the environment) agenda, with which selling organic cotton apparel fit particularly well. Organic Exchange also made a well-researched case for how organic cotton could be a strategic advantage for the firm. After an intense period of discussion and relationship building, Nordstrom became an Organic Exchange sponsor.

For Organic Exchange to work, its sponsors have to balance their will to compete with their need to cooperate.

Patagonia opened its doors to other sponsors' queries and requests - for example, the company connected other sponsors to its farmers and spinners.

At the same time, Patagonia made sure that its open-door policy did not harm its competitive advantage by carefully protecting its proprietary information, such as its fabric patterns.

The spirit of collaboration and mutual indebtedness permeates the organization.

In four years, the network has more than tripled, from roughly 35 business sponsors to more than 120. In addition to growing its network of sponsors, Organic Exchange has also helped expand global production and sales of organic cotton.