Lessons from the past: Co-operative retail societies as supply chain pioneers

Co-operatives have been global trade innovators for over a century, according to Professor Tony Webster of the Northumbria University, who is conducting research into the history of British co-operative...

Co-operatives have been global trade innovators for over a century, according to Professor Tony Webster of the Northumbria University, who is conducting research into the history of British co-operative retail societies as supply chain pioneers. In January he gave a lecture at the Northumbria University, presenting some of his findings.

In 2013 Prof Webster along with John F. Wilson and Rachael Vorberg-Rugh published Building co-operation, A business history of the Co-operative Group. The book looks at the story of the reatilaer, from the days of the Rochdale Pioneers to the present.

“When doing research work on the Co-operative Group, I realised the international dimension of societies had really not been covered,” he said. “Now I am looking specifically at the international actions of co-op wholesale societies and see how they fit in.”

The existing literature on supply chain management focuses on the 1990s. However, according to Prof Webster, British co-operative retailers succeeded in developing a system of supply chain management as early as the 1880s.

“In many ways British co-operative societies had a way of managing supply from overseas that gave them advantage to win the market,” he says.

From the 1890s, the Co-operative Wholesale Society (now the Co-operative Group) focused on owning key sources of supply. They set up a number of branches and depots around the world, in New York (1876), Copenhagen (1881), Hamburg (1884), Rouen (1879), Spain (1896), Montreal (1894) and Sydney (1897).

In addition, the CWS bought tea plantations in India and Sri Lanka in the early 1900s and started to invest in palm oil and cocoa production in West Africa. WWI interrupted developments in West Africa to some extent, but these were carried on after the end of the war.

“Many people sent to manage branches spent their years going to local co-operative societies so they knew what they would buy,” explained Prof Webster.

The overseas managers also became heavily involved in local politics. In New York, CWS branch manager, John Gledhill, was elected manager of the New York Produce exchange in 1882. Under his leadership, CWS became an important international player among New York’s merchants and brokers. In 1883 he moved the HQ of the New York CWS into the Produce Exchange Building. This enabled him to get the best deals for co-op societies, heavily embedded in local commercial institutions.

The CWS moved its New York HQ into the Produce Exchange Building in 1883
The CWS moved its New York HQ into the Produce Exchange Building in 1883

 

“They were extremely innovative, very outgoing as well as new in some of the things they developed – they were people who went out to get new contracts,” said Prof Webster. He described how CWS staff travelled overland across Europe on their way to Turkey and Greece, where they were looking to find dried fruit producers.

“As they passed through, they signed deals with others so they began sourcing potatoes from Germany and wheat from Hungary. They were very entrepreneurial at a time when a lot of this wasn’t done”

CWS’ international supply chain also had an ethical dimension, according to Tony Webster, giving the example of how in the 1870s and 1880s CWS stated trading with Denmark in butter.

John Andrews, the head of the new branch in Copenhagen established contacts with local people, including he president of the Royal Agricultural Society of Denmark. As an experienced traveller for CWS, he was aware of the tastes and demands of retail societies. His strategy was to source goods where possible at the point of production, and so sought to establish supply chains with farmers rather than rely on merchants and brokers. He started working with creamery co-operatives, and by 1885 CWS was receiving butter from 101 farmers across Scandinavia.

Related: How is Fairtrade tackling the problem of worker exploitation?

In the 1920s and 30s, the CWS was heavily involved in supporting the International Co-operative Alliance as part of the attempt to create an international co-operative society.

“The great problem was that the interwar period caused major disruptions of international trade,” said Prof Webster. In Nazi Germany and Italy the state attempted to crush the co-operative movement. “In many ways this is why an international co-operative society didn’t come into existence.”

After WWI British co-op retailers tried to support co-op movements abroad in Belgium, Poland, Romania and Austria to help existing co-op movements or set up new one.

Prof Webster thinks the movement today can learn important lessons from the past. “Co-ops were highly competent, and innovative,” he says. “In many senses, if the Co-op Group is to become successful again some of that spirit of entrepreneurship needs to be revived. International co-operation is also important with the current descent into protectionism.

“One of the things to understand is that the co-op movement is international. If we want to main good relationships across national borders, the co-op movement of Europe may well have an important role to play.

“Over the next few years there is a danger that the relationship between Europe and the UK could become frosty. The co-op movement can put forward an alternative voice though organisations like the International Co-operative Alliance, and promote European co-operation and goodwill.”

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