Building a Local Dairy Supply Chain with Abbott
Abbott is a global health care company with a significant presence in high-growth emerging and developing economies. Because complex social challenges such as poverty and limited infrastructure are often barriers to health in these markets, shared value is core to Abbott’s business strategy. Abbott’s efforts focus on three areas: 1) building an inclusive supply chain; 2) delivering innovative products to meet local needs, and 3) expanding access by addressing barriers to care. This approach is driving real social and business impact across the organization.
One of Abbott’s key shared value initiatives is a dairy farming partnership in India. This partnership was recently highlighted on Fortune Magazine’s Change the World List, which recognizes companies for innovation in shared value. Abbott faced a growing demand for nutrition products in India and needed to ensure a dependable supply of high-quality milk to meet customer needs. They worked with India supplier Prabhat Dairy and the global non-profit TechnoServe to launch a program that provides more than 1,500 small-holder dairy farmers with targeted support to build their skills. The farmers were then able to produce better milk and grow their family farms (and incomes) and Abbott secured a reliable local supply chain.
Abbott has partnered with FSG along this journey. We caught up with Susan Beverly, Senior Director of Sustainability and Jenna Daugherty, Divisional Vice President of Global Social Responsibility, to understand how they have catalyzed internal support for shared value initiatives and developed the capacity to execute them, with a particular focus on their value chain investments in India.
“Shared value is not just a buzzword — it plays an important role in our operations. To have true impact, everyone needs to be involved and commit to integrating the shared value mindset into their work.”
— Susan Beverly, Senior Director of Sustainability, Abbott
Five Insights from Abbott on Creating Shared Value
1. Champions within the company are key to success. Our efforts to deliver shared value have benefited from identifying champions across businesses at Abbott who recognize the impact that we can have on both the business and in the communities where we work. These champions — our head of nutrition supply chain, chief economist, and vice president of rapid diagnostics, among others — truly embrace the shared value mindset and support it as a decision-making lens for the creation of new strategies that will ultimately drive results.
2. Having our own shared value framework is essential to identifying opportunities in new markets. We are always thinking strategically about how to expand our presence in key emerging and developing economies. One tenet of our shared value framework is a focus on markets where we can offer products that are relevant to local needs. For example, our rapid diagnostics business delivers tests that fight some of the greatest infectious disease burdens in developing countries.
3. Strong measurement is critical to driving buy-in among business leaders. When we started our dairy initiative in India, measuring results was one of the first items of discussion. We worked with our business and NGO partners to identify the relevant business and social metrics and created a dashboard that we still use to assess the progress of the program today. Demonstrating success through these metrics is key to continued investment in our shared value approach.
4. Shared value programs are not “one size fits all.” Shared value programs must be designed to meet the unique needs of the market and in the communities where the work is being done. For example, in our work in India, through focus groups with farmers, we found out that women in India play a crucial role in dairy farming. In fact, the majority of the work on dairy farms is performed by women, so we tailored our program to include a specific focus on training for women.
5. Shared value pays — both in terms of business and social returns. We were surprised by the pace at which our initial investments paid back. We met our business goals within a year and were able to locally source high-quality milk to produce our products in India. These investments have also led to an expansion of the program, meaning more farmers will benefit from participation and our supply chain will continue to benefit.
How has Abbott built and sustained buy-in for shared value initiatives through the years?
SB: Abbott’s culture is achievement-driven and goal-oriented. As a result, we have focused on building an internal network of champions committed to proving the importance of a shared value approach through data-driven measurement. We have leaders within Abbott, such as our head of nutrition supply chain, chief economist, and vice president of rapid diagnostics, among others, who have all embraced the shared value mindset. Our partnership with FSG has helped us to operationalize shared value and navigate markers for success and continued investment in shared value initiatives.
How have you approached entry into new and emerging markets?
SB: For us, shared value is an integral part of our strategy to grow our business in emerging and developing economies. Each market is different, with different challenges and opportunities that are often intertwined with complex social problems — which points to the localized solutions that shared value solutions can deliver.
We look at shared value through an innovation lens, not only through R&D aimed at addressing gaps in developing countries but within our supply chain and as part of our market access strategies, where we apply the same level of creativity to adapt operations to local realities.
Our rapid diagnostics business is a great example. Today, we lead the industry in delivering rapid tests that fight some of the greatest infectious disease burdens in developing countries, from malaria to HIV. These tests are squarely aimed at delivering high-quality results in low resource settings. They’re portable, affordable and deliver fast results — which helps overcome barriers to access in remote areas across Africa.
But it’s not just the technology that’s cutting edge. It’s the partnerships and how we get things done. Our rapid diagnostics team recently worked with the Gates Foundation, PATH and FIND to develop a new ultra-sensitive rapid diagnostic test to identify malaria in people with no symptoms, an important advance in preventing the transmission of the disease to others.
Abbott introduced new nutritional products in India and then had to adapt its supply chain. In the process, you developed a great shared value solution. What have you learned from this work?
SB: The business started by embedding supply team members within our suppliers’ organizations, but quickly realized they needed to look at quality challenges further upstream in the value chain. This is when our shared value team got engaged and we pulled in TechnoServe, an NGO with expertise in agricultural value chains. Abbott and TechnoServe worked together with Prabhat, one of our dairy suppliers in India based in the state of Gujarat, to create a training program for farmers. To date, we have trained more than 1,500 dairy farmers. Abbott supplemented technical training with capital investments to further address quality issues, such as investments in bulk milk chilling centers to improve cold chain management.
JD: An early insight was that women play a crucial role in dairy farming. Through focus groups with farmers, we found out that most of the dairy farming was actually performed by women, but that they had not really been involved in the decision-making. We realized that we needed to target women farmers more proactively, so we designed dedicated trainings and programs for women farmers.
How do you measure results both in terms of business outcomes and social impact? What have you learned from your approach to measurement?
SB: When we started the dairy initiative in India, measuring results was one of the first items of discussion with our leadership. We conducted an exercise with the nutrition team and NGO partners to identify the relevant business and social metrics and created a dashboard we still use today.
JD: On the business side, we looked at the quality of milk. This was an opportunity to help raise dairy standards, production, and quality for our supplier in India. On the social side, we also looked at increases in income levels and saw significant gains, with farmers nearly doubling their income.
Abbott doesn’t enter into a shared value initiative without setting metrics with the business unit first. We’ve been diligent in tracking targets and metrics that validate success, and we need to avoid rigidity and allow for flexibility within reason to set the right targets.
Did this initial investment by Abbott pay back?
SB: Yes, and we were surprised by the pace at which our initial investments paid back. We met our business goals within a year and were able to locally source high-quality milk. These investments also helped strengthen relationships with the government of India. The initiative has been so successful that we are working with Prabhat to expand this pilot and reach many more farmers.
Any words of wisdom or reflections on the role that shared value has played at Abbott?
SB: Shared value is not just a buzzword — it plays an important role in our operations. To have true impact, key decision-makers with the company, as well as implementing partners, need to be involved. You have to commit to thinking outside of the box and integrating what’s best for the business and what will deliver true value in a community.
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