3.4.1. Industry Pathway
An industry pathway is a management tool that integrates the incremental behavior changes required to make an industry more competitive with the project process. The industry pathway tool provides guideposts towards sustainable competitiveness, allowing implementers to track the impact of project interventions and adjust these interventions as needed. An industry pathway should lay out the behaviors that lead to:
- supportive horizontal and vertical relationships,
- innovation-based competitive strategies,
- benefit flows that provide incentives to firms to foster ongoing upgrading, and
- improvements in key end market factors – product, operations and branding
Pathways must be directly linked to the project cycle to ensure interventions are grounded in the timeframe and resources of the project. Planning and initiating interventions that can not be fully implemented or funded is likely to be very destabilizing for the industry and to produce negative results.
The intervention process is comprised of four basic stages as defined by the graphic below. While there is a sequence to the intervention process, sequencing does not always follow a rigid step by step process. Instead interventions may be at different phases at different times, skip a middle phase or require the project to go back a phase. For this reason it is critical that an overarching pathway system be based on the timeframe of the project and then informed by expected as well as actual observations.
The Zambian cotton industry is characterized by declining competitiveness due to a concentration of risk for ginners, stagnant upgrading leading to rising costs of production (i.e., on-farm productivity is stagnant or dropping), and inappropriate supply chain management given the external and internal threats and competitive pressures. The Zambia cotton industry has to first focus on operational improvements to achieve basic cost effectiveness in order to remain even remotely competitive. As a result, the pathway needs to focus on behaviors required to improve supply chain management and on-farm productivity, with market segmentation and related supply change management upgrades evolving later.
|Demonstration||Transaction to Relationship||Scale Up & Exit||Competitive Industry|
|Innovations & Learning||OGFs test preferred supplier incentives||OGFs test ICT tools to improve management efficiency||Majority of SHs using upgraded farming practices||Competition in cotton industry driven by innovation and ongoing upgrading|
|Relationships||OGFs recognize critical role of SH suppliers||OGFs begin to work with 3rd party service providers||OGFs working with each other to address industry-wide constraints||Cotton industry has a wide-ranging and robust network of relationships|
|Benefits||Increasing percentage of SHs covering their costs of production from cotton crop sales||Increasing percentage of SHs improving yields by accessing high quality services||Preferred supplier SHs receiving price premium for performance||SH receive premium for differentiated products (Fair Trade, organic from OGFs)|
|OGF = outgrower firm/cotton ginner||SH = smallholder|