Supply Chain Verification Terms and Definitions

Small and Medium Partners
Our focus is on small and medium-sized businesses. Companies with 1 to 49 employees are considered small,
and companies with 50 to 499 employees are considered medium enterprises. This corresponds essentially to the EU definition.

In practice, however, this definition is difficult to track. Unlike in Europe, many companies not only employ usual employees,
but also involve a variety of independent individuals, groups and craftsmen, with whom they also have various relationships.
(“Satellites”, associated workshops, internal free production groups or free craftsmen – usually piece workers).
This takes some getting used to for European eyes.

Intermediary trade
One sometimes hears the demand for “elimination of the intermediary trade”. But many of our trading partners work
in decentralized regions. They are artisans. Resources are limited. Distances are long, infrastructure is often fragmentary and
communication channels and language barriers are sometimes difficult. All this calls for cooperation and risk sharing.
In such cases, we use service providers to facilitate our trade. Where we use such helpers, this is mentioned in the coreesponding pages.

Term: Trading Partner
We refer to all overseas business relationships as “trading partners”, regardless of their nature, function and legal form.
For us there are two different types of partnerships:

  1. Producers: These are either complete manufacturers of their products or partial or final manufacturers with associated workshops
    or craftsmen. However, they supply us directly.
  2. Exporters/Service Providers: These are specialized companies or single persons who take our orders and redistribute them to
    specialized craftsmen. They provide us with technical services, such as order picking, quality control, packaging and shipping.
    Some exporters also get involved in product development e.g. assortment design and sourcing of raw materials – usually according to our specifications.

You will find the exact classification of which type of producer or exporter we are dealing with on the corresponding pages.

Rating of our Trading Partners
The relations with our partners are constantly in motion and show clear differences from each other. These is due to, for example,
the duration of the relationship, size and capacity of a partner, trade volume, order frequency, CONTIGO’s importance to the partner,
and the partner’s importance to CONTIGO.

Not all overseas partners manage to meet all Fairtrade criteria from the beginning and are still developing. However, most CONTIGO
producers meet the Fairtrade standards to their and our satisfaction. Some of our partners also provide additionally excellent
Fairtrade services to their employees and their environment.

For this reason, we categorized our partners into two groups: Fairtrade Approved (FTA) and Fairtrade in Progress (FTP)

Partner FTA – Fairtrade Approved
Criteria and Requirements:

  • Completed processing of the initial audit (Fairtrade questionnaire).
  • Differentiated and reliable knowledge of the production environment
  • Compliance with all requirements of the Fairtrade Basic Agreement
  • Transparency
  • Complete, reliable and verifiable documentation
  • Good and proven trading relationship
  • Long-term perspective
  • If required: joint design and product development
  • Personal knowledge of key people

The vast majority of our trading partners are classified as FTA partners.

Partner FTP – Fairtrade in Progress
(Minimum) criteria and requirements:

  • Interest in the “10 Principles”
  • Willingness for own further development
  • Potential for development
  • Potential for long term marketing
  • No child labour, no bonded labour (according to ILO Convention, Convention 105)
  • No discrimination (according to ILO Convention, Convention 111)
  • Clean and humane working conditions
  • First sampling and trial orders successful

Reasons for provisional classification in “Fairtrade in Progress”:

  • The relationship is still very new, but promising
  • The partner does not yet have a sufficient economic basis to completely comply with all Fairtrade criteria
  • Complete information is not yet available or could not yet be conclusively verified

An absolute ambition of CONTIGO is to elevate every FTP partner to the “FTA” group. However, if producers do not
meet the minimum criteria for “Fairtrade in Progress” (see above), they cannot be listed with CONTIGO.

Author: Janina Lange on 3. February 2021
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