Harvard Case - Inge Skjelfjord and the Cacao Supply Chain
"Inge Skjelfjord and the Cacao Supply Chain" Harvard business case study is written by Rosabeth Moss Kanter, Oludamilola Aladesanmi, Ai-Ling Jamila Malone. It deals with the challenges in the field of General Management. The case study is 19 page(s) long and it was first published on : Nov 18, 2015
At Fern Fort University, we recommend Inge Skjelfjord implement a multi-pronged strategy to address the challenges in the cacao supply chain. This strategy focuses on building a robust and ethical supply chain, fostering innovation in cacao production, and leveraging technology to enhance transparency and traceability. The key elements of this strategy include:
- Developing a comprehensive sustainability program: This program will incorporate fair trade practices, environmental protection initiatives, and community development efforts.
- Investing in research and development: This will focus on improving cacao yields, developing disease-resistant varieties, and exploring alternative farming methods.
- Leveraging technology for traceability and transparency: This will involve implementing blockchain technology, GPS tracking, and other digital tools to track cacao from farm to bar.
- Building strong relationships with farmers: This will involve providing training, technical assistance, and fair pricing to empower farmers and improve their livelihoods.
- Developing a robust communication strategy: This will involve engaging stakeholders, building trust, and communicating the company's commitment to sustainability and ethical sourcing.
2. Background
Inge Skjelfjord, a leading chocolate manufacturer, faces a complex challenge in its cacao supply chain. The company is committed to ethical sourcing and sustainability, but faces issues such as low farmer incomes, deforestation, and child labor. These issues threaten the company's reputation and long-term viability.
The case study focuses on Inge Skjelfjord's efforts to address these challenges. The company has implemented various initiatives, including fair trade partnerships, sustainable farming programs, and investments in technology. However, these efforts have not been fully successful, highlighting the need for a more comprehensive and strategic approach.
3. Analysis of the Case Study
The case study highlights several key issues:
- Complex and fragmented supply chain: The cacao supply chain is long and complex, involving multiple intermediaries and actors. This makes it difficult to ensure ethical sourcing and traceability.
- Low farmer incomes: Farmers often struggle to earn a living wage, leading to poverty and vulnerability.
- Environmental degradation: Deforestation and unsustainable farming practices are contributing to environmental damage.
- Lack of transparency and traceability: The lack of reliable data and information makes it difficult to monitor and improve the supply chain.
- Limited access to technology and resources: Farmers often lack access to technology, training, and financial resources, hindering their ability to improve their livelihoods.
To analyze the situation, we can utilize the Porter's Five Forces framework:
- Threat of new entrants: The barrier to entry in the cacao industry is relatively low, with new players emerging.
- Bargaining power of buyers: Large chocolate manufacturers have significant bargaining power, putting pressure on farmers and suppliers.
- Bargaining power of suppliers: The bargaining power of farmers is limited due to their fragmented nature and lack of organization.
- Threat of substitute products: Alternative sweeteners and chocolate substitutes pose a threat to the cacao industry.
- Competitive rivalry: The chocolate industry is highly competitive, with numerous players vying for market share.
4. Recommendations
To address these challenges, Inge Skjelfjord should implement the following recommendations:
1. Develop a Comprehensive Sustainability Program:
- Fair Trade Practices: Implement fair trade principles throughout the supply chain, ensuring farmers receive fair prices and working conditions.
- Environmental Protection: Promote sustainable farming practices, reduce deforestation, and conserve biodiversity.
- Community Development: Invest in community development initiatives to improve access to education, healthcare, and infrastructure.
2. Invest in Research and Development:
- Improved Cacao Yields: Fund research to develop high-yielding, disease-resistant cacao varieties.
- Alternative Farming Methods: Explore and promote alternative farming methods, such as agroforestry and organic farming.
- Innovation in Processing: Invest in research to improve cacao processing techniques, enhance quality, and reduce waste.
3. Leverage Technology for Traceability and Transparency:
- Blockchain Technology: Implement blockchain technology to track cacao from farm to bar, ensuring transparency and accountability.
- GPS Tracking: Utilize GPS tracking to monitor the location and movement of cacao beans.
- Digital Platforms: Develop digital platforms to connect farmers with buyers, provide market information, and facilitate transactions.
4. Build Strong Relationships with Farmers:
- Training and Technical Assistance: Provide farmers with training on sustainable farming practices, pest management, and quality control.
- Financial Support: Offer financial support to farmers through microloans, grants, and other initiatives.
- Fair Pricing: Ensure farmers receive fair prices for their cacao beans, reflecting the true cost of production.
5. Develop a Robust Communication Strategy:
- Stakeholder Engagement: Engage with stakeholders, including farmers, consumers, NGOs, and governments, to build trust and transparency.
- Transparent Reporting: Publish annual sustainability reports detailing the company's progress and impact.
- Marketing and Branding: Communicate the company's commitment to sustainability and ethical sourcing through marketing campaigns and brand messaging.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Mission: The recommendations align with Inge Skjelfjord's commitment to sustainability and ethical sourcing, reinforcing its core values and mission.
- External Customers and Internal Clients: The recommendations will improve the company's reputation, attract environmentally conscious consumers, and enhance employee morale.
- Competitors: The recommendations will help Inge Skjelfjord differentiate itself from competitors by demonstrating its commitment to sustainability and ethical practices.
- Attractiveness: The recommendations are expected to lead to long-term cost savings, improved efficiency, and enhanced brand value.
6. Conclusion
By implementing these recommendations, Inge Skjelfjord can transform its cacao supply chain into a model of sustainability and ethical sourcing. This will not only improve the company's reputation and profitability but also contribute to the well-being of farmers, the environment, and the global chocolate industry.
7. Discussion
Alternative Options:
- Outsourcing production: While outsourcing could potentially reduce costs, it could also compromise control over the supply chain and ethical practices.
- Focusing solely on fair trade: This approach might not be sufficient to address all the challenges in the supply chain, particularly environmental concerns.
- Ignoring the issue: This is not a viable option, as it would likely lead to reputational damage and consumer backlash.
Risks and Key Assumptions:
- Implementation challenges: Implementing these recommendations will require significant investment, time, and effort.
- Resistance from stakeholders: Some stakeholders, such as intermediaries, may resist changes to the existing system.
- Market volatility: Fluctuations in cacao prices and demand could impact the effectiveness of the strategy.
8. Next Steps
- Develop a detailed implementation plan: This plan should outline specific actions, timelines, and resources required.
- Establish a dedicated team: A cross-functional team should be responsible for overseeing the implementation of the strategy.
- Monitor progress and adjust as needed: Regular monitoring and evaluation are crucial to ensure the effectiveness of the strategy and identify areas for improvement.
By taking these steps, Inge Skjelfjord can build a sustainable and ethical cacao supply chain, ensuring a brighter future for the company, its stakeholders, and the global chocolate industry.
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