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Chipotle’s Consumer Trust Crisis Enters a New Critical Phase

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In mid-December, Supply Chain Matters published our commentary: How Events Can Change in a Matter of Months- Time for Chipotle to Openly Demonstrate Resolve. In our posting, we outlined from a supply chain lens the crisis that Chipotle Mexican Grill was involved in after hundreds of consumers were sickened by a series of varying incidents ranging from E-coli outbreaks to norovirus that date back to last summer.   Chipotle logo

In our commentary, we declared what most consumers and general media have since concluded that Chipotle needed to rebuild trust in its brand and in its restaurant and supply chain food handling practices. We called for, among other actions, a temporary nationwide suspension of all outlets to perform top to bottom cleaning and rigorous employee training at each and every Chipotle outlet.

Yesterday, all Chipotle restaurants were closed for four hours during traditional lunchtime hours in order for all employees to participate in a company-wide meeting concerning food safety.

Thanks for listening.

According to reports, yesterday’s company-wide meeting included a briefing addressing the improved “farm to fork” food safety efforts that are being implemented, an announcement of paid sick leave to insure that sick employees stay home when they are ill, and a series of changes related to food preparation practices and protocols. There are a host of new protocols being implemented to include more preparation of food at central kitchens, DNA based testing of supply chain ingredients before being shipped to restaurants and new ways of marinating meats. In essence, Chipotle has little choice but to revert to a model of more centralized food supply chain control to restore trust and added food safety for the chain’s brand. Further announced was $10 million set aside to help smaller local farmers meet the restaurant chain’s new food safety standards and protocols.

The U.S. Centers for Disease Control (CDC) concluded its investigation of the recent nationwide E-coli outbreak last week without any conclusive findings.  That was not good for the restaurant chain since it leaves consumers with additional doubts. The Wall Street Journal recently reported that behind the scenes, Chipotle disagreed with health officials on the likely source of the infection.  While officials suspected some form of produce, Chipotle concluded it was imported Australian beef that must have been contaminated. But that does not fully explain the outbreaks not related to E-Coli infection.

The economic cost of Chipotle’s food crisis has also become far more visible. Sales at existing restaurants fell 14.6 percent in the fourth quarter while stock has fallen more than 25 percent in value since October. New costs incurred to mitigate food safety risks are yet to be totally quantified. This is yet more current day evidence that a supply chain focused disruption or snafu does and will directly affect both shareholder and brand value.

This crisis remains ongoing and Chipotle must now convince it’s once loyal customers that it serves safe food with integrity.

This author recently conducted an interview with Chloe Demrovsky, Executive Director at Disaster Recovery Institute International (DRI), a noted foremost authority on business continuity and risk management. Our interview generally touched upon a trend toward lack of consumer trust in food related supply chains which has been come about from a new resurgence of food, drug and other related product recalls or food safety incidents.  While discussing the implications of these trends on food supply chains, we could not avoid discussing the ongoing Chipotle situation.

Ms. Demrovsky stressed how important and difficult it can be to restore consumer trust in a brand once it has tainted by unfortunate incidents. She also reminded me of how important it is for businesses to have business continuity and supply chain disruption plans in-place before any crisis occurs. We both touched upon business media reports that are concluding that for the past few months, Chipotle has been playing defense, trying to respond to one report after another. Any organization, especially those associated with food, needs to be prepared as to how to respond, and how to protect consumers and the brand when a major snafu or incident occurs. In helping companies with business continuity planning, DRI advocates a thorough risk assessment that includes both internal and external dimensions, coupled with a business impact analysis as cause and effect impact.

Consumer trust is hard won, but also hard to get back when consumers believe that trust has been violated. Consulting firm Deloitte recently partnered with the Food Marketing Institute and the Grocery Manufacturers Association (GMA) on a recent survey of 5000 consumers nationwide regarding food buying decisions.  One of the stated conclusions of this survey was that consumers not only want toxin and pathogen-free food but also more transparency from food producers and retailers about food safety. Another stated finding of this survey was that consumers want accountability and transparency across the entire food supply chain. Other food safety concerns identified by respondents included clear information on ingredients and sourcing, clear and accurate labeling, added visibility to the nutritional content of food.

Chipotle management is now planning to launch an extensive nationwide marketing plan to convince consumers that Chipotle outlets will be the “safest restaurant to eat at” and that the chain’s goal is to reduce risk of another infection outbreak “as near zero as possible.” The Wall Street Journal recently disclosed (Paid subscription required) an interview with a former Chipotle operations executive. According to that executive, Chipotle’s stated mission of “food with integrity” was always the prime emphasis, and when translated to supplier management; “they’d never talk about food safety. It doesn’t mean it wasn’t checked, but the discussion was always about the story behind the supplier and keeping up with growth.

A director of the University of Georgia’s Center for Food Safety indicated to The Wall Street Journal that claiming the risk of another outbreak is near zero is: “really going out on a limb.”

We concur.

Supply chain risk mitigation is not a marketing exercise, it is rather a comprehensive plan addressing area of supply risk, internal process shortfalls or vulnerabilities, and action plans to resolve such risks.

We would instead offer one further recommendation to Chipotle. That would be weekly and monthly management updates on progress obtained in the mitigation of food safety risks both within each and every restaurant and within the supply chain. That is not marketing but rather management’s efforts to continually inform consumers as well as shareholders on what is being done and how progress is being measured and achieved. Restoring consumer trust in a badly damaged brand is not a marketing challenge. Now is the time for straight talk not marketing spin.

Bob Ferrari

© 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Supply Chain Matters 2016 Predictions for Industry and Global Supply Chains in Detail- Part Three

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We continue with our Supply Chain Matters series outlining in more detail, 2016 Predictions for Industry and Global Supply Chains. These predictions are provided in the spirit of assisting industry supply chain teams in setting management objectives for the year ahead as well as helping our readers and clients to prepare supply chain Supply Chain Matters Blogmanagement and line-of-business teams in establishing meaningful programs, initiatives and educational agendas.

The context for these predictions includes a broad cross-functional umbrella of supply chain strategy, planning, execution, product lifecycle management, procurement, manufacturing, transportation, logistics and service management.

Our predictions series includes a re-look at all that occurred in the current year, a reflection of future implications, and soliciting input from clients and other supply chain and blogosphere observers. Unlike others, we incorporate a lot of thought and perspective into our annual predictions and take the time to actually scorecard our annual predictions at the end of the year.

Readers are welcomed to review our complete listing of all ten 2016 predictions for industry and global supply chains.

In our Part One posting, we dived into Prediction One that addressed what industry supply chains should anticipate in global chain activity and Prediction Two, what to expect for inbound commodity and component costs as well as unique challenges for sourcing and procurement teams in the coming year.

Part Two of our in-detail predictions explored Prediction Three, turbulence and continued change in global transportation / logistics, and Prediction Four, the growing supply chain talent and skills gap requiring organizations to be more innovative and resourceful.

In this posting, we explore certain industry-specific challenges occurring in 2016.

2016 Prediction Five: Our Noted Supply Chain Industry-Specific Challenges

Each year when we publish our annual predictions, we include a specific prediction addressing what we feel will be industry-specific challenges dominating business and media headlines in the coming year.  In 2016, challenges will remain in B2C Online Retail, Commercial Aerospace, Consumer Product Goods (CPG) and Automotive industry sectors.  We have added a further 2016 industry challenge, that being current efforts to deploy more sustainable and health conscious agriculture and food based supply chains.

B2C and Online Retail

In 2015, global retailers continued to be challenged in emerging and traditional markets and in permanent shifts in consumer shopping behaviors. Industry CEO’s continue to openly admit that this is one of the most challenging eras for the retail industry. The byproduct of the late 2014 U.S. West Coast port disruption was retailers having a discernable overhang in inventories entering the 2015 fulfillment surge quarter.

While penning these predictions, the final online tally for 2015 is yet to be determined, but at the close of the 2015 Black Friday and Cyber Monday weekend, trending clearly points to a permanent shift in consumer sentiment towards online buying preferences in the order of double-digit shifts.  By mid-December 2015, reports began to reinforce that online orders were far more than originally anticipated with major parcel transportation provider FedEx and UPS networks falling behind in delivery commitments. Once again-finger-pointing among carriers and online retailers broke out as to which party exhibited accuracy of forecasting.

We predict more challenges for the retail industry in the coming year, unfortunately to include some high visibility bankruptcies. We also suspect that strategies to predominately route online orders to centralized customer fulfillment warehouses may have contributed to carrier network congestion because of the locations of these centers.

We believe that more integrated Omni-channel fulfillment capabilities will trump customer engagement Initiatives in 2016 in the ability to synchronize fulfillment execution with network-wide inventory policy and management with logistics and transportation cost implications.

Commercial Aerospace

Industry dominants Airbus and Boeing are both entering an unprecedented phase of ramping-up each of their individual global-based supply chains and ecosystems to make a dent in multi-year order backlogs over the next 3-4 years among new aircraft programs.

The implication for the commercial aerospace ecosystem is the ability to support a production cadence of nearly 100 per month or 1200 completed aircraft per year by 2019 with very little tolerance for disruptions or system component delays. That is a tall order for an engineered to order, high tolerance and quality centric industry eco system. The cracks were already showing in 2015 and there will be more in 2016. In June of 2015, key suppliers for both Boeing and Airbus were communicating their concerns about supply chain ramp-up plans and were urging the OEM’s to proceed cautiously.

We foresee a rather fragile commercial aerospace supply chain in 2016-17 with many increased risks and concerns. We expect the smaller industry OEM’s to be the primary victims of any supply disruptions.

Automotive Industry

Despite an improved economy and more optimistic consumers, the automotive industry continues to have its own unique set of challenges that will obviously extend into 2016.  An unprecedented level of industry-wide product recalls has taxed service management and repair parts supply chains which will overflow into 2016.  In 2015, the most visible driver was the ongoing series of recalls related to defective airbag inflators produced by supplier Takata that involved a multitude of global brands in 2016. The headline will shift to Volkswagen and its needs to address thousands of diesel-powered vehicles with illegal air pollution monitoring devices and software, which continues to impact the reputation of its brand.

Another concern for 2016 will center on China’s automotive sector where significant overcapacity amidst declining domestic demand will likely force more global exports.  GM is expected to import its first totally Chinese manufactured vehicle, a small SUV, into the U.S. market in 2016.

In 2015, initial buzz on the possibility of Apple getting the automobile business persisted. We concur with Fortune Magazine’s published prediction in November that Apple will likely buy Tesla to springboard entry into the industry as well as acquisition of a fully operating, vertically integrated supply chain.  If this occurs, it will be game-changing in the notion of a software company producing automobiles.  Google (Alphabet) is likely another potential player.

The bottom-line for the automobile industry in 2016 will be innovation in quality assurance, combined software and hardware innovation, alternative energy and Internet-of Things technologies. Automakers again run the risk of complacency in the current environment of unprecedented low prices of gasoline and diesel fuel, opting to promote higher margin trucks and luxury vehicles over those of more increased fuel efficiency and range. The theme for 2016 is which automakers spur more innovation and which focus on short-term profitability needs.

Consumer Packaged Food and Beverage Goods

Since 2014, we have included CPG in our industry-specific challenges for the coming year amid permanent changes in consumer tastes.  The year 2016 we be no exception, but this time, the stakes and the pain levels are far higher.

Consumers continue to shift their food shopping preferences away from traditional processed foods staples in favor of niche food providers that offer more perceived healthy foods containing natural and sustainable ingredients. This trend has become quite discernable and is reflected in financial results and negative growth now being experienced among many large and termed “Big-Food” global producers with iconic food brands. CPG firms continue to work frantically to create alternate choices either through acquisitions of up and coming natural foods providers, by developing new internal product creations, or both.

Declining profits and meager sales growth continues to spawn activist equity investors to influence certain CPG, food and beverage firms to consolidate.  We predict further M&A announcements in 2016, possibly involving blockbuster global brands. As a consequence, the industry is now consumed by zero-based budgeting and significant supply chain focused cost-cutting techniques.  Industry leaders and past veterans point to experiencing one of the most dynamic, challenging and disruptive periods ever seen in the industry.

In 2016, the winners or survivors will be those who can lead in product and process innovation and gut-wrenching transformation satisfy consumer preferences more healthy foods, while dealing with the significant distractions and de-moralization brought about by ZBB or other wide-ranging cost cutting initiatives. We further predict the food quality will suffer and there will be yet another uptick in highly visible food related product recalls in the coming year.

The True Organic, Green and Sustainable Food Supply Chain

We are adding this industry sector to our unique industry challenges in 2016.  Today’s consumers demand healthier food choices and more natural ingredients, are more interested in knowing where their food originated, the ingredients within food and how food is produced with sustainable methods. They are clearly holding well-known iconic food and restaurant brands accountable for increased commitment to this effort.

Throughout 2015, well known producers, food service providers and suppliers were compelled to respond. Brands such as Costco, Hershey, Kellogg, McDonalds, Nestle, Tyson Foods, Yum Brands and others have all embarked on initiatives directed at curbing the use of antibiotics in animals, artificial food coloring within food, and higher quality standards for suppliers. Yet, do consumers and providers realistically understand the significant challenges and timetables for these efforts?

There are clear realities to the challenges of this ongoing transition.  In April of 2015, The Wall Street Journal noted that the increasing need among consumers for more organic foods is literally: “hampering the growth of one of the hottest categories of the U.S. food industry.” Farmers, dairies and ranchers face significant costs and risks in attempting to convert from conventional to organic farming or animal production techniques. “While organic produce or livestock can command prices as high as three to four times that of conventional food, farmers generally have to sell their food at conventional prices during the transition.”

In other words, the entire food industry and respective shareholders need to come together in concerted efforts in 2016 and beyond to address realistic timetables and consumer expectations as to when true organic, green, sustainable and socially responsible foods will be available in adequate supply and at more affordable prices.  Providers and originators of meat, grocery and produce products will require financial incentives and economic resources to make such transitions over reasonable time periods.  The other obvious concern is food safety.  When massive scale methods are removed that focus on the use of harmful drugs, genetically modified methods of farming or raising animals in quicker time periods, what will be the near-term impact on food safety?

Thus in 2016 and beyond, all of the stakeholders associated with food supply chains need to move beyond press releases, marketing and rhetoric, and address a comprehensive set of plans, expectations, incentives and realistic timetables for when fully green, sustainable food supply chains will provide supply in the volume required to meet global needs, and in adhering to all required food safety standards.  We believe and anticipate that this will be an effort suited for global bodies and regulators such as the United Nations, World Health Organization or industry consortiums.  More overt actions and incentives need to come forward or these long-term commitments will slip even further.

Keep your browser pointed to Supply Chain Matters as we continue dive into each of the above 2016 predictions in more detail. In our Part Two posting we will explore Prediction Three- continued turbulence in global transportation and logistics, and Prediction Four- the widening of supply chain talent and skills gaps.

 

In the meantime, share your own predictions over and above those that we have outlined. Utilize the Comments section associated with this posting or email us directly with your predictions at: feedback <at> supply-chain-matters <dot> com.  We will share all contributed predictions in a final predictions of this 2016 series.

Bob Ferrari, Founder and Executive Editor

 ©2015 The Ferrari Consulting and Research Group and the Supply Chain Matters® blog.

Content appearing on Supply Chain Matters® may not be used by any third party without written permission of the author and our parent, The Ferrari Consulting and Research Group.

 


Supply Chain Matters 2016 Predictions for Industry and Global Supply Chains

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Once a year, just before the start of the New Year, our parent, the Ferrari Consulting and Research Group along with Supply Chain Matters provide a series of predictions for the coming year. These predictions are provided in the spirit of assisting industry supply chain teams in setting management objectives for the year ahead as well as Supply Chain Matters Bloghelping our readers and clients to prepare supply chain management and line-of-business teams in establishing meaningful programs, initiatives and educational agendas.

The context for these predictions includes a broad cross-functional umbrella of supply chain strategy, planning, execution, product lifecycle management, procurement, manufacturing, transportation, logistics and service management.

Our process includes a re-look at all that occurred in the current year, a reflection of future implications, and soliciting input from clients and other supply chain and blogosphere observers. Unlike others, we incorporate a lot of thought and perspective into our annual predictions and take the time to actually scorecard our annual predictions at the end of the year. Readers are welcomed to review our scorecard series of our 2015 predictions that occurred in late November.

In this initial posting, we will unveil our complete listing of our ten predictions for the coming year with summary descriptors. In subsequent postings spanning the remaining weeks of December we will dive further into each of our predictions. In early January, we will publish the complete Ferrari Consulting and Research Group research report, 2016 Predictions for Industry and Global Supply Chains that will incorporate all of our predictions along with even more details and supporting data related to each prediction. This report will be made available to all of our consulting clients and will further be made available for no-cost complimentary downloading in the Research Center of Supply Chain Matters.  Anticipate general availability in mid-January with an announcement on this blog.

Let’s therefore begin the process with the unveiling our ten 2016 predictions.

 

2016 Prediction One: A Year of Uncertainty and Continuous Challenges Related to Global Supply Chain Activity

Our first prediction related to global activity is that industry and global supply chains should anticipate another year of uncertainty in planning product demand and supply needs on an individual geographic region or country basis.  From our lens, there will be a need for lots of contingency and various scenario planning options, and sales and operations planning will be very engaged and challenged throughout the year to meet expected business outcomes.  Even more production overcapacity across China’s industry sectors will add to downward global pricing pressures affecting specific industry supply chains.

 

2016 Prediction Two: Favorable Outlook for Inbound Component and Commodity Costs but Procurement Teams Need to Step-up Supplier Management

Global commodity prices, the raw-material of industry supply chains, declined sharply during 2015.  The World Bank’s Commodity Markets Outlook published in October 2015 generally called for slightly higher non-energy commodity prices in 2016 including categories of Agriculture, Raw Materials, Fertilizers Metals and Minerals. We believe that may be too optimistic and that continued overcapacity will drive inbound prices generally lower. The most significant commodity price trend remains that of oil, as the price of crude oil has reached seven year lows amidst of global glut of supply and little demand growth.

Due to the uncertainty and the heightened supply risks expected in 2016, procurement teams will need to re-double their efforts focused on supplier assessment and monitoring.

 

2016 Prediction Three:  Turbulence and Continued Change Surrounds Global Transportation and Logistics

As we enter 2016 we are once again compelled to predict another year of turbulence and continued change surrounding global transportation and logistics with particular emphasis in the third-party/fourth-party logistics, global ocean container and air freight segments. We are predicting more consolidation and mergers to occur among ocean container shipping lines and one North America based rail merger to occur in 2016.

 

2016 Prediction Four: Widening of Supply Chain Talent and Skill Gaps Will Require Organizations to be More Innovative and Purposeful in Recruitment, Career Planning and Training Efforts

We predict that the existing widening skill gaps will compel industry supply chain executives to be more creative and purposeful in recruitment and training. That includes facing the realities of competitive compensation and purposeful career planning for individuals. We expect organizations and recruiters to more broadly define supply chain related jobs in skill dimensions and in expected performance parameters for both current and future organizational needs. Individuals who possess required cross-functional hard and soft skills, including in-depth technology prowess will continue to experience a seller’s advantage.

 

2016 Prediction Five: Noted Supply Chain Industry-Specific Challenges

In 2016, challenges will remain in B2C Online Retail, Commercial Aerospace, Consumer Product Goods (CPG) and Automotive industry sectors.  We have added a further 2016 industry challenge, that being current efforts to deploy more sustainable and health conscious agriculture and food based supply chains.

 

2016 Prediction Six: Certain Industry S&OP Processes Will Morph to Broader Forms of Integrated Business Planning and Product Management.

The term integrated business planning is often depicted as a specific technology vendor term but in reality, it is a desire that all functions of a firm are aligned at a single set of financial, business, supply chain and operational outcomes.  As multi-industry business challenges continue in speed and complexity, S&OP processes will need to foster more agility to effectively deal with change. In 2016 we anticipate that certain S&OP teams, those experiencing high levels of value-chain complexity and business change, will begin to morph S&OP process and decision-making with broader information and contextual decision-making components and begin to identify and address obstacles for incorporating key information integration from product management and financial systems.

 

2016 Prediction Seven: Internet of Things (IoT) Initiatives Continue to Dive into Realities of Line of Business Strategy and Deployment

In 2016, we anticipate that B2B focused manufacturers and services providers will broaden their perspectives on connected devices and services, especially in the notions of the realities for being a software-driven vs. a hardware-driven enterprise. That includes leveraging intellectual property and software knowledge into more innovative products and services that result in new revenue streams. Thus, the value of products will increasingly be defined by the embedded sensors, software and consequent added services that products provide for customers.

 

2016 Prediction Eight: Geopolitical Developments Centered on Global Trade Agreements Will Present New Concerns and Challenges for Specific Industry Supply Chains.

Details of the recently adopted Trans-Pacific Partnership will continue to unfold in 2016 while individual sponsoring countries undertake the process of ratification. As TPP details emerge, industry supply chains will begin to uncover certain strategic and tactical impacts related to current global sourcing strategies. China will continue to drive and influence its One Belt, One Road (OBOR) initiative placing additional political and specific industry pressures on certain TPP participants. Industry supply chain teams will thus be caught in the middle of geopolitical pressures and forces in relation to pending strategic sourcing or value-chain design strategies.

 

2016 Prediction Nine: Alibaba and Amazon Will Expand Their Presence in Customer Logistics Fulfillment.

There are stronger indications that online giants Alibaba and Amazon will expand their presence in last-mile customer fulfillment. Increasing transportation rates and surcharges from both FedEx and UPS in 2015, and in the coming year, make this prediction more viable for the most influential online retailers as well as more evidence pointing to such capabilities.

 

2016 Prediction Ten: A High Visibility Supply Chain Snafu or Event with Business Implications

This is a prediction that we are obviously reluctant to publish for readers and clients. However, our observation of industry supply chains being whiplashed with unprecedented business change and growing global chain risks leads us to this prediction.

 

Keep your browser pointed to Supply Chain Matters as we dive into each of the above 2016 predictions in more detail. In the meantime, share your own predictions over and above those that we have outlined. Utilize the Comments section associated with this posting or email us directly with your predictions at: feedback <at> supply-chain-matters <dot> com.  We will share all contributed predictions in a final predictions of this 2016 series.

Bob Ferrari, Founder and Executive Editor

©2015 The Ferrari Consulting and Research Group and the Supply Chain Matters® blog.

Content appearing on Supply Chain Matters® may not be used by any third party without written permission of the author and our parent, The Ferrari Consulting and Research Group.


The Dow Chemical and Dupont Merger Has Obvious Massive Implications

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The biggest news last week and perhaps for all of 2015 was the announcement that long-time rivals Dow Chemical and DuPont‘s intend to merge into a specialty chemicals giant of more than $120 billion.  There are stated plans to split both enterprises into three separate companies providing different specialty chemical based product offerings.

This proposed deal has obvious massive implications.

Saturday’s edition of The Wall Street Journal carried the headline that this deal cements activists’ rise. A profound quote of that article stated:

While they (activists) have become increasingly powerful in recent years, forcing companies to do everything from buying stock to selling assets, their ability to help bring about such a monumental deal represents a new high.

Today, the WSJ further described long-simmering hostilities between Dow CEO Andrew Liveris and activist investor Daniel Loeb which reached a boiling point this weekend after the announcement on Friday. Loeb apparently declared that this deal was too rushed, and called for Liveris’s resignation.

In October, former Dupont CEO Ellen Kullman suddenly resigned after fending off one of the most prominent wave of activist investor assault on a corporate board. Kullman was succeeded on an interim basis by board member Edward Breen while the company searched for a permanent replacement. Breen, whose resume includes being Chairmen and CEO of Tyco International worked with Dow CEO Andrew Liveris to orchestrate this deal.

Our Supply Chain Matters initial perception is that the announced deal provides a significant new and scary watershed as to the degree of influence that activists portend to have on corporate CEO’s. That is qualified, however, as to whether government regulators would allow this deal to go through given the significant implications. Analysts at Piper Jaffrey were quoted as indicating: The global natures of the antitrust hurdles are likely to be significant.”

The National Farmers Union (NFU) has already expressed its frustration for yet another enormous merger. NFU President Roger Johnson declared: “Having just five major players remaining in the marketplace would almost certainly increase the pressure for remaining companies to merge, resulting in even less competition, reduced innovation and likely higher costs for farmers.  This announcement, combined with the on-again-off-again Monsanto/Syngenta merger, is creating a marketplace where farmers will have very few alternatives for purchasing inputs.” The National Corn Growers Association declared it will do all it can to protect farmer interests and preserve an open and competitive marketplace.

Do not be surprised to read of other such declarations.

Since both of these global companies supply materials at the lowest echelons of many different industry supply chains, this proposed merger has significant internal and external implications from many industry value-chain supply dimensions.  These will unfold over the coming days and weeks and will likely take on market, technology and human resource dimensions, since the cost and the scale of this merger is momentous and far-reaching. How long the regulatory approval process actually occurs is likely anyone’s guess.

One thing is certain however, the specialty chemicals industry has reached a watershed moment, one that will likely redefine industry players and their associated supply chains for many years to come.

Bob Ferrari

 


Grocery Manufacturers Launch SmartLabel Program to Address Supply Chain Transparency

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This week the Grocery Manufacturers Association (GMA) announced what was described as an  innovative SmartLabel™ technology that will enable consumers to have easy and instantaneous access to detailed information about the supply chain origin of thousands of products.  According to the announcement, more than 30 major companies are already committed to taking part in this transparency initiative.

The initiative enables consumers to get additional details about products by either scanning a bar code with a mobile device or performing an online search to reach a landing page with information on ingredients and other attributes of a wide range of food, beverage, pet care, household and personal care products. Each individual product in SmartLabel will have a specific web landing page containing detailed product information from the associated manufacturer.

GMA initiated the Consumer Information Transparency Initiative (CITI) as a collective  industry response to the consumers’ growing need for additional information about the products they use and consume. SmartLabel is the consumer-facing piece of this initiative, which will allow the shopper to access accurate, detailed and consistent information about nutrition, ingredients, allergens, product advisories, and brand information in a simple, digital format.  The technology not only provides consumers access to information, but it also creates  a mechanism for industry to provide answers to questions that might arise in response to events.

Current projections call for 30,000 participating products by the end of 2017. According to the GMA, within five years, 80 percent of the food, beverage, pet care, personal care and household products will be utilizing SmartLabel.

Supply Chain Matters applauds members of the GMA for undertaking this broad technology initiative. We have also made our readers aware of other smart labeling technology starting to make its way into specific industry supply chain environments.

However, the real value to this program rests with providing consumers with up-to-data and accurate information regarding products, including their origins and composition.  One of the more controversial aspects related to such technology is the disclosure of and genetically modified (GMO) ingredients, which is a rather important topic for some consumers. Producers themselves need to insure that information is current and transparent, since consumers will likely discredit such a program without meaningful and timely information presented.

 


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