Wednesday, April 29, 2015

Chipotle's Sustainable Supply Chain

Creating shared value is a concept designed to help businesses focus on bigger societal needs and concerns. It is easy for a business to just focus on profits and not worry about the external affects on the world.  The idea that profit can be combined with social good is still uncharted territory. However, more and more businesses are seeing the benefit of creating shared valued with community and local businesses. If done strategically, not only will profits increase for the business but they can have a positive effect on the economy and society.  Chipotle is one business that managed to combine profits with social good.

Founded in 1993, Chipotle set out to give Americans “fast casual.” One of the main missions of the company was to create what they call a sustainable supply chain[1]- one that uses natural ingredients from local farmers. Creating this type of supply chain has been a bit challenging for the company. Based on the article, Creating Shared Value, there are a number of steps that Chipotle could use to enhance their value chain and reach their goal of creating shared value.

Chipotle works with local and regional farmers to provide their restaurants with quality natural produce and meats. What began with as a single partnership has spawned a network of distributors that provide produce to locations across the country. To continue this trend, Chipotle must work to enable local clusters. One way to potentially do this would be to invest in farm equipment and growing techniques. This type of investment could help fill in the gaps that hindering productivity and move Chipotle one step closer to realizing the company’s goal of having more mid-size farms in the United States. [2]

The enabling of local clusters is directly linked to procurement. Chipotle may consider following Nestlé’s approach by establishing local facilities to inspect the produce from the farmers. This approach yielded more money for both Nestlé farmers and the company. This type of arrangement could help Chipotle manage their current image problem, as they have recently come under attack for their stance on GMOs. While the company has stated they will not use any products with GMOs, this approach would reinforce that statement with action, and allow the company to say they are on-site and know with certainty that their food does not contain GMOs.

Finally, Chipotle can continue to refine their resource use. Currently, Chipotle recycles in stores with separate bins for plastic, paper and trash. Further refinement of this initiative combined with other environmentally friendly initiatives would save the company money and continue to enhance their image as being “fresh” and “natural.”

Overall, in order to achieve its sustainable supply chain Chipotle needs to keep working with its suppliers and investing in the improvement of the supply chain.  By investing now, Chipotle will yield greater returns in the future and contribute to the greater American economy. With the proper resources, Chipotle could change the way the food industry does business.

[1] Streeter, April. "North America Case Study 3: Chipotle Mexican Grill – Fast Casual Sustainable Chain." Ethical Corporation. March 6, 2014. Accessed April 28, 2015.

[2] Streeter, April. "North America Case Study 3: Chipotle Mexican Grill – Fast Casual Sustainable Chain." Ethical Corporation.            March 6, 2014. Accessed April 28, 2015.      chipotle-mexican-grill-%E2%80%93-fast-casual-sustainable-chain

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