Heated Issue in Sriracha Supply Chain

Heated Issue in Sriracha Supply Chain

August 19, 2019

Tensions now run hot between Sriracha producer Huy Fong Foods and Underwood Ranches, the largest domestic source of the fresh jalapenos that are the main ingredient in the Southeast Asian sauce.

In the past, Underwood produced 100 million pounds of peppers per year on California farmland for Huy Fong.

The model worked this way: Underwood estimated the cost of the upcoming year’s harvest, Huy Fong Foods fronted the money and assumed the risk, and at the end of each year the two companies settled up.

After 28 years of business and friendship, issues arose and the relationship deteriorated.  Fong sued Underwood for not repaying a $1.5 million overpayment for the 2016 harvest season.  While the jury awarded to Fong, it concurrently gave Underwood Ranches $10 million in punitive damages and $14.8 million for contracts lost over the next two years when Huy Fong sourced its peppers elsewhere. 


Video Spotlight:


This post is based on the Modern Farmer article, Sriracha and Its Pepper Farmer Are Mad at Each Other, by Dan Nosowitz, July 23, 2019; the San Gabriel Valley Tribune article,  Continue reading

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Nike Withdraws Betsy Ross Flag Sneaker from Market

Nike Withdraws Betsy Ross Flag Sneaker from Market

August 4, 2019

Nike has withdrawn their Air Max 1 Quick Strike Fourth of July shoe.

The shoe features an early U.S. flag, commonly referred to as the Betsy Ross Flag.  Nike decided to pull the shoe from the market after Colin Kaepernick expressed concerns about what the Betsy Ross flag represented.

The shoes were already in retail stores in anticipation of the July 4th holiday sales.  A handful of these shoes had already been sold.


Video Spotlight:  Nike pulls ‘Betsy Ross flag’ sneakers after Colin Kaepernick steps in


This post is based on the NBC News article, Nike Pulls Betsy Ross Flag Shoes after Kaepernick Complaint, Report Says, by Ben Kesslen, July 2, 2019, and the YouTube video, Nike pulls ‘Betsy Ross flag’ sneakers after Colin Kaepernick steps inby CNBC Television, July 2, 2019. Image source: Library of Congress, Prints and Photographs Division (LC-USZC4-2998).

Discussion Questions: 

1. With the shoe already in stores, what operations management issues have arisen with Nike’s decision to withdraw the shoes?

Guidance: Immediately, Nike needs to retrieve the sneakers from the stores.  There is an added problem in that there are Nike Shoe collectors, and Continue reading

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Surviving Tortillapocalypse

Surviving Tortillapocalypse

August 1, 2019

We survived the Tortillapocalyspe.

The first half of July 2019 brought supply chain shortages to Taco Bell, as the company ran out of 10 inch tortillas at several restaurants.  The shortage impacted the availability of burritos and quesadillas.

The shortage expanded nationwide. While we don’t have specifics on the root cause, they cited “supplier shortages”.

Taco Bell reported the problem was resolved by mid-July for most locations.


Video Spotlight:  Tortilla Trouble! Taco Bell Reportedly Suffering from a Tortilla Shortage


This post is based on the Daily Mail article, Taco Bell Warns Of Wrap Shortage As Staff Brand It The ‘Tortillapocalypse’ And Say It Could Hit Restaurants Across The U.S., by Ross Ibetson, July 3, 2019; the Food and Wine article, Taco Bell Confirms ‘Tortillapocalypse’ Is Real, Recommends Gorditas Instead, by Mike Pmranz, July 3, 2019, and the YouTube video, Tortilla Trouble! Taco Bell Reportedly Suffering from a Tortilla Shortageby b/60, July 3, 2019. Image source: cokemomo/123RF.

Discussion Questions: 

1. What steps should Taco Bell take to handle this type of shortage?

Guidance: Obviously, Taco Bell needs to react to this shortage and get tortillas to their restaurants as soon as Continue reading

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