Sustainable Sourcing in the Cocoa Supply Chain

October 13, 2018
Sustainable Sourcing in the Cocoa Supply Chain

Mars Wrigley Confectionery is planning to spend $1 billion over 10 years to ensure responsible sourcing of its cocoa supply by 2025.  Mars and eleven other cocoa buyers are working to increase  sustainable business practices for cocoa farmers in a responsible manner.

The plan is to use GPS mapping to insure cocoa supplies do not come from protected rain forests and to work directly with farmers to increase productivity and find ways to increase their income.

Fifty percent of Mars’ cocoa is currently certified by Rainforest Alliance and Fairtrade.  Mars wants to do more to improve the lives of farmers by paying more for responsibly sourced cocoa.  The company will also work with communities and governments to combat child labor practices.

A key issue is that cocoa production has been dwindling over the last decade in part due to farmers’ low income. Cocoa buyers fear that farmers will turn to more lucrative cash crops and further reduce the supply of cocoa.

This post was co-authored by David Little, Ph.D., and Anita Lee-Post, Ph.D.  It is based on the Supply Chain Dive article, Mars will invest $1B to fix ‘broken’ cocoa supply chain, by Emma Cosgrove, September 20, 2018; and the Reuters article, Mars aims to tackle “broken” cocoa model with new sustainability scheme, by Ana Ionova, September 19, 2018. Image source: sgoodwin4813/123RF.

Discussion Questions:

1. What can Mars do, in addition to the article’s strategies, to reduce risk in its cocoa supply chain?

Guidance: Students should consider vertical integration as one strategy to reduce supply chain risk.  The pros and cons of vertical integration will promote initial discussion.  The next question could be to ask students to consider alternatives to cocoa in chocolate production to include some internet searches.  If the consensus is that cocoa cannot be replicated or replace, students should see if other regions of the world of suited to cocoa farming.  The result of the discussion should be that students can better understand scarcity of some global supplies and how this impacts business strategy.

2. What are the limitations of a GPS tracking system for Mars?

Guidance: Review GPS technology briefly and then have the students consider how Mars can best use the technology.  What will Mars do with the information if a suspected cocoa supplier has farmed in protected rain forest lands?  How will Mars know exactly where the cocoa comes from?  Is there a better way to monitor suppliers than GPS for Mars to consider?  Could drones serve a purpose here or not?

3. Why is responsible sourcing important to Mars?

Guidance: Mars wants to operate its cocoa sourcing in ways that address issues of deforestation, employment of child labor, and poverty.

4. In what way does Mars operate a sustainable supply chain?

Guidance: The cocoa is sourced in areas that are certified to prevent environmental degradation.  The farmers involved in cocoa production are paid a premium to improve their lives and use no child labor.  Strategies for long-term sustainability include working with governments to improve infrastructure, and investing in farming families and suppliers to boost productivity.


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