Despite Empty Shelves, Supply Chain Is Still Strong

Despite Empty Shelves, Supply Chain Is Still Strong

April 15, 2020

The pandemic has spotlighted several issues in the food supply chain.

The hallmark of a good supply chain is to plan on disruptions and build in redundancies in the network.  The current spike in demand could lead grocery stores to increase capacity that may not be needed when the pandemic ends.  Without careful management and communication, it’s a potential example of the bullwhip effect.

In addition, the health of farm workers upstream in the supply chain is a major concern, the longer the pandemic lasts.


Video Spotlight: 


This post is based on the CNN article, How grocery stores restock shelves in the age of coronavirus, by Danielle Wiener-Bronner, March 20, 2020, and the YouTube videos in the Spotlight. Image source: Getty Images/iStockphoto.

Discussion Questions:

1. How would you mitigate the bullwhip effect for paper towels?

Guidance: This is a good time to review the bullwhip effect.  Students likely have been to a grocery store where certain items may Continue reading

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The Billion Dollar Brand Club Is Disrupting the Basics

The Billion Dollar Brand Club Is Disrupting the Basics

The founders of Dollar Shave Club, Harry’s, and other direct-to-consumer start-ups adopted razor-sharp strategies.

They focused on consumers’ simple needs and disrupted the old adage “You get what you pay for.” They fearlessly lured customers away from giant corporations’ established brands and succeeded. Their strategy was to offer quality, basic products at much lower prices than the competition’s and connect directly with their customers. However, for all start-ups, easy market entry with a catchy video on a Web site is both an opportunity and a threat: it helps achieve rapid success while leaving the door wide open to other daring, new competitors.


Video Spotlight: The Dollar Shave Club Video that Started It All


This post is based on The New York Times article, They Changed the Way You Buy Your Basics, by L. Ingrassia, January 23, 2020, and the YouTube video, DollarShaveClub.com – Our Blades Are [Expletive] Greatby Dollar Shave Club, March 6, 2012. Image source: Shutterstock / Oksana Kuzmina.

Discussion Questions:

1. In your opinion, what are the competitive priorities emphasized in Dollar Shave Club’s operations strategy? Distinguish between order winners and qualifiers.

Guidance: Review cost, quality, delivery and flexibility. To beat the competition, Continue reading

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CostCo Vertically Integrates to Manage Rotisserie Chicken

CostCo Vertically Integrates to Manage Rotisserie Chicken

October 24, 2019

Costco is planning to vertically integrate by owning production of 40% of its rotisserie chicken supply chain.

Vertical integration is an effort to keep the price at $4.99 to attract customers.  The issue is that the main chicken suppliers are producing fewer whole birds, down from 50% of the supply in the 1980s to just around 15% of the supply today.

Bird size has also increased as the demand for chicken has increased.  Most whole chickens today are too big to fit on the Costco rotisserie production equipment.  Costco needs 6 pound birds and the typical whole chicken is now 7-8 pounds from suppliers.

Costco can control the size of the bird and plans to cut costs per bird by 35 cents by developing their own poultry complex.


Video Spotlight: This Is Why Costco Only Charges $5 For A Rotisserie Chicken


This post is based on the CNN article, Five things to know about Costco’s $4.99 rotisserie chickens, by Nathaniel Meyersohn, October 14, 2019, and the YouTube video, This Is Why Costco Only Charges $5 For A Rotisserie Chicken, by Mashed, February 5, 2019. Image source: Uwe Starke/Image Source

Discussion Questions:

1. After reading Continue reading

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