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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Poaching Constrains Supply of Elvers

Poaching Constrains Supply of Elvers

The supply chain of baby eels, called elvers, is facing tighter controls from Elver Fishery in Maine to Eel Dish in Japan.

The root cause? Illegal poaching.  A pound of elvers goes for more than a thousand dollars.

State law enforcement officers will oversee the weighing, packing and shipping of the eels to ensure elvers are legally harvested from participating fishermen within a quota of 9,688 pounds per fishery.


Video Spotlight: Poaching Threatens Maine’s Eel Fishing Industry


This post is based on the Washington Post article, New controls in Maine to prevent poaching of valuable eels, by Patrick Whittle, February 22, 2019, and the YouTube video, Poaching Threatens Maine’s Eel Fishing Industry, by AP, August 12, 2017. Image source:(c) Erica Simone Leeds

Discussion Questions:

1. Identify the unethical and illegal behaviors spotlighted in Maine’s baby eel supply chain.

Guidance: Examples of unethical and illegal behavior include poaching eels from rivers and streams, exporting poached eels to Asian aquaculture companies, exceeding eels quotas to profit from illegal sales, and tampering with eel shipments to bypass the state’s tracking system. Each of these behaviors is illegal, but student discussion can also focus on ethicality.

2. What steps Continue reading

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Weather Stopped Beer Delivery With Super Bowl Looming

Weather Stopped Beer Delivery With Super Bowl Looming

February 11, 2019

Several beer distributors in the Milwaukee, Wisconsin area stopped delivery of their products on Wednesday, January 30, 2019.  With extremely cold weather in the area, many organizations shut-down for the day, including several beer distributors.  Many of the beer distributors decided that it was unsafe for their delivery drivers to be out in the extreme cold.  Additionally, their products don’t handle cold weather well.

Bad timing, with the Super Bowl only 4 days away, but winter weather shows no mercy for kickoffs.

This post is based on the Journal Sentinel article, No beer deliveries in Milwaukee today. Thanks a lot, Mother Nature, by Kathy Flanigan, January 30, 2019. Image source: Getty Images/iStockphoto.

Discussion Questions:

1. What operational problems does a shutdown present?

Guidance: Unexpected disruptions in the supply chain are difficult.  With the Super bowl approaching, beer distributors want to have the store shelves full of their product.  However, cancellations occurred in a relatively short time period.  If they had substantial warnings of the impending cold, distributors could have made extra or larger deliveries before the temperatures forced a shut-down.  Weather forecasts can be unpredictable, making it difficult to anticipate such Continue reading

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