Supply Chain Management at CliffBar
From the beginning, CLIF BARs were made from wholesome
ingredients. Yet as Erickson looked at the ingredients being sourced for CLIF
BAR, he realized that making a healthy food product and sourcing ingredients
from farmers, ranchers and cooperatives using organic growing
techniques was a "natural" fit. The company made a
commitment to both sustainable growing techniques and using only organic raw
ingredients back then, and by 2003, had made CLIF BAR 70 percent certified
organic. Since then, six of Clif Bar & Company's CLIF and LUNA brands are
now made with 70 percent organic ingredients or more. The
impact on the supply chain for sourcing organic ingredients is tremendous.
First, there is a limited—but growing—number of organic growers for the
ingredients Clif Bar uses. Second, growers who do not use pesticides,
herbicides
and genetically modified plants are sometimes at risk of
producing lower crop yields. Third, it can be more costly to store the
ingredients. And fourth, as more companies commit to environmentally
responsible programs and organic ingredients, competition is great for the
available global
supply. The company's forecasters and planners work hard to
manage both the raw ingredient inventory flows from upstream suppliers, and the
finished goods flows to downstream customers, to be sure products are available
in the right quantities and right locations. Spending on raw
materials and packaging materials is aggregated to provide
efficient sourcing efficiency. Production is planned, based on both input and
output forecasts, to maximize customer service and minimize inventory. Several
times a year, production plans are shared with business partners at all
points of the supply chain to make sure the flow of
ingredients and products is smooth, and that inventories do not accumulate at
any point in the supply chain beyond planned volumes. Monthly forecasts and
changes to plans also are communicated to all supply chain partners. Clif Bar
&
Company managers know that consumers' tastes for products
change regularly, so new flavors and brands are periodically introduced into
the various brands. Likewise, flavors are sometimes retired to make room for
new ones. As the company's research and development team prepares to
move a new product idea from the test kitchen to the
manufacturing plant, supply chain managers must get to work assuring any new
ingredients can be procured. As a smaller and privately-owned company, Clif Bar
does not own its manufacturing plants and distribution centers, and relies
on contractual agreements with outsourcers in the United
States. These supply chain business partners are carefully chosen for their
ability to manufacture and distribute Clif Bar's products, their commitment to
quality, and their alignment with Clif Bar's own value system. This value
system, referred to as the company's "Five
Aspirations," holds that Clif Bar & Company will work toward
sustaining its people, brands, business, community, and the planet. Greg
Ginsburg, Vice President of Supply Chain, wants to be sure all parts of the
supply chain owned or not—are in
agreement with these aspirations. "We look at their
energy sourcing, labor practices, and workplace environments. And where we
source products from small cooperatives, we'll go as far back as possible to
assure those tiny growers know about our expectations," says Ginsburg.
QUESTIONS
1. What type of supply chain does Clif Bar & Company
have? Efficient,
responsive, or a combination of both? How can you tell?
2. What business risks does Clif Bar & Company face with
so many parts
of its supply chain outsourced?
3. What issues or risks could Clif Bar & Company
encounter if it chose to
expand to international markets?
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