-
Essay / The first part of the supply chain for General Mills Inc.
There are many functional parts within a company that manufactures consumer goods. Departments such as sales, finance, accounting and marketing are at the forefront of consumers' and professionals' minds. However, there is one aspect of business that is at the forefront of every successful manufacturer and that is a well-managed supply chain. Supply chain is the coordination of activities within a manufacturing process starting with the supply of raw materials and ending with a satisfied consumer. This article will focus on the first part of General Mills Inc.'s supply chain, the sourcing of one of its most sought-after ingredients, raw cocoa. Ethical Sourcing, The beginnings of a successful supply chain strategy begin with an organizational culture that fosters ethics from within. “From purchasing to selling and in all facets of a business in between, if there is a strong ethical culture, a company can better avoid conflicts of interest, lack of professional competence, reciprocal agreements inappropriate relations between buyers and sellers and ethics within the supply chain” ( Heizer 448). Many different factors are present in the sourcing of raw cocoa, and because General Mills does not purchase directly from producers, it is imperative that the extensive research into the production of their ingredients adheres to good ethical standards and practices. “As with many priority products around the world, cocoa production is not always good and, in countries like Africa (where 40% of global cocoa trade comes from), it is equated with trade in conflict diamonds, more commonly known as blood diamonds. » (Riggs). General Mills has implemented what it calls the Supplier Code of Conduct, and they will not tolerate the use of paper in the middle. This highlights the need to evaluate the location of suppliers as well as their environment. When evaluating suppliers, it is important for General Mills to determine that “a potential supplier is or could be an International Cocoa Organization (ICCO) certified producer” (Anga). If supplier quality is poor, the rest of the supply chain will suffer and efforts will be wasted. General Mills must then choose how the supplier will be integrated into its system, and the buyer must ensure that the supplier has an appreciation of quality. “General Mills will benefit from a cost-based negotiation strategy because it forces the supplier to show its books to the buyer. From there, the buyer will draft contracts that specify the terms, boundaries and conditions of the relationship so that each party involved shares the same benefits and risks” (Heizer 443).