Chocolate: The Road to Luxury


For all of you chocolate lovers out there beware: there may be a flaw in Western chocolate manufacturers’ supply chain management of cocoa. Productivity is not at the levels it needs to be to satisfy manufacturers and consumers. To better put this into perspective, Mars has found that if the levels of productivity remain the same as today, by the year 2020 there would be a shortage of 1.1 million tons of cocoa. If this occurs and current productivity levels of cocoa trended into the future, the cocoa farming business will not be headed in a promising direction.

The disconnect lies within cocoa faming itself. There is little incentive for cocoa farmers to continue in their line of work because of the competitive rubber industry. It is considered a less uncertain industry with a longer crop season by about four months. On top of this, the wage for both types of farming is roughly the same.

The other constraint of the industry is the high risk for disease outbursts. This is partly due to the inadequate access of much needed fertilizers for the cocoa crop.

Cocoa-farmers do not come anywhere near the crop’s capacity since their utilization is only around 60%. Cocoa manufactures have recognized the scarcity as a sincere problem since in many growing areas more than 40% of the cocoa crop is destroyed due to vermin and disease.  One would hope that this type of scarcity could be due to assignable variation that can be improved by subtracting bad causes.

How would you react if chocolate turned into a luxury good instead of an affordable snack due to flaws in the supply chain management?

Chocolate manufacturers are looking to provide solutions for productivity in the cocoa-farming realm. Many companies like Mondelez and Mars have invested millions in education programs in hopes to increase productivity and decrease disease-ridden crop. Mondelez has gone as far as hiring students from universities for these cocoa programs to target efforts toward younger generations. This seems to be an efficient approach, given the fact that peer motivation is a convincing form of motivation.

Another potential solution was Ivory Coast’s decision to set a price minimum for cocoa. This was an astonishing action that stresses how essential cocoa farmers are in the industry.

It is hard to believe that the issue has gone this far. In my opinion, action should have been taken much sooner. The uphill battle is much worse now that efficiency levels have sunk so far below maximum capacity.

Do you think that these efforts put forth by chocolate manufacturers will be enough to save the chocolate industry?

What else can be done to improve the supply chain management and productivity in the industry?

Have you noticed any other flaws in the cocoa/chocolate industry besides the supply chain management?

Which action will have a greater affect on the industry: a price minimum or cocoa farming education programs?


FIRE! Honda Recalls Almost 1.4 Million Automobiles,0,7115867.story


Safety issues have been a huge problem for Honda this week. This car company recalled around 1.4 million Honda Civics, Accords, and Pilots. The most resent account being this past Saturday. 268,000 CR-V sport-utility vehicles from the year 2002-2006 where recalled due to faulty automatic window switches, the specific cause of production variation. This assignable variation was recognized by Honda due to malfunction and the potential to start a fire. The problem with these vehicles was not discovered until 6-10 years after the manufacturing of the vehicle. I find it odd that these problems were not detected earlier. Honda said that rain or liquids that may enter into the driver’s window, dripping onto the power window switch is what is causing the problem. A constant exposure over time can “cause electrical resistance in the switch, making it overheat, melt and cause a fire.”

This is just the most resent recall of Honda vehicles. They are having problems in their manufacturing across three different lines produced from 2002-2006, so their system is not stable. This is not something that I would expect from a trusted automotive manufacturer. The continuation of recalls is going to make people doubt Honda vehicles. Since the assignable variation is a problem among multiple models throughout five years it will be a hard blow for Honda to bounce back from. With the massive amounts of vehicles being recalled by this automotive company, they are not upholding the quality that their customers expect. Honda needs to reevaluate their system in order to identify the cause of these multiple problems. Was it a manufacturing problem due to faulty machinery? Will the problem persist in new model Hondas but just has not been identified yet? These are questions that I have myself as a consumer; ultimately lowering my quality perception of Honda.

An expanded March recall of Civic sedans with wiring problems in the headlight switch was also announced; along with CR-V small SUVs and Pilots that have the same problem. Some models of the Accord where also recalled in order to fix leaking power steering hoses which could cause fires. This problem won’t be addressed until early 2013 because Honda does not have enough parts to fix such a large number of vehicles. Instead, notice has been sent to Accord owners telling drivers who experience symptoms of the problems to go to the dealership for repair. The smell from seeping fluid is the most common symptom reported. Do you think this is an acceptable way for Honda to handle their manufacturing flaws? Is there a more effective way to handle the matter?