CSR is Practice – Chipotle Runs Out of Suppliers With Capacity

As is common in many "sustainable" and "diverse" areas in procurement (they are often grouped together and managed by the same director), it is hard to find suppliers with capacity. This is an evergreen topic among all supplier diversity professionals – how to get small and diverse firms to scale. Suppliers need capacity if they want to work with Fortune 500 firms looking to maintain a consistent customer experience nationwide.

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Chipotle has already found this out with its beef. In 2013, the company "was forced to begin serving ‘conventionally raised beef,’ after it became clear that there was no longer enough antibiotic and hormone free beef to go around," The Washington Post reported. And now, Chipotle has pulled pork from the menu at 600 of its restaurants across the country – not because of trichinosis outbreaks, but because of supplier practices.

Paul Shapiro, vice president of farm animal protection for The Humane Society of the United States, recently told The Associated Press that farms that raise pigs outside of gestation crates still represent a "very small portion of the pork industry." In other words, just about all pigs raised for meat spend their entire lives in gestation crates.

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Clearly, the sourcing and procurement process at Chipotle is broken. If, per The Humane Society quote above, the industry operates almost entirely as the image above shows, and this animal farm life is so objectionable to Chipotle's core values, this should have been discovered long ago.

It is more likely that procurement bought the meat, no questions asked, and then some animal activist group caught wind of this and cornered Chipotle executives during or prior to an analyst briefing. At that point, decisions were rapidly made to pull this product line, so as not to impact the company’s valuation. A great example of free market change – even if it likely took some backdoor pressure to pull off, it is a response to market forces.

Takeaways

Stakeholders should clearly have been allowed to weigh in early enough in the sourcing process so that these 11th-hour emergency measures could have been avoided.

Supplier lifecycle management tools – with extensive workflow around onboarding – are great to ensure that all steps critical to meet performance goals are met before the first PO is cut. If one of the stakeholders is The Humane Society, allow them to weigh in on your procurement practices! Same with analysts – let them see your process. If this is what you hang your shingle on, put it out in public.

Work with credible third-party sustainability organizations to drive adoption where applicable among your suppliers. Companies like Ecovadis have many-to-many certification solutions where suppliers don’t have to jump through the same hoops more than once per certification period – consider scalable solutions like this.

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