I can’t recall
anybody saying NO to “Maggi”, a ready-to-eat noodles brand in India. I remember
eating “2- Minutes Maggi”, when our hostel mess used to be closed on account of
summer vacation and now I see my children savoring its taste with pleasure. Its
recent advertisement campaign ‘Meri Maggi – 2 minutes mein Khushiyan’
celebrated the everyday spontaneous happy moments that Maggi has been creating
for consumers - wherever, whenever, whoever! Its popularity
cuts across sections, region or age divide. If you have travelled to India, I
am sure you would be able to recall its bright yellow packets found on the
shelves of mom-and-pop shops across the country. To say the least, it was one
of India’s most iconic brands till yesterday. But not any longer!
Last fortnight has been
abuzz with “Maggi”, though for wrong reason, in Indian media be it print or
visual. Reportedly, “Maggi” brand of ready-to-eat noodles, manufactured and
sold by Nestle, has been found to contain dangerously high levels of lead in
some samples. Its sale has been banned across several states by respective
states governments. Nestle share price has witnessed severe beating at Mumbai
Stock Exchange. Its brand value has been so diluted that its tag line “Good
Food - Good Life” no longer emanates the same confidence. Nestlé has been
forced to recall all of its wildly popular instant noodles in India after this
unsavory revelation. According to the Wall Street Journal, this exercise would
entail recall of 400 Million packets of Maggi, weighing 27000 Tons, would need
2500 trucks for transporting these packets from warehouse to cement plants for
pulverization and incineration and would take 40 days to accomplish. This would
also mean loss of 98.47 billion calories, when several million people are
struggling to meet two squares of meals. Such a colossal waste of resources!!!
This is not the
first instance of supply chain risks arising out of sustainability concerns that
has been reported in world media. This is also not the last incident rocking
the business world. The debate would go on for sometimes whether Nestle was at
fault for sourcing raw materials from vendors because such dangerous levels of
lead cannot come in “Maggi” during manufacturing process but from raw
materials. But are not you responsible for your supply chain? To put simply,
Nestle failed to identity ‘hot spot’ in its supply chain arising out of
sustainability concerns and take adequate measures to address those concerns. No
organization can afford to overlook risks in its supply chain that have
negative impacts on environment, human health and society. The only way to
insulate itself from such risks is to identify those risks and work together
with vendors to mitigate those risks. Otherwise, chances are Nestle saga will
repeat again.
It makes immense
business sense for industry to proactively focus on sustainability concerns in
their supply chain in view of heightened consumer’s awareness and regulatory
challenges. However, actually doing this is not without challenges, especially
when business has increasing gone for global sourcing in its quest to reduce cost. This has resulted in many global supply
chains leading to SMEs in Asia. But the SMEs in this region have largely remained indifferent
to sustainability concerns. In such situation, business is in serious peril of inheriting environmental risks from less
environment-conscious suppliers. On the other hand, when buyers undertake sustainability reporting initiatives to
improve suppliers’ sustainability quotient, the suppliers may get suspicious of
such a move unless, the buyers integrate them suitably into their sourcing
strategy. Thus, to avoid turbulence in the supply chain, the cost advantage of sourcing from this
region needs to be balanced against the
associated risk from losing the market in view of increased sustainability
concerns of consumers and environmental regulations.
Business needs to revisit and reconfigure its
sourcing strategy to improve supplier’s sustainability
performance and simultaneously make its supply chain more efficient and cost
effective. I know it is
easier said than done. I recall, Jason Pearson, Executive Director of
Sustainable Purchasing Leadership Council (SPLC) making a suggestion to
businesses to resolve this issue while delivering keynote speech during SPLC
Summit 2015 in Seattle this year. He
said the issue is complex and no solution is possible when purchasers and
vendors try to find out solutions while working in silos. A solution can emerge
only when they join hands and start a dialogue to find out a win-win solution. Therefore,
let us start conversation with our vendors to avoid a repeat of the Nestle
fiasco!!!
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