Supply Chain Sustainability at Clif Bar & Company
Length:
9:30
Subject:
Supply Chain Design and Management
Textbook Reference:
Chapter 15: Supply Chain Sustainability, page 616
Summary
Clif Bar (CB) produces a variety of popular energy bars. Its major framework for supply chain
design is that of “sustainability,” a characteristic of processes that meet humanity’s needs without
harming future generations. This video shows how CB designed its supply chain and how it
manages the flow of product with the added challenge of dealing with organically produced
ingredients. The video can be used as a gateway to managing supply chains (Part 3) because it
addresses several topics contained in those chapters.
Key Concepts related to the chapter
Supply chain design, from sourcing to retailers, is critical for CB because its products involve
organically grown ingredients that have limited shelf life and are in short supply. CB views its
supply chain as having three levels: suppliers, manufacturing plants, and distribution centers. CB’s
core process is new product development; it has outsourced the other key processes. CB does not
do any growing of ingredients nor does it do any manufacturing or distributing; as such, CB must
manage the flow of materials and products that are produced and moved by other firms.
The supply chain must support CB’s competitive priorities. The overriding philosophy at CB is
that of “sustainability,” which must apply to CB’s people (employees), its business and brands,
the community, and the planet. For example, the supply chain must support the sustainability of
variety of retail outlets in the United States, such as Whole Foods, Trader Joe’s, REI, and even
your local grocery store.
CB develops a production cycle that supports its inventory strategy as well as its new product
development. CB faces the ageless tradeoff of inventory service levels (the probability of stock
outs) versus the costs of excess inventories (especially those SKUs with short shelf lives). CB
holds anywhere from 3 days to 3 months of organic inventories. To cope with the tradeoff, CB
uses ABC analysis whereby the more expensive or short-shelf-life SKUs receive more attention
(A items) than other SKUs. New products are often based on suggestions supplied by employees
or consumers. Recipes, which specify the ingredients and production requirements, are thoroughly
tested before releasing them. The production cycle, based on the current product mix, is demand
driven, which relies on good forecasting. Forecasts of demand as well as supplier lead times are
needed to assess the potential variability in demands and supplies CB will experience in the future.
CB gathers inputs from suppliers, co-packers, distributors and retail outlets and communicates its
forecasts and production plans up and down the supply chain. Suppliers to CB’s suppliers even
receive production information. This process is important because it helps ensure sufficient
Essay or Discussion Questions Based on Video
1. In what ways does Clif Bar have a sustainable supply chain?
• As explained in Chapter 15, there are three elements to supply chain sustainability:
financial responsibility, environmental sustainability, and social responsibility.
Regarding financial responsibility, the company has been in existence for nearly 20
years and appears to be holding a niche in the “power bar” industry. Consequently,
management appears to be financially responsible to their employees and stakeholders.
2. Regarding financial responsibility, what business risks does Clif Bar & Company face
with so many parts of its supply chain outsourced?
• Clif Bar has outsourced manufacturing and distribution. Both of these are key
processes in its business. Outsourcing such major processes puts a lot of pressure on
management to coordinate the supply chain and to work with managers in these other
companies, especially on issues of sustainability. Integrating the information systems
3. What issues or risks to sustainability could Clif Bar & Company encounter if it chose to
expand to international markets?
International expansion would pose important supply chain considerations for Clif Bar. First,
organic farmers would have to be located. Second, those farmers would have to be certified in
their ability to produce acceptable food products according to Clif Bar and the agricultural