Supply Chain Management in the Food Industry

This assignment delves into DoorDash's supply chain management within the context of the food delivery industry. It examines their three-sided marketplace model, operational strategies, and the role of technology in optimizing logistics and delivery. The analysis also considers challenges faced by DoorDash, including regulatory issues, independent contractor disputes, and the competitive landscape. Additionally, it discusses the broader impact of DoorDash's supply chain on food security, sustainability, and consumer behavior.

Running head: CASE STUDY 1
CASE STUDY
Student Name
Institution
CHIPOTLE MEXICAN GRILL, INC

CASE STUDY 2
Executive summary
The purpose of this report is to establish responsible and sustainable methods for
sourcing food ingredients used in restaurants. It is important for a business to act in goodwill of
customers. Healthy food originates from farms of people using responsible and sustainable
methods. Chipotle Mexican Grill Inc., is a fast-casual food restaurant in the US that is making
good profits. It discovered that the farmers supplying them with ingredients used too much
fertilizers and antibiotics in farming. This threatened the health of customers and polluted the
environment. Curious customers realized this and started to avoid its restaurants. Consequently,
there was a decrease in sales. This called for the need of action. Therefore, the company
implemented vertical integration, a technique of resource management, to encourage responsible
sourcing of ingredients. Because it was hard to confirm whether suppliers were adhering to this,
Chipotle started backyard farms in most of its restaurants. Therefore, this report provides
forward, Hyper-Local restaurants as a technique of vertical integration form of resource
management. This technique ensured that Chipotle served healthy food. Although it led to an
initial increase in production cost; it was proven to be economically viable, environmentally
sound and created increase in food production.

CASE STUDY 3
Research Question
How can Chipotle Mexican Grill Inc., increase customer loyalty, employee morale
and profits while using sustainable and responsible ingredient sourcing?
As a business, it is important to not only focus on the financial benefits but also
safety for your customers. This is the main idea behind social responsibility. Such that the
models used are within the spirit of the law, national (or international) norms and adhere to
ethical standards (AMP, 2013). Promoting and supporting organic agriculture is a responsibility
of businesses, especially for those dealing with food like restaurants. Similarly, naturally raised
poultry and meat ensures that customers do not suffer from the effects of added antibiotics and
hormones. The easiest way of achieving sustainable sourcing, production and services to
customers is to educate the latter on the need and advantages to health. Researchers have shown
that there are significant changes in consumer trends- healthy diet tops the list (AACN, 2015).
Chipotle Mexican Grill Inc had a vision of changing the way people eat and think about food.
Thus they decided to change processes of sourcing for ingredients used for preparing food.
Introduction
As time changes, the world is witnessing a shift in consumer preference. More
importantly, there is a need for businesses to create ways of meeting the change in consumer
preference (Hubble, 2017). According to the 2015 Supermarket Guru Grocers Association
Consumer Survey, 50% of Americans would like have healthier foods with less processing and a
shorter list of ingredients (Hubble, 2017). Also, 53% of Americans want locally prepared food
(IMO, 2001). Meaning, consumers now want more fresh foods, prepared with less ingredients
and from places they know (Hubble, 2017). The shift in consumer preference has made it a

CASE STUDY 4
necessity to have alternative platforms that can deliver foods considered fresh and healthy to the
consumers.
Chipotle Mexican Grill is a pioneer in the fast-casual restaurant industry. It was founded
in 1993 by Steve Ells. Since then, it has grown to be among the leaders of the restaurant industry
(Gold, 2005). Currently, the company has more 1600 restaurants within the US and 11
internationally. In 2000, under the leadership of Steve Ells, Chipotle made a commitment to
serving customers with food sourced, produced and served through sustainable and responsible
approaches (Gold, 2005). However, because of lack of effective strategy, took too long to fulfill
this promise to customers. For example, in 2015, the restaurant recorded a loss because
consumers questioned the quality of the food and cleanliness of in-store practices (Gold, 2005).
This called for the need for Chipotle to implement integrated resource management techniques.
Doing this enhanced customer loyalty, employees’ morale, increased competitive advantage and
profits, and attracted big investors.
Application of Resource integration technique
Vertical Integration through Hyper-Local restaurant technique
Chipotle had a vision of serving food to consumers with integrity. This would change the
way people thought and ate food. This program means the company’s supply chain and corporate
culture will have to be closely integrated from the time the ingredients are grown, harvested and
shipped to stores (Christopher, 2016). Thus appeal to socially responsible customers deepens
through the latter knowing how chipotle sources for its food.
Hyper-Local restaurant is new in the food service industry. It involves the restaurant
growing own food in its backyard. It is a food service business that grows ingredients in its own

CASE STUDY 5
property. It may be a rooftop garden or backyard. This technique is a product of vertical
integration where a business proactively participates in controlling the raw materials, production
and the sell of goods.
Chipotle Mexican Grill encouraged sustainable and responsible sourcing through the
application of Hyper-Local restaurant method. Thus, the set aside some piece of land in their
backyard and started growing food ingredients used in the restaurant. Chipotle chose this method
because it was cheaper compared the cost of buying ingredients from farmers. Also, it made
management and control of the business easier.
To make Hyper-Local restaurant more effective, the business used Integrated Plant
Nutrition Systems approach in applying this technique (Gold, 2005). Apart from being
economically viable and environmentally sound, this process was also conducive to the urgently
needed increase in production of healthy food (Mason, 2013)s. As farmers, Chipotle used
feasible and adequate mineral and organic inputs.
Similarly, they applied Integrated Pest Management method. This ensured that the level
of pesticides on ingredients was low. They also applied ecology-based principles in methods of
cultivation. This includes predator/prey relationship and pest life cycles. This helped in reducing
the cost of ingredient production and risks associated with excessive use of pesticide (Kolk,
2016). Although promising, this technique had an impact on the labor cost. Thus, the company
needed to employ more people to work in three areas: packaging, pesticides and fertilizer.
In 2012, a Deutsche Bank reviewed one hundred academic resources, fifty-six research
papers and two literature reviews (Souza, 2013). The report showed that 76% of businesses that

CASE STUDY 6
used environmental, social and governance activities gained competitive advantage (Gold, 2005).
Similarly, more than 73% companies worldwide take part in corporate responsibility.
Chipotle Mexican Grill Inc., operates in a very competitive environment. The food
industry has grown thus leading to shift in market dominance. Before, the company could be
comfortable with sourcing for ingredients from environmentally unverified sources and
maintaining low food prices to attract customers. However, because of availability of capital and
emergence of rapid technological inventions, Chipotle could not afford to sit pretty while
competitors gained mileage.
Analysis of Results, Critique and Recommendations
Results
To measure the results of vertical integration, Chipotle used Value Stream Mapping
(VSM). This is a lean supply chain tool employed by Chipotle Mexican Grill Inc., to separate
wasteful and necessary value-adding activities. The method is used to identify all types of waste
in the value stream chain and methods of eliminating them (Shorr, 2014). Resource managers
also cite this to be one of vertical integration technique strength. In case of a machine
breakdown, the use of a dynamic scheduling technique such as right-shift heuristics allowed
farming processes to continue by simply altering the production schedule (Toyota Motor
Corporation, 2016).
Similarly, to reduce risks associated with labor size, the business contracted farm training
operators to equip laborers with multi-tasking skills. This way, the process of ingredient sourcing
would not be interrupted incase a laborer fell ill (Gold, 2005). Multi-skilled employees trained to
do tasks on machinery at different levels of manufacturing caused an increase in employee labor

CASE STUDY 7
rates because vary of years of service, contract negotiations and positional status (Mazutis,
2012). Consequently, the value of optimal assignment was affected.
Nevertheless, this technique yielded fruits for Chipotle. For example by 2010, 100% of
pork, chicken and beef served in the restaurants were naturally raised. Also, beans served to the
customers were organically grown. By 2014, the company gained recognition for serving
customers food made by ingredients sourced through responsible and sustainable means (Gold,
2005).
This is also the moment when Chipotle customer loyalty came to test. Because of the
increase in food production cost, the company had to increase its food prices. Surprisingly,
having seen the results of sustainable and responsible sourcing, Chipotle customers embraced the
change. Consequently, the company made profits; despite increasing prices.
Strategy formation in organizations needs concerted efforts. More importantly, it needs
careful implementation. Failing to do this can be a great setback. Chipotle knew that their
mission is to change ways in which people think and eat fast food (Gold, 2005). Therefore, they
sought ways of ensuring customers are served fresh food made from ingredients sourced through
sustainable and responsible ways (Gold, 2005). For example, they started serving naturally raised
pork, beef, and chicken and organically grown black beans. Because of the nature of the strategy,
they had to increase food prices by one dollar. Because of the nature of the technique, the
company had to increase its food prices by $1.
Critique
Implementation of vertical integration strategy is not for the faint hearted. It takes long
and require close monitor to establish progress. Moreover, it has tendencies of being expensive,

CASE STUDY 8
especially for an organization that has not dealt with it before (Dickey, 2017). Chipotle majored
in preparing and serving customers with meals. In terms of sourcing, the company sought
suppliers. However, after realizing that 50% of the food they served was being sourced through
unsustainable and irresponsible means, they decided to create a backyard farm in most of its
restaurant to help in production of ingredients (Gold, 2005). Of course this came with cost. For
example, the company had to purchase farming machineries and seek the services of suppliers
for seeds and fertilizers. Additionally, they had to the cost of construction and training laborers
on responsible and sustainable processes of farming.
At the beginning, Chipotle experienced a decrease in profits. After conducting an
assessment of cost, Chipotle management realized that they had spent $ 2 million in production
(Gold, 2005). This led to a consequent decrease in profits. This was shocking. Although they had
seen strong evidence that consumers wanted food prepared by ingredients sourced through
sustainable and responsible means, there was no reflection in sales (Gilmour, 2013).
This shows the importance of conducting a thorough market research to understand the
target market of a strategy. It enables a business to better understand the attitude and values
among both loyal and potential customers (Grant, 2016). Strategies that lead to increase in cost
are often avoided by companies that fear losing customers. Nevertheless, if a company chooses
to implement any of them, then it should ensure that the anticipated results will impress
customers beyond doubt.
Recommendations
The performance of a business depends on stability in its supply chain. This is possible
through balance and collaboration in supply, management and delivery. Therefore Chipotle can

CASE STUDY 9
invest heavily in staff so that the latter can contribute to efforts of growth and development
within it (Wynstra, 2013). A motivated employee is the best for persuading customers to
continue being part of a brand. For example, when Chipotle decided to serve naturally raised
chicken, beef, pork and organically grown black beans, there may have been resistance within
some section of the staff (Gold, 2005). However, through open communication, inclusion and
responsible management, they chose to embrace it and be part of its implementation (Grant,
2016). Similarly, organizations should include employees in strategy formation and
implementations to enable effective and efficient results (DoorDash, 2017). Chipotle should seek
the services of an integrated information system to enable free flow of information and resources
in its supply chain.
In conclusion, this report was based on a case study of Chipotle Mexican Grill., a fast
food restaurant. T experienced decrease in sales because of not being cautious about the methods
of ingredient sourcing by suppliers. Therefore, the management implemented Hyper-Local
restaurant, a form of vertical integration technique in the food industry to promote responsible
and sustainable ingredient sourcing. Although the company had to increase food prices, it still
made profits because of customer loyalty.

CASE STUDY 10
References
AACN. (2015, January 23). Health Reform: Put Patients First. Retrieved August 10, 2017, from
American Association of Colleges of Nursing: http://www.aacn.edu/government-affairs
AMP. (2013). Supply Chain Management. Wall Street journal , 172-195.
Christopher, M. (2016). Logistics & supply chain management. Pearson Higher Ed.
Dickey, M. R. (2017, April 10). Doordash will pay $5 million to settle class-action lawsuit over
independent contractors. Retrieved July 23, 2017, from techcrunch:
http://www.techcrunch.com
DoorDash. (2017, May 18). Strategy & Ops Has Its Finger on the Pulse of Doordash's Three-
Sidede Marketplace. Retrieved July 21, 2017, from http://www.blog.doordash.com
Gilmour, P. ( 2013). Benchmarking supply chain operations. Physical Distribution & Logistics
Management , 123-135.
Gold, A. N. (2005). Conscious Captalism: Serving food with integrity. In T. W. Hunger, Cases
in Strategic Management. Prentince Hall.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Hubble, E. (2017, February 7). 7 Food Delivery Industry Trends for 2017. Retrieved July 22,
2017, from http://www.veinteractive.com
IMO. (2001, March). Shaping the future for Health. Institute of Medicine , pp. 1-8.

CASE STUDY 11
Kolk, A. (2016). The social responsibility of International business: From ethics and the
environment to CSR and sustainable development. Journal of World Business , 23-34.
Mason, N. (2013). Economic Security and Well-Being Index for Women in New York City. New
York: Center for Research & Policy in the Public Interest.
Mazutis, D. (2012). Authentic Leadership. In W. G. Guerrero, Cases in Leadership (pp. 240-
250). New York: SAGE Publications, Inc.
Shorr, E. (2014, December 16). Reindeer Herders of Northern Europe Confront Climate
Change. Retrieved October 13, 2016, from http://www.foodtank.com
Souza, G. (2013). Closed‐Loop Supply Chains: A Critical Review, and Future Research.
Decision Sciences , 7-38.
Toyota Motor Corporation. (2016, April 1). Toyota . Retrieved from Toyota:
http://www.toyota.com/all-vehicles
Wynstra, F. (2013). Past, Present and Future Trends of Purchasing and Supply Management: An
Extensive Literature Review. A Review and Outlook. A Journey through Manufacturing
and Supply Chain , 199-228.

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