Alabama Southern Community College The Tale of Thin Mints Shortage Case Study

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Alabama Southern Community College

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I'm working on a supply chain case study and need a sample draft to help me learn.

answer the last 2 questions in a paper.

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CSCMP ACADEMIC CASE STUDY SERIES Case studies can supplement a course and be used to teach application of supply chain management concepts to real-‐world situations. Others can use the case studies to learn about supply chain challenges and to analyze the situation to develop solutions. Where Are My Cookies? The Tale of Thin Mints Shortage An Academic Learning Case Study written for the Council of Supply Chain Management Professionals Written by: Arunachalam Narayanan, University of Houston Gordon D. Smith, University of Houston This case was developed solely for the purpose of classroom discussion. Some details of the case, including names of the individuals, have been disguised. This case is not intended to serve as endorsements, sources of academic or business data, or illustrations of effective or ineffective management of the personnel or organization. Council of Supply Chain Management Professionals 333 East Butterfield Road, Suite 140 Lombard, Illinois 60148 USA +1 630.574.0985 | education@cscmp.org | cscmp.org Where Are My Cookies? The Tale of Thin Mints Shortage PROLOGUE On March 5, 2015, Suzie was getting ready to meet her troop leader Alice to receive her order of Girl Scout cookies. She was very excited as she exceeded her goal of 100 boxes this year, she had sold 120 boxes. Alice was distributing the boxes of cookies she received to her troop members, when it was Suzie’s turn – she gave her only 100 boxes for the 120 she sold. Suzie was surprised, she recounted the boxes and found that she was short of 20 Thin Mints cookie boxes! Before she could inquire, Alice gathered all her troops and made an announcement, “This year our baker was overloaded and they have run out of Thin Mints. Unfortunately, we may not be able to fulfil our Thin Mints sale. Therefore, I request to ask your customers if they would accept other flavors. If not, we may have to revisit our budget goals for this year. Sorry girls, this is the first time it has happened since I joined Girl Scouts.” Such scenes were common across the US in 2015, luckily the Girl Scouts of San Jacinto Council (GSSJC) was not affected. However, this unprecedented shortage made Mary Vitek, CEO of GSSJC to think about the sourcing strategy for cookies the following year. HISTORY OF GIRL SCOUTS In 1912, in the midst of the Progressive Era, a time when women in the United States couldn’t yet vote, Juliette (affectionately known as “Daisy”) a nearly deaf 51-‐year-‐old sparked a worldwide movement inspiring girls. She gathered 18 girls in her hometown of Savannah, Georgia, to share what she had learned abroad about a new outdoor and educational program for youth, and with this, the Girl Scout Movement was born. Today, the movement includes 2.6 million Girl Scouts (1.8 million girls and 800,000 adults) spanning across 92 countries and more than 59 million alumnae, united by lifelong friendships, shared adventures, and the desire to do big things to make the world a better place.(1) In the US, there are 112 local Girl Scout 1 Girl Scout history (http://www.girlscouts.org/en/about-‐girl-‐scouts/our-‐history.html) This document is available from our site and p rovided for your p ersonal use only and may not be retransmitted or redistribute d without written p ermission from the Council of Supply Chain Management Professionals ( CSCMP). You may not upload any of this site’s material t o any public server, online service, network, or bulletin board without written p ermission from CSCMP. 7 Where Are My Cookies? The Tale of Thin Mints Shortage councils, each registered as an independent nonprofit organization and are responsible for certain set of counties in the region.(2) There are no overlap between the regions served by each council, and all are affiliated to the Girl Scouts of the USA. Majority of the revenue for this organization to conduct their field trips, camps and other social activities are raised by selling cookies to the local communities. Cookie sales are an essential part of the Girl Scout troop’s activities and through these sales the scouts learn five key skills: goal setting, decision making, money management, people skills, and business ethics, all essential to leadership, success, and life.(3) GIRL SCOUT COOKIES First cookie sales in the Girl Scouts can be traced back to 1917, when an Oklahoma troop sold cookies as a fundraiser at their local high school.(4) The first cookies were baked in the kitchens of Girl Scout parents. Five years later, some cookie recipes were published in the scout magazine, This American Girl, for troops who wanted to fundraise.(5) By 1930s, official cookie sales were held in major cities, and bakeries were licensed to produce cookies. The number of bakeries involved in producing cookies eventually grew to 29 commercial bakers scattered across the US.(6) Since then, the Girl Scouts have reversed course and the number of bakers has steadily declined. It whittled down to just four in 1978 and today, they have only two bakers: ABC Bakers (a subsidiary of Interbake Foods, a Virginia based company) and Little Brownie Bakers (a subsidiary of Keebler, which is owned by Kellogg’s). The Girl Scout moved to two bakers for two main reasons, cost control and to ensure uniform quality. The two bakeries supply all of the 112 Girl Scout councils in the US (see Figure 1). 2 Find a council (http://www.girlscouts.org/en/about-‐girl-‐scouts/join/council-‐finder.html) Girl Scout cookies FAQ (http://www.girlscouts.org/en/cookies/all-‐about-‐cookies/FAQs.html) 4 Girl Scout Cookies Fuel A Century of Adventure for Girls (http://www.girlscouts.org/en/cookies/all-‐about-‐cookies/100-‐years-‐of-‐cookie-‐history.html) 5 Myers D, “10 Things you didn't know about Girl Scout cookies”, published in “The Daily Meal” on July 16th, 2015 (https://www.thedailymeal.com/eat/10-‐things-‐you-‐ didn-‐t-‐know-‐about-‐girl-‐scout-‐cookies) 6 Smith R, “Girl Scout Cookies: Thin Mints Shortage, Other Surprises”, AOL.com (https://www.aol.com/article/2015/03/23/girl-‐scout-‐cookies-‐thin-‐Mints-‐shortage-‐other-‐ surprises/21156446/) 3 This document is available from our site and p rovided for your p ersonal use only and may not be retransmitted or redistribute d without written p ermission from the Council of Supply Chain Management Professionals ( CSCMP). You may not upload any of this site’s material t o any public server, online service, network, or bulletin board without written p ermission from CSCMP. 7 Where Are My Cookies? The Tale of Thin Mints Shortage FIGURE 1. Regional distribution of Girl Scout cookies suppliers in 2015 (Source: LA Times, http://graphics.latimes.com/girl-‐scout-‐cookies/) These two bakers are responsible for making all the Girl Scout cookies, it is not a small contract. In 2007, the Girl Scouts sold about 200 million boxes of cookies, at $3.50 per box – the total sales amounted to about $700 million! Its big business. The split of revenue between the baker and the Girl Scouts is based on cost and expense, approximately 35% of revenue is given to the bakers and the remaining 65% stays with the local Girl Scouts Council. A portion of this 65% is then given directly to the local troops that made the sales. The volume of cookies sold in each council helps the purchaser to negotiate the price of cookies in the subsequent contract with the baker. Each local council sells about 8 varieties of cookies, five of them are core and 3 are discretionary. The cookie varieties by bakers, ingredients, corresponding sales percentage for the year 2016 is listed in Table 1.(7) 7 Girl Scout cookies FAQ (http://www.girlscouts.org/en/cookies/all-‐about-‐cookies/FAQs.html) and Wikipedia (https://en.wikipedia.org/wiki/Girl_Scout_Cookies) This document is available from our site and p rovided for your p ersonal use only and may not be retransmitted or redistribute d without written p ermission from the Council of Supply Chain Management Professionals ( CSCMP). You may not upload any of this site’s material t o any public server, online service, network, or bulletin board without written p ermission from CSCMP. 7 Where Are My Cookies? The Tale of Thin Mints Shortage It takes a long time to get the cookies from the bakers, hence the local councils order in advance.(8) The local council needs to have a good idea about the demand for each variety of the cookies, since they are mostly ordered on or before the sales season. The bakers need that information to source their raw materials, many of which like cocoa and palm oil are imported from other continents. As a result, it is not easy for bakers to ramp up the production of cookies on short notice. TABLE 1. Girl Scout cookie varieties Bakers ABC 9 Little Brownie Sales Flavor Thin Mints® Thin Mints® 25% Thin, Mint-‐flavored chocolate wafers dipped in a chocolaty coating. Caramel deLites® Samoas® 19% Vanilla cookies coated in caramel, sprinkled with toasted coconut and laced with chocolaty stripes. Peanut Butter Sandwich Do-‐si-‐dos® 11% Peanut butter filling sandwiched between crunchy oatmeal cookies. Peanut Butter Patties® Tagalongs® 13% Crispy vanilla cookies layered with Peter Pan peanut butter and covered with a chocolatey coating. Lemonades™ Shortbread cookie with lemon icing. Shortbread Trefoils® 9% A traditional shortbread cookie made in the shape of the Girl Scout trefoil. Thanks-‐A-‐Lot® Shortbread cookie dipped in fudge with a thank you message. Savannah Smiles® Lemon wedge cookies dusted with powdered sugar. Girl Scout S'mores Graham cookie double dipped in crème icing and finished with a chocolate coating. Girl Scout S'mores™ Graham sandwich cookies with chocolate and marshmallow filling. Trios Gluten-‐free peanut butter oatmeal cookies with chocolate chips. Toffee-‐tastic™ Gluten-‐free buttery cookies with toffee bits. (Pilot, not offered everywhere.) 8 English, Joe , “Northwest escapes Girl Scouts' Thin Mints shortage”, http://katu.com/news/local/northwest-‐escapes-‐girl-‐scouts-‐thin-‐Mints-‐shortage Top 5 cookies by sales in 2014 season, some of the cookies listed in 2016 were not sold in 2014), like gluten free ones. (http://www.businessinsider.com/most-‐popular-‐ girl-‐scout-‐cookies-‐2014-‐1 ) 9 This document is available from our site and p rovided for your p ersonal use only and may not be retransmitted or redistribute d without written p ermission from the Council of Supply Chain Management Professionals ( CSCMP). You may not upload any of this site’s material t o any public server, online service, network, or bulletin board without written p ermission from CSCMP. 7 Where Are My Cookies? The Tale of Thin Mints Shortage THIN MINTS SHORTAGE As seen in Table 1, Thin Mints is the most popular cookie in the Girl Scouts portfolio. During the peak sales season, nine million Thin Mints are made every day.(7) In 2015, there was spike in orders at Little Brownie Bakers and they were behind the delivery schedule due to production shortages. There were several reasons cited for the shortage, including increased demand to lack of raw materials.(10) The resulting shortages lead to delay in delivery for many councils served by Little Brownie Bakers, but they assured that the initial orders from troops (including direct online orders) would be fulfilled. At the end of the season, some of the cookie lovers did not receive the desired Thin Mints. It made headlines in several local newspapers and television shows, while the shortage affected only 6% of the Girl Scout Councils, it represented several thousand customers.(8) CURRENT STATE AT GIRL SCOUTS OF SAN JACINTO COUNCIL Even though their supply was uninterrupted in 2015, Mary Vitek, CEO of Girl Scouts of San Jacinto Council worried what would happen if it was their baker. She was looking for ways to mitigate the risk of supply disruption. They do have a few constraints to keep in mind. The local councils are broadly bound by the national contract with the two bakers. They cannot source cookies from outside bakers, it will be breach of the national policy. Each council selects a baker and signs one to three year contracts and the selected bakers become the sole supplier for the region’s entire demand of cookies. Therefore, the bakers enter into individual contracts with each of the 112 councils and the contract will be up for renewal or renegotiation at the end of one or three years depending on the contract. Sometimes the local council will move to a different baker, for example the Girl Scouts of Central Texas changed the baker from Little Brownie to ABC bakers in 2016.(11) 10 “Remain Calm: The Thin Mints Shortage Could Last Weeks”, https://www.eater.com/2015/2/20/8078205/girl-‐scout-‐cookies-‐thin-‐Mints-‐shortage-‐2015 Lin II R., Schleuss J. and Xia R. “7 Girl Scout cookies you thought you were getting but aren’t”, LA Times (http://graphics.latimes.com/girl-‐scout-‐cookies/) 11 This document is available from our site and p rovided for your p ersonal use only and may not be retransmitted or redistribute d without written p ermission from the Council of Supply Chain Management Professionals ( CSCMP). You may not upload any of this site’s material t o any public server, online service, network, or bulletin board without written p ermission from CSCMP. 7 Where Are My Cookies? The Tale of Thin Mints Shortage Apart from using the two bakers, and the restriction on the recipes of cookies, there are no major constraints on order quantities or timing of placing the orders, but the cookies themselves have an expiration date. Most councils place their initial bulk order to the baker by November for the upcoming year. The cookie sale period in local communities is from January to March, so they place their order a few months in advance. Mary Vitek and her team have about four months to come up with a strategy for the next season and their contract is also up for renewal. DISCUSSION QUESTION 1. What can Mary Vitek do to mitigate the risk of supply disruption? 2. What is your opinion on supplier diversification in Girl Scout cookie program? This document is available from our site and p rovided for your p ersonal use only and may not be retransmitted or redistribute d without written p ermission from the Council of Supply Chain Management Professionals ( CSCMP). You may not upload any of this site’s material t o any public server, online service, network, or bulletin board without written p ermission from CSCMP. 7
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Where are My Cookies? The Tale of Thin Mints Shortage.

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Discussion Questions.
What can Mary Vitek do to mitigate the risk of a supply disruption?
The agreement between bakers and the girl scout council is, by all means, binding
with little flexibility for the council. Therefore, Vitek is restricted in her...