Using a total cost approach, identify at least two hidden costs the organization should take into consideration in its situation?

Total cost approach

Answer 2 questions based on information below.

1.   Using a total cost approach, identify at least two hidden costs the organization should take into consideration in its situation?

2.   Many times an action to solve a problem can have unintended consequences.  If the scenario has an action, analyze it for consequences that may not be immediately obvious.  If no action is included in the scenario, suggest one and analyze it for potential unintended consequences?

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There are many things to consider when selecting suppliers. Some of those things include:

  • The impact of government & regulatory bodies;
  • The growing trend in the ‘green supply chain’ (the environment and securing supply!); and
  • Social/ethical considerations in sourcing

What I learned from this week and last week’s readings is there is a lot of regulation involved in sourcing suppliers from other countries (globalization). Some countries we are not even allowed to deal with and it is recommended to seek guidance from experts to ensure you are in compliance with these regulations.

We also learned that companies are paying more attention to how their company affects the environment and community and are seeking ways to produce less waste and create more sustainable products and services. I have talked about this since week 1 and many of the companies I chose to do business with are friendly to the environment, community and care about their employees.

For this discussion, I am going to use Ben and Jerrys Ice cream company out of Vermont since I am familiar with them and the effort they have made towards green sourcing.

Ben and Jerry’s are well known for their sustainability programs and builds their sourcing strategy on values. They take a lot of pride in knowing where their ingredients come from and who their suppliers are. They created a sustainability program called “Caring Dairy” where they rate their suppliers against certain criteria. There are 12 indicators/standards Ben and Jerry use to rate their suppliers which include things like; Cow Care, Planet Stewardship, and Farmer/farm workers standards. To be considered as a supplier for Ben and Jerry’s, potential suppliers must complete three annual requirements:

  1. Complete the Caring Dairy assessment of 12 indicator sections.
  2. Attend three workshops.
  3. Implement two process improvement plans.

Their mission consists of three parts:

  1. Product mission – to make, distribute and sell the finest quality all natural ice cream and euphoric concoctions with a continued commitment to incorporating wholesome, natural ingredients and promoting business practices that respect the Earth.
  2. Economic mission – to operate the Company on a sustainable basis of profitable growth, increasing value for our stakeholders and expanding opportunities for development and career growth for our employees.
  3. Social mission – to operate the company in a way that actively recognizes the central role that business plays in society by initiating innovative ways to improve the quality of life locally, nationally and internationally.

As you can see, Ben and Jerrys has a very strong green sourcing company and regardless of their growth over the years, they have remained consistent in the morals and values their company represents.

To address the questions in this week’s discussion assignment, Ben and Jerrys current supplier/sourcing is described as follows:

  • Using a supplier, St. Albans Cooperative Creamery, and tanker trucks, heavy cream and condensed skim milk is shipped to Ben and Jerry’s factories. (Outsource)
  • The cream and milk are stored in chilled tanks until needed. (Insource)
  • Inside the factory, the ice cream is made using internal methods and production processes to include; the blend tank, pasteurization and homogenization, flavoring, freezing, chunking, contherm and variegator. (Insource)
  • Dispense into pint containers (Insource)
  • Cover with lids (Insource)
  • Hardening (Insource)
  • Bundled (Insource)
  • Quality Assurance (Insource)
  • Distribution (Outsource)

In summary, I think that Ben and Jerrys takes a comprehensive approach on green sourcing and promotes positive environmental, social and ethical concepts to support its company. Many of their customers value this from the company and is one of the reasons they have such a strong customer base.

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