OpenIDEO is an open innovation platform. Join our global community to solve big challenges for social good. Sign up, Login or Learn more

Shortening the Supply Chain

Grameen Danone started as a social business collaboration to provide children in Bangladesh with essential vitamins. Through the process Danone discovered that shortening the supply chain and smaller production could also increase profits.

Photo of DeletedUser
1 2

Written by DeletedUser

Danone typically produces dairy products in a very large factory in order to capture maximum economies of scale for thier range of consumables. But when their collaboration with Grameen bank required Danone to lower cost to make an affordable price, Danone took a look at the delivered cost rather than just the produced cost.

They discovered that a great deal of delivered cost sat in the cold chain.  Keeping yogurt cool and fresh over long distances sometimes cost more than the product itself. In response, they developed a smaller production facility closer to demand.  Losses in economies of scale were more than made up on reduced transport cost. Danone has replicated this strategy in other markets.

What if US producers considered total cost and shortened their supply chains in a similar way.  Cold we bring meaningful amounts of production back to the USA? 

1 comment

Join the conversation:

Photo of Emelia

Its good to shorten the supply chain but maximise the efficiency. When shortening the supply chain sometimes the processes are affected but a good supply chain even if you shorten it the flexibility and efficiency will still remain. A successful supply chain leads to economic growth, great partner relationship, strong client relationship, can create new opportunities and innovative technology solutions. A successful supply chain must be adaptive and responsive to any changes and must still remain the efficiency.

Emelia Ingram, Marketing
BR International Supply Chain Consulting