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.
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.
Grameen Danone Brings Production to the People
A New Way of Producing Yogurt
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?