Case study: Illycaffe value creation through responsible supplier relationship


Procurement case study: Illycaffe value creation through responsible supplier relationship

1.  In sustainable procurement people talk a lot about whether implemented practices rather lead to additional business or whether these practices only generate extra costs which might help to reduce risks. Please explain for the case of illy if the initiative generates additional value or if it is only a risk avoiding initiative. Bring good arguments for the conclusions. the tables, cost benefit analysis, lists of risks or benefits, or other data could be use for substantiating the argument, as well as academic literature.

2.  Please explain how the sustainability initiatives impacts the sourcing position of illy in the mid-run.
Things might be thought about in this respect are:
– Will illy be more dependent on certain suppliers leading to higher prices?
– How do you think will the coffee market as such change and how will your competitors react?
– How did the relationship with the suppliers change?

3.  In several industries you face as a sourcing manager the challenge if you should directly source raw material from the original source or you rely on intermediaries. One example for this challenge is also the hazelnut supply chain where many firms do not contract directly with the “farm”, but have to rely on several partners in the supply chain. In the hazelnut supply chain you’re particularly confronted with child labor issues.

Please suggest how to best achieve a sustainable hazelnut supply chain by considering that you can use different types of relationships (e.g. partnerships based on trust or transactional relationships mainly focusing on contracts). Please have for the analysis a company with a strong brand in mind (eg Nestle). Try to find a solution which has an overall positive economic benefit for the company. NGOs, internal and external audits, fair trade labels are things which you might want to critically address in your thoughts.

The expectation is that you present a sustainable solution for the hazelnut supply chain. Of course you should become familiar through internet with the basic conditions and also bring in your learnings from the illy case.

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no more than 4000 words in length and should normally contain the following elements:
Executive Summary;
Main body with answers to questions 1-3;
Bibliography (more than 20 references)

The report will be assessed on the basis of:
Depth and relevance of research;
Synthesis and evaluation of data;
Application, analysis and understanding of appropriate concepts;
Quality of recommendations including originality and critical thinking;
A clear, professional and well-presented report.

14 Pages

719N1 Essentials of Procurement