Will Supply Chain Save Chipotle?

Can an optimized supply chain turn Chipotle around?

Supply Chain Burrito
Burrito Supply Chain. Getty Images

Full disclosure: I loved Chipotle.  I have probably been to two dozen of them in just my home state of California.  I've dined at Chipotles in Minnesota, Ohio, Illinois, Massachusetts and countless other states.  

When E. coli broke out in Chipotles in the Northwest, I kept eating at Chipotles.  And when Salmonella struck Minnesota restaurants, I kept eating at Chipotles.  And when a norovirus waylaid college students who dined at a Boston area Chipotle, I still kept eating at Chipotles.

 

But when I was researching an article about the safety of our food supply chain and learned that diners at a Chipotle in Moorpark, California had also been hit with a norovirus, I became curious.  And when I learned that Chipotle initially underreported the number of diners who had gotten sick, I paused.  And when the Justice Department launched a probe into Moorpark norovirus cases, I stopped.  

I bought their excuse that the Chipotle's E. Coli and Salmonella issues were related to infected ingredients and I gave Chipotle a pass.  I mean, I'm a supply chain guy and I know that in a supply chain the size of Chipotle's, a bacteria or two might slip through the cracks.  Okay, they shouldn't but they did.  And I figured that those cases were enough to give Chipotle and its supply chain a wake up call.

Apparently, they hit the snooze button.

You see, a supply chain is made up of a series of smaller supply chains.

 Anytime your goods pass from one set of hands to another, a micro supply chain has just occurred!  Your supplier gets your goods onto a truck?  Micro supply chain!  Your trucker gets your goods onto a freighter?  Ditto!  And so on, and so on - from the freighter to your location.  And from your location to your customer.

 And from your customer to their customer.  A supply chain's job is never done.

That leads me back to Chipotle's norovirus.  Here's the thing I learned about the norovirus: the norovirus comes from humans, typically from our vomit or our fecal matter, and it lives on our skin or our clothing or our phones (we tend to touch those a lot).  Before you get too grossed out over that, it's possible to care for a sick child (I'm a dad, I know from sick children) and carry a norovirus around.  

So the norovirus at Chipotle's Boston and Moorpark locations were likely transmitted to customers from an employee.  And what did we just learn about micro supply chain?  That's right - when a customer walks up to a Chipotle counter and orders the chicken bowl, black beans and brown rice with mild salsa and guacamole (yes, I'll pay extra for the guac) - that customer just placed an order in a Chipotle micro supply chain.  

In any supply chain, the goal of optimization is to get your customer what it wants, when it wants it - and spend as little money as possible getting that done.  Chipotle had been doing a bang up job of the first two parts of that, but it seems that they didn't calculate the total cost of their supply chain when they decided to not pay for enough food safety training or process controls.

 

And that's where supply chain can save Chipotle.  Process controls.  Just like in the broader Chipotle supply chain (where I'm assuming they are auditing their produce, cheese and meat suppliers), the micro supply chains of their 2000+ stores need process controls.  

It's not enough to shut a store down for half a day and remind employees to wash their hands after going number two and to not check Facebook on their phones while they're cutting up chicken and to wipe the mildew out of the inside of the ice dispenser (a real finding in the Moorpark Chipotle) - but these processes have to be controlled.  And once they have employee and management turnover in their stores, how are they going to continue this focus on food safety (I mean, their customer's safety)? 

Chipotle didn't have control over that final micro supply chain in their overall supply chain and so their stock that traded at $742/share in July 2015 closed at $450/share in early January 2016.

 For Chipotle management, that might be a more effective wake up call than E. Coli and Salmonella. 

For Chipotle's supply chain to be optimized - and stay optimized - it needs to be process driven and results oriented.  Chipotle has the ability to control the process.  And we, the customers, will let them know if they've won us back.  

Please, Chipotle, I'm jonesing for a sofritas burrito.  Control your supply chain processes.  Win me back.