A few years ago I hosted a panel at the UCT Graduate School of Business. All the panelists had one thing in common – they all did extensive business throughout Africa. One story has stayed with me – supplying chilli to Nandos is harder than you’d think
Supplying chilli to Nandos
Nandos, the global chicken restaurant chain, pays careful attention to the quality of its supply chain. It wants high quality chilli for its sauces but that presents a problem. One entrepreneur supplies Nandos using many local farmers across the continent. He wants to support the local farmers but what happens if their crop isn’t up to the high Nandos standards? If he does buy their chilli, they survive but he carries the loss. But if he doesn’t buy their chilli, the farmers collapse and will probably never deal with him again. How would you resolve this problem?
The entrepreneur left the question hanging in the air. He had solved it but wanted us to try and get to the answer ourselves.
Eventually he put forward his approach. He knew he had to buy the chilli, regardless of quality, in order to create a sustainable relationship with the farmers. Now he needed to break the chilli into three grades of quality. A grade would go to Nandos, that is the easy part.
What to do now with all the B and C grade chilli?
Here comes the memorable bit. He thought outside of the food customer category entirely.
B grade would go to the makers of pepper spray, who just want chilli that stings the eyes. C grade would get mixed with dung, and sold to the government. What was it used for? Whenever elephants threatened to trample on the crops of local farmers, this mixture was placed up wind and set alight. The smoke would irritate the elephants, who would then leave the crops alone in peace.
Genius; and a helpful reminder that sometimes constraints are our greatest source of innovation.