Not So Sweet: Expensive Cocoa’s Lesson on Supply Chain Resilience

Cocoa futures are higher than they’ve been in nearly 50 years, making chocolate treats a bit less sweet this Valentine’s Day. Unusually wet weather, caused by El-Nino, has ravaged cocoa crop yields in West Africa, leaving chocolate’s largest manufacturers facing spiraling costs for key ingredients like cocoa beans and cocoa butter.

The trickle-down effect will hit many consumers in the wallet — 92% of Americans plan to share chocolate this Valentine’s Day. It’s the latest example of what can happen if a supply chain isn’t resilient enough.

Disruptions have become the new normal across many sectors. During the pandemic, the supply chain model quickly ballooned as manufacturers created new relationships with suppliers to fulfill orders faster than the competition.

All these new connections and enterprise resource planning (ERP) systems made an unorganized mess that looked like a bowl of spaghetti, with strands that didn’t have precise data flows, leaving companies across the value chain in the dark.

Leading companies are rethinking their strategies from square one — not just how they can consolidate their supply chains, but how they can create resilience and agility so it doesn’t have a ripple effect if, say, cocoa harvests can’t meet demand.

How to build supply chain resilience

Building natural supply chain resilience starts with identifying your weak spots across the whole chain. The effect spreads quickly when a link gets hit by shortages or outages. Whether it’s a supplier capacity crunch, port pile-up, or extreme weather hitting a facility, there’s always a downstream effect. If you can see that disruption with enough advanced notice, you can adjust and minimize its impact.

The solution is more than simply reshoring factories or adding a supplier. Diversity and flexibility are crucial, but you also need integration. Modern digital tools can map upstream and downstream networks while tracking shipments door-to-door. This visibility enables companies to pick up on disruptions faster and coordinate better responses across the ecosystem.

Continuity improves when partners access shared data for scenarios like regional warehousing adjustments or production shifts to alternate sites.

Transparency and accessibility of information require trust and alignment. Establishing operational protocols, security controls, and contingency plans jointly yields better results than trying to figure out how to calm the storm once it has already arrived and determine how it might affect other stakeholders. The more each business applies lessons learned through past disruptions, the better it can harden defenses for the next.

There’s no one-size-fits-all blueprint, but by assessing unique risk exposures, digitally linking networks, and collaboratively addressing vulnerabilities across their chains, companies embed resilience to ride out better stormy operating environments.

What resilience enables

Resilient supply chains allow companies to translate market uncertainties into opportunities rapidly. By implementing predictive analytics across interconnected partner networks, businesses gain integral visibility to turn emerging data into actionable insights. Resilient supply chains also enable greater agility to adjust operations and partnerships to capitalize on market fluctuations.

For example, if cocoa bean supplies fall short of demand for a third consecutive year, it might be time to consider new recipes for Valentine’s Day chocolate hearts. This could reduce the reliance on a specific supplier and enable production to continue without a hefty price hike.

But you don’t have to wait for a disruption to update your operations. Tabletop exercises, stress testing, and scenario planning can help companies understand how their supply chains would respond to different disruptions and allow them to make improvements like diversifying supplier bases, increasing inventory buffers, or building contingency plans.

Regular stress testing allows companies to assess emerging risks and ensure their network is prepared to withstand potential shocks. It helps transform supply chain resilience from a passive goal to an active, ongoing management process.

Since supply chain uncertainty has become the norm across industries, resilience is imperative. Companies must move from fragmented linear structures to integrated ecosystems that embed visibility, flexibility, and collaboration.

Enhancing transparency and agility across supplier and distribution relationships allows disruptions to be detected faster with more coordinated responses. Those still anchored in static modalities risk being upended by mounting instability. Resilience marks the path to navigating and harnessing the new age of compounding change.