Tag: raw materials

OM in the News: Giving M&M’s a MAHA Makeover

As we note in Chapter 5, Design of Goods and Services, the dynamic market places changing demands on products. Such is the case for M&M. Mars, the manufacturer of M&Ms, under pressure from the “Make America Healthy Again” (MAHA) campaign, is striving to make them without artificial dyes.

Naturally dyed blue M&M’s

So M&M’s will mark a milestone in their 85-year history in August, debuting a version temporarily missing two hallmarks colors: brown and blue. Mars plans to color the remaining foods with dyes derived from natural sources.

The task is proving much harder and more expensive than it sounds, writes The Wall Street Journal (June 23, 2026). Blue is proving difficult to re-create affordably, and at scale. To complete the challenge, the company couldn’t reliably churn out brown M&M’s, which, it turns out, include a fair bit of blue. Some 100 employees are working on its natural-color efforts. A quarter of them are dedicated solely to finding a proper blue!

Companies have scoured the globe in search of raw materials to create a natural blue food color that can withstand changes to heat, light and pH. They have experimented with juice from a fruit found in Central and South America, petals from the butterfly pea flower in Southeast Asia, and spirulina (which works best, but leaves a sticky film akin to dental plaque inside the factory pipes).

All this means that Mars must upgrade more than 300 machines across its plants to handle spirulina. The company is installing new mixing tanks, paddles and motors. Moreover, new cleaning equipment will also be required to blast machines on the M&M’s lines for longer stretches, with hotter water and more force.

The company pledged a decade ago to cut artificial dyes from all of its human food. But it changed course for candy, saying many consumers weren’t worried about the dyes in those products.

This M&M story illustrates the pervasiveness of issues with new or altered designs. As is often the case at M&M and elsewhere, cross functional teams are needed for experimenting, international suppliers must be developed,  capital investment for new equipment must be devoted, and new maintenance procedures to keep equipment working must be created.

Classroom discussion questions:

  1. Why is the move to healthier candy so difficult?
  2. Why not just drop the brown and blue M&M’s?

OM in the News: The Cost of Cheap Labor

“When companies consider making changes in their supply chains, the mantra of question everything can’t be overstated—even when the topic becomes cheap labor for consumer product manufacturing,” writes Material Handling & Logistics (Nov. 8, 2016). The article suggests that: 

  1. The source of the raw ingredient and its impact on cost is critical. A majority of a finished good product cost is often thought to be in labor and manufacturing overhead. But cost is largely tied to the ability to find local production of the raw materials and components. If a firm has to import “raws” and components, it is likely going to lose the economic edge that cheaper labor might otherwise provide. Focusing on raw material sourcing as the most important aspect of a supply chain shifts the firm away from chasing cheap labor. Companies are better off centering their manufacturing plant around material supply and proximity to their customer base.
  2. Understand customer preferences. Consumer demand for goods produced in certain countries is increasing. The value of the country of origin varies, of course, by the product category. “Made in the USA” carries premium positioning globally for nutrition products. For beauty and skin care, sourcing from the U.S., Korea, Japan or France carries a premium influence. For home care or durable goods, such as TVs, there is far less emphasis on the country of origin.
  3. Labor is just one of the non-material costs. Free trade agreements allow for significant savings when a company meets certain local sourcing minimums. Also, depending on the variability of the demand, shorter lead times and more supply chain agility (the ability to accommodate surge in demand) can make a big difference in sales.

In the end, simply chasing low labor costs is seldom the best way for a company to think about its supply chain. Consumer preferences, material supply and other considerations such as free trade and demand variability are more important.

Classroom discussion questions:

  1. Why are raw materials such an important part of sourcing?
  2. When might low labor costs be the most important factor in the supply chain?