Essay on Illy Coffee: Roasting Coffee Since 1933, World-Renowned Italian Brand

Introduction

Illy Coffee is an Italian company that specializes in the roasting of coffee and the production of espresso coffee. Branded as illy, the company started its operations in 1933 under the leadership of Francesco Illy. Later, Ernesto Illy, a son to the founder, expanded the company in terms of operations, products, and initiated its international presence. Today the company is managed by the third generation of Illy's family, and Andrea Illy is the chairman. The company is one of the very popular coffee makers in Italy and has employed over one thousand two hundred employees (Illy, 2015). The company products are available in over one hundred and forty countries. It is estimated that company revenue exceeds EUR800 million per year. What differentiates Illy's coffee from other coffee in the Italian and global market is the fact that Illy Coffee is a blend of three different roast variations. That is a mix of decaffeinated coffee, the dark roast, and normal coffee in a cup.

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Illy Coffee has a robust supply chain network that enables the company source for the best Arabica coffee beans from six countries in the world. It sources single-origin monoarabica from India, Costa Rica, Colombia, Ethiopia, Guatemala, and Brazil. The company also offers Idillyum an Arabica with low caffeine levels, which is mostly sourced from El Salvador. The Illy Coffee is packaged as capsules like the iperEspresso, pods like the Easy Serving Espresso (E.S.E.), pre-grounded coffee, and as whole beans. Illy Coffee offers premium coffee, which is an excellent expression of innovation and tradition (Illy, 2015). Since 1933, the company has had the vision of providing top quality coffee at both the local and international markets. This passion has been the foundation of the company's success. Today, Illy Coffee is a well-respected and renowned brand in Italy, and it is estimated that over five million cups of Illy coffee are consumed every day.

Brief Analysis of the Company Operations

From the analysis of the company operations, the major strength is the strict selection process to ensure top quality Arabica beans are used as Illy Coffee ingredients. The company has been able to deliver unmatched top quality coffee over time. In its operations, the coffee beans are roasted to produce a rich aroma, which is balanced with a flavor to ensure a high-quality espresso is produced. Illy Coffee product offers bests coffee enjoyment (Masella, Guerrini, Spinelli, Calamai, Spugnoli, Illy and Parenti, 2015). For the green coffee, Illy Coffee offers the best nature can offer, which is further refined by the use of technology. The normal Arabica coffee roasting is perfectly balanced in taste, and aroma an interesting phenomenon equated to a game between amiable nobility and powerful intensity. In the brewing process, aromas of light floral scent, toasted bread, chocolate, and caramel unfold. The operations of Illy Coffee need to be sustainable to ensure the company remains competitive. In this sustainable advisory report for Illy coffee, three main concepts shall be discussed; circular business model, social risks in the supply chain, and integrated reporting.

Circular Business Model

A circular business model entails creations of a system that would improve efficiency as well as extend the useful life of business resources, products, and parts hence attaining sustainability (Antikainen and Valkokari, 2016). Companies that adopt a circular business model create and deliver value through the use of models like long-life design, reuse, repair, recycling, and remanufacturing with an intention to close the material loops.

The circular business model is a possible solution in decreased waste production and improved resource management. The concept is also instrumental in attaining sustainability and reducing costs while improving performance (Mentink, 2014). Adopting a circular business model entails streamlining the internal business activities as well as ensuring the supply chain link and any other business stakeholders are aligned to the model to ensure there is a holistic system that would improve efficiency and bring about sustainability (Linder and Williander, 2017). At Illy Coffee, the business model adopted is not fully circular hence there are some noted cases of inefficiency in the operations. According to Planing (2015), adopting a fully Illy Coffee will be able to harness efficiency and sustainability, which will go a long way in improving the company's bottom line- profits.

The current emphasis on quality to ensure the customer is satisfied, and the brand remains competitive in the coffee industry. The company is much concerned about the consumer, suppliers, and the company's human resources. To the suppliers and the entire raw material supply chain, the company ensures there is high quality of raw material from the coffee farmers. Suppliers are paid best price for high-quality raw materials to the company. Consumers are the main users of the company's end product; hence the company ensures the customers get the best quality coffee that provides value for their money. To the company staff - human resource, the company provides a conducive and enabling working environment to ensure that employees provide the best innovative services to deliver quality to the customers. At Illy Coffee, it is not clear how the company harness efficiency and sustainability through long-life design, reuse, repair, recycling, and remanufacturing.

Social Risks in the Supply Chain

Illy Coffee has a rigorous supply chain management program to ensure that the quality of Arabica coffee raw materials to the company is the best. In the supply chain management program, the concept of sustainability is key to ensure a continuous and uninterrupted supply of raw materials from the various remote locations to the company (Brandenburg and Rebs, 2015). The companies supply chain management process is also certified by an independent third party entity, and it complies with responsible supply chain processes (Freise and Seuring, 2015). Five main features of Illy Coffee supply chain are: first, the company can trace the source or origin of every bean of coffee it purchases. Secondly, the company buys coffee from producers that guarantee high-quality coffee and rewards producers for maintaining high standards of quality. Thirdly, the company has a team of agronomists and technicians who visit the coffee producers to impact them knowledge of the best agronomist practices to ensure quality is maintained. Forth, the company does a periodical internal audit on its supply chain to ensure it is sustainable. Fifth, the company has a loyalty program where it maintains its long term relationships with producers who produce quality coffee over time.

Further analysis of the supply chain indicates that it is closely monitored by the producer to the company and to the consumer. Close monitoring ensures efficiency and sustainability (Brusset and Teller, 2017). The critical social risks in the companies supply chain include cartel fixing in Colombia and Brazil, trade unions in Ethiopia, and exploited labor in India. In Colombia and Brazil, there are coffee cartels that disrupt the coffee supply leading to artificial shortages in supply. In Ethiopia, there are coffee trade unions and cooperative societies that influence the producers' decisions in production hence causing hitches in the companies supply chain. In India, there are cases of exploited labor, but the national government is doing its best to create and implement labor policies that will ensure workers in coffee production are not exploited. Currently, there is no existing suppliers' code of conduct that the company's suppliers abide by, but the supply chain activities are in compliance with international laws of trade.

Integrated Reporting

Integrated reporting entails the communication of the company's strategy, prospects, performance, and governance to the company's stakeholders (Crowther, 2016). It is a new concept of company reporting which leads to value creation in the short, medium, and long term. An integrated report provides a deep insight into the quality and nature of the relationship the organization has with its key stakeholders (Adams, 2015). The report includes to what extent the organization and the stakeholders understand or relate to each other by taking into account the individual needs of each different stakeholder to the company (Dumay, Bernardi, Guthrie and Demartini (2016). In the context of Illy Coffee, the company has adopted integrated reporting. In the company's annual sustainable value report, the company communicates seven key items, namely Company Identity, Financials, Production, Human aspects, Intellectual, Relations, and Nature. By providing a detailed report of the company in terms of the seven aspects, it is easy for a stakeholder to better understand the company's strategic plan both in the short and long term (Flower, 2015). Other than the traditional basis of company reporting where historical financial information is provided, the Integrated reporting system provides the company stakeholders a wider understanding of the company, therefore bridging the gap between what stakeholders need to know and what corporate reports provide in the traditional reporting standards (Serafeim, 2015).

On the company identity, the company reported all key figures, including sales volume, direct and indirectly managed facilities, point of sale facilities, and the total number of employees. On the financials, the normal financial and economic information is provided. On production, the company provides information on its operation productivity and tasting. On people, the report provides information on the number of employees and their diversity. On intellectual capital, the report provides information on the people it has trained through the efforts of its research and development team. On relational capital, the report explains the impact of the company on communities and specifically the coffee production communities. On Natural capital, the report provides its proposed program towards attaining circular economy through processes like reducing waste, reusing, and recycling wastes.

Recommendations and Conclusions

Illy Coffee can adopt a circular business model by adopting simple procedures like the use of waste heat that is produced by its cafe to run the coffee roasting machines. This will greatly reduce the cost of power to run the coffee roasting machines (Bocken, De Pauw, Bakker and van der Grinten, 2016). The company can start a water treatment plant where all the wastewater in its cafe is purified and be used in other processes like maintaining cleanliness in the cafes. This will reduce the total cost of water for the company. In the water treatment operations, biogas shall be produced, which can also be used for heating or energy production for lighting and running the coffee brewing machines. Sludge is also produced during the water purification process. The sludge can be dried and be sent to farmers to use in the improvement of the soil. Any broken glass or cups can be recycled and used again in the company while any waste paper can be recycled to produce toilet paper and serviettes that can be used in the companies cafes. It is worth noting that Illy Coffee's supply chain is one of the most sustainable, and in March 2011, the company received a 'Responsible Supply Chain Process' certification, an indicator that the company creates value for stakeholders in the supply chain. Illy Coffee has fully adopted the use of integrated reporting, and this goes a long way in ensuring stakeholders are well informed about the company and not rely on past financial information.

References

Adams, C. A. (2015). The international integrated reporting council: a c...