Starbucks Procurement and Supply Chain Strategy

This report evaluates Starbucks' procurement and supply chain strategy, including its procurement strategy, supply chain management, and cost reduction strategy.

SUPPLY CHAIN
MANAGEMENT

Table of Contents
PROJECT A.....................................................................................................................................3
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Application of the key supply chain concepts, principles and processes....................................3
Critical evaluation of SCM concepts...........................................................................................4
Evaluation of the importance of SCM perspectives....................................................................4
Critical evaluation of the importance of the physical, information and financial
management250...........................................................................................................................5
Cross functional and integrated approach of SCM......................................................................6
Interrelationships between SCM and other functional areas.......................................................6
Critical Evaluation of the supply chain interrelationship with other functional units.................7
CONCLUSION................................................................................................................................7
Project 2...........................................................................................................................................7
INTRODUCTION...........................................................................................................................7
Evaluation of Starbucks procurement and supply chain strategy................................................8
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

PROJECT A
INTRODUCTION
Supply Chain Management is a comprehensive part of the overall functioning of the
organisations and facilitates in the revenue generation and production department (Hugos, 2018).
Starbucks is a global brand that operates successfully through a number of supply chains spread
all through the world. The current report will identify the theoretical concepts that are associated
with SCM and then evaluate the practical application on Starbucks.
MAIN BODY
Application of the key supply chain concepts, principles and processes
The key concept of the Supply chain management basically includes the monitoring of the
different aspects that are associated with the overall management and integration of the different
aspects that are associated with the procreant of the raw materials and till the last stage of
delivering the final product to the consumers ultimately. Some of the key concepts that are
implemented in Starbucks throughout the different stages can be analysed in following manner:
Resourcing: The resourcing involves the sustainable procurement of the necessary raw materials
that are required and then managing them accordingly (Christopher, 2016). In Starbucks, the
stage is intricately implemented where the most of the resources are acquired from the local
producers so that the overall development can be encouraged and the cumulative growth can be
achieved.
Product designing and development: In this stage, the overall designing of the product is done
where the key is to use the most appropriate strategy where the technology and its use is well
integrated with the overall efficiency of the supply chain. In Starbucks the overall integration of
the product designing is closely linked to the technology required at the manufacturing houses
where the quality and efficiency of the manufacturers is not compromised with.
Logistics and distribution: This is effectively the last aspect in the overall process of Supply
chain management as well where the focus lies on the collective storing and the distribution of
the different aspects that are associated with the process (Meredith and Shafer, 2019). In
Starbucks, the warehousing is closely integrated with the manufacturing units and the outlets are
mainly in the form of wholly owned units of Starbucks or either through different licensed and
franchised stores that are located and distributed all over the world.

Critical evaluation of SCM concepts
The different SCM concepts that have been discussed indicates that the overall integration
of the supply chain in Starbucks is comprehensive and exhaustive. The different aspects show
that although the different aspects of the Starbucks are very closely linked to the main activities
and also the availability of the products and the quality of them is the reason that Starbucks has
expanded globally today. However, it can be said that since the availability and distribution of
the brand is global and this is the major reason that the overall management and integration gets
extremely complex. The sustainability aspect of the company has also been affected due to the
operation in the multiple countries (Kshetri, 2018). The successful integration of the brand on
international platforms and then its implementation accordingly can increase the irregularities
and negative aspects that might arise for Starbucks. Overall it can be said that although the
practices of procurement, manufacturing, warehousing etc. help in increasing the overall revenue
generation and returns for the company but yet these are also a limiting factor as the
sustainability aspect regulates the overall implementation of the different components of supply
chain.
Evaluation of the importance of SCM perspectives
The overall supply chain management is a comprehensive process and affects as well as is
affected by a number of parties that help in overall improvement in the effectiveness of the entire
process. The different relevant perspectives are:
Customers: The customers are the necessary parties for every company and these are the ones
that need to be ultimately satisfied in order to increase the overall contribution in the
effectiveness. The customers affect the quickness in the overall delivery process, the integration
of sustainability aspect and the overall integration of the hazardous technology.
Suppliers: Suppliers help in increasing the flexibility and the availability of the raw materials
that are necessary for the completion and finishing of the entire supply chain in the organisation
(Mangan and Lalwani, 2016). These are necessary in ensuring the continuance of the overall
supply chain and the availability of the products as well.
Distributors: The distributors are another effective party where the sales channel and the entire
profitability and availability of the final product is affected by the integration of such
distributors. They are the ones who facilitate and maintain the overall flow of the products in the
market.

Retailers: Retailers are ultimate connections that complete the supply chain and their reviews
and satisfaction and demand of the product ultimately affects the overall supply and demand of
the customers as well. They help in maintaining adequate stocks and ensure physical presence of
the product.
Therefore, in this manner the different perspectives affect the supply chain management
and its overall implementation and integration collectively over different aspects together.
Critical evaluation of the importance of the physical, information and financial management250
The implementation of supply chain management techniques is not limited to the basic
functions of procurement and storage and supplying but it also uses or is dependent on a lot of
other tools and techniques (Lambert and Enz, 2017). These are important part in the overall
implementation of SCM in Starbucks as well. Some of the key components that can be discussed
here are:
Physical Management: The term physical management indicates the overall stock management
of both raw materials as well as the finished products. For Starbucks, the physical management is
a key part of the overall SCM as this helps in ensuring that there is a proper record of the inflow
and outflow of different goods and it also includes the warehousing and manufacturing
department where the majority of the information regarding their movement is available.
Information Management: Information management systems and software are another major
aspect behind the overall functioning of the supply chain management (Ayers and Odegaard,
2017). There are a variety of online tools and software used at Starbucks that can help in keeping
a proper record of the different stocks and products that are in regulation. This software also help
in keeping a record of the revenues and expenses that are earned by the company.
Financial Management: Financial Management is the ultimate aspect of the Supply Chain
Management where the different sources of revenue through the supply of the products of
Starbucks through the world is integrated by the use of common systems. This also helps in
keeping a proper tab on the expenses that are made and hence regulate the overall profitability of
the supply chain management that is being implemented.
Therefore, in this manner the different systems are important for the overall management
of supply chain in Starbucks.

Cross functional and integrated approach of SCM
The elements involved in SCM collectively are integrated and involve a variety of other
aspects as well that need to be taken into consideration as the implementation of the supply chain
management is integrated not with just one functional department of production but with various
other functional department such as HR, Marketing etc. as well (Fredendall and Hill, 2016). The
cross functional approach of SCM indicates that through this approach the integration between
the different functional departments of an organisation is an ongoing process where they
regularly collaborate and coordinated so that the overall productivity of the organisation can be
maximised.
The integrated approach of supply chain on the other hand is the approach where the
enterprise resource planning approach is used i.e. here the different aspects and areas of
relationships with the suppliers, managers; distributors etc. are managed through a single and
centralised system rather than through having multiple systems.
In Starbucks mainly both the techniques are used where the integrated approach is
implemented at the international level where the different suppliers , distributors, retailers etc.
are linked throughway centralised systems connected globally which helps in better
management. But at the same time, the company also uses the cross functional approach where
the individual outlets of Starbucks developed strategies after collaborating and communicating
with the different functional units as well (Dubey and et.al., 2017).
Interrelationships between SCM and other functional areas
The interrelationship of the SCM with the other functional units in an organisation can be
evaluated and analysed in following manner:
SCM with the Marketing Department: The SCM is closely integrated with the overall activities
of marketing department as the marketing department helps in analysing which are the products
towards which the interests of the consumers is more and which are the non- performing
products of the brand (Kshetri, 2018). The SCM can then accordingly produce the goods and
services that justify the overall demand of the products and services working more on increasing
the availability of the goods that are in demand as compared to the ones that are not.
SCM with the HR Department: The SCM of any organisation is also very closely linked to the
HR department as these help in the overall estimation of the collective requirement of the
different types of personnel and candidates that are required in the SCM department and also

help in scheduling the trainings that are required. These collectively increase the productivity of
the employees working in SCM.
SCM with R&D Department: The R&D department regularly innovated and identifies the new
trends that can be turned into potential sources of revenue and based on the guidelines given by
R&D department only, the production and manufacturing of the goods that are as much close as
to the innovation that has been created are developed by the company (Hugos, 2018).
Therefore in this manner the integration between different functional units is important.
Critical Evaluation of the supply chain interrelationship with other functional units
Interrelationship between supply chain and other functional units like human resource,
marketing, production department, logistics, operational department and others is quite beneficial
for the organization because all department become flexible with time. With interrelationship
approach each functional units of company can direct communicate with supply chain regrading
product quality to product supplying. So it become easy for both supply chain and functionals
units to perform different duties but keeps common goal to lead success within company
(Herningsihand et.al., 2019). The major drawback of the interrelationship is that each functional
units and supply chain become dependent to each other as result delay in taking effective
decision. Due to high dependencies all business activities of the company become reductant. So,
it is important that each functional units of Starbucks perform their task itself and communicates
with supply chain as per the situation.
CONCLUSION
The research in the report helps in concluding that the overall implementation and
integration of the supply chain management is a very comprehensive part in the overall
management of the entire organisation. In case of Starbucks as well the different concepts that
are associated with the SCM were analysed and the interrelationship with different department
was also analysed.
Project 2
INTRODUCTION
Supply chain strategy refers as an iterative procedure that defines the model of Logistic
operations which undertakes by organization to gain a defined high-level of objectives within
timeframe. In other word, supply chain strategy is the process of influencing customer

satisfaction and reducing operational cost. In this report will discussed about Starbuck’s
procurement and supply chain strategy.
Evaluation of Starbucks procurement and supply chain strategy
Starbucks is famous as world’s largest coffeehouse chain because it operates in multiple
countries through it’s franchises and offers it’s products like coffee beverage, tea and others to
the customer across the world.So it can be understood that it has wide supply chain management
which spreads around the world and provides high product availability.
Procurement strategy of Starbucks
Procurement is the process of gainingraw material for transforming into final products.
Starbucks spreads in multiple countries so it implements multiple suppliers’strategy within
company so that it get such suppliers who are willing to work on lower salary and gives high
quality raw material to the company (Alhaskeerand et.al., 2020). As organization’s stores are
located ion multiple countries so it recruits diverse cultural employees as suppliers because each
person posses’ extensive knowledge about native places and organizations which can give raw
material at lower costs. With the diversity in suppliers leads fruitful results in term of high-
quality material at lower costs with company. Starbucks agents travels to multiple countries like
Asia, Latin America and Africa to gain high grade raw material or input to lead finest coffee to
it’s users. Agents of the Starbucks builds strategic relationship as well as partnership with
number of suppliers through communication and organization’s standards. Starbucks selects
highest and more fine quality coffee beans as raw material that gathers from the coffee buyers
who appointed to buy raw material from coffee producers in Latin America, Africa and Asia.
While green and roasted coffee beans are procured by Starbucks directly from the farms of
coffee buyers who appointed as agent. Then these coffee beans are transported in logistic houses.
Then logistic department roasts and packaged beans properly and now these beans are ready to
send to the distribution centres (Ramesh, Sarmahand Tarei, 2019). Starbucks does not
outsourceit’s procurement because it believes that high grade quality can be maintained when it
directly involved in selecting the finest raw material. Starbucks follows cost reduction strategy
within organization so that it gets high quality raw material at lower cost and in return generate
high profit margin on it’s products. With the cost reduction strategy organization enable to
analyse cost of each operation effectively and it’s management trains it’s staff members to
reduce wastage of products and gives best quality products and it’s services to the customer. For

example,currently Starbucks is famous in world as world’s largest supply chain due to green
purchasing procurement strategy. Management of Starbucks has implemented global sourcing
strategy which is practiced by it’s staff members. This global sourcing strategy helps company to
procure raw materials at lower cost with high grade quality. Thus. Company enable to reduce
operational costs of coffee beans and encourages it’s customers to buy products and services
within hospitality industry.
Supply chain strategy of Starbucks
Starbucks journey starts from coffee beans plantation to coffee serving which is quite
lengthy process in which involves planting, growing, harvesting, drying, blending and in last
roasting beans. Generally, supply chain web of Starbucks is quite complex because inventory
management and transport requires supply storefront which is not possible due to high
productivity of input (Bergerand Blake, 2016). However, it is fully integrated vertical supply
chain and others means it involves in plantation of coffee beans to recyclable cup in customer’s
hand. Organization works with more than 400,000 coffee growersacross the world on their
plantation technique to quality assurance. Due to wide supply chain Starbucks has claimed that
they effectively produce coffee beans along with greater standard flavour and sustainability as
well as decline their exposureswith massive supply disruption. Starbucks opens it’s new stores
every 15 hours in china instead of concerning about size and growth of business activities.
Worldwide guarantee of Starbucks that all beans are roasted and packaged in actual manner prior
and taste will be same either it is in Tokyo or Tallahassee. Supply chain management approach
already has practiced by Starbucks to keep on track supply chain strategy. this approach helps
company to align all activities of individuals so that each one performs effective role within
company.With the supply chain strategy company establishes strong relationship with multiple
hospitality industries to offer it’sproduct services to them.Whereas member of supply chain
supplies raw material from coffee buyers to logistic department, then logistic supply chain
transports final products to distribution centres and in last it supplies to end users. Thus,
Starbucks provides it’s products availability to the customer within timeframe.
Procurement strategies and supply chain strategies supports Starbucks toimprove satisfaction
level of customers for it’s products and in return generate high profit margin on them. Starbucks
has mission to offers high grade quality coffee as product to the customer and gains trustable

brand positioning in the customer’s mind (Chuang, 2019). So, organization always focus on it’s
product quality and taste, and supply chain strategy.
Recommendation
 Green Purchasing strategy is the best strategy because it has aim to maintain
sustainability in purchasing process, products and operations. So, Starbucks mustpractice
green purchasing strategy because it supports to buy such products which improves
positive effect on human health and environment. With this strategy organization enables
to gain trust of customers on it’s products and gain competitive advantage from it’s
competitors. This strategy is not only supported to create positive image of the company
in multiple countries but also supports to capture large market share on it’s product.
 Total quality management technique is also another effective strategy that organization
must implement because it helps to improve quality of products and services in efficient
manner which organization can cater in order to achieve all business goals of the
company. With this approach management of Starbucks can ensure to maintain quality of
product and services at each and every stage which ultimately meets customers objectives
(Goudaand Saranga, 2018).Total quality management contains various elements such as
customer focus, high involvement of employees, integrated system for maintaining
authenticity, strategic and systematic approach, on-going improvement, effective
communication and fact-based decision-making etc. supports organization to maintain
sustainable business performance across the world. So, Starbucks must implement this
strategy to gain effective results.
 Six Sigma technique is another effective approach that will also support to improve the
quality of products and services. This approach comprises five parameters such as
designing, measuring, analysing, redesigningand verifying etc.supports to improve
quality of products on each step. With this approach organization does not have follow
lengthy process of procurement. Six sigma technique will support more to improve
quality of product and services.
 360-degree feedback strategy is quite famous and effective approach that helps to keep
wellbeing of individuals and can analyse effectiveness of strategy which has
implemented. So, Starbucks can implement this strategy to improve service of supply
chain management within company.

CONCLUSION
This report has been discussed about different procurement and supply chain strategies of
such as cost reduction, risk management, global sourcing and others which has implemented by
Starbucksas resulted has achieved more success in the global market.

REFERENCES
Books and journals
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Administration, 10(3), pp.99-110.
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