A Case Study of Starbucks: Operation Management

This case study explores the operational management of Starbucks, focusing on ten key areas such as design of goods and services, quality management, process and capacity design, location strategy, layout design and strategy, human resource and job design, supply chain management, inventory management, scheduling, and maintenance. It also discusses the challenges faced by Starbucks and suggests solutions. The case study provides insights into how Starbucks manages its operations to maintain its premium image.

Running Head: OPERATION MANAGEMENT 1
Operation management
Name:
A case study of Starbucks

OPERATION MANAGEMENT 2
The company under discussion is Starbucks which is known for its premium coffee
worldwide (Gupta, Nagpal, & Malik, 2018). Starbucks addresses the ten key operational
areas of management as follows;
1. Design of goods and services
It involves implementing methods that ensure consistency in cost and quality in all
business departments. At Starbucks, emphasis is put on the design of products and the
services they offer (Ross, 2017). This process is reinforced by the Starbucks coffee’s generic
as well as the world class pricing strategy used by Starbucks. The company has contacted
other manufacturer companies who help them design other things like mugs. This decision
area has been emphasized by the Starbucks. And as a result of this, Starbucks goods and
services portray a bold image of the company. For example, Starbucks uses their custom
Starbucks branded cups to pack coffee to its customers. This cup differentiates and stands out
as unique.
2. Quality management
This can be achieved by understanding the customer needs and then finding ways to meet
them. Market research is a powerful tool that can be employed to determine what the
customers want. Starbucks uses the premium character to control this decision area. In
collaboration with batch quality assurance testing for all products and services to be provide.
For example, they acquire coffee beans from firms who agree to their quality standards. The
farmers must also be certified by the Starbucks Coffee and Farmer Equity (CAFE) program.
Starbucks ensure that they acquire quality coffee that will much their brand image which is
highly appreciated (Goetsch Davis & Stanley, 2013). For example, the average score of fifty
of Starbuck’s coffee is 83.1 which means that the coffee is of good quality.
3. Process and capacity design
It involves strategies that are designed to support production goals. These strategies
involve technology and resources available. A value stream map can be employed to define
the fundamental processes and find way to keep them functional. The processes at Starbuck
are very effective and have contributed greatly towards its success. fluctuation on demands at
Starbucks are met by optimization of capacity as well as capacity utilization. For instance,

OPERATION MANAGEMENT 3
the café operations are flexible in readiness for the peak hours when customers flock the café.
Starbucks focuses on maximizing cost-effectiveness by employment of effective workflows
and procedures (Slack & Brandon-Jones, 2018).
4. Location strategy
This area is mostly affected by the supply chain. It is important to know how the location
will be able to get supplies effectively and the need for marketing and public relations in that
particular area (Levering, & Vos, 2019). Starbucks has directed its focus towards urban
centers that are heavily populated by middle and upper class population. They have
positioned majority if their branches in areas that are densely populated. Starbucks also
cluster the same geographical area with many branches so as to eliminate any competition.
Starbucks sets up their cafes in areas that have people who can afford their premium
products. For example, Starbucks has a total of twenty-two stores in New Zealand alone.
5. Layout design and strategy
It is involved in the way resources are delivered and used as well as the arrangement of
workstations and desks. The Starbuck’s layout design increases the efficiency of works flow.
The strategy employed here does not focus on maximizing utilization of space for more seats
and tables, but provision of more queueing space inside the cafés. Starbuck puts a priority on
the needs of customers instead of focusing on space utilization. This can be associated with
the fact that many customers come into the café with an intention of carrying the coffee with
them instead of taking it at the café. For example, at Starbucks, the prefer to provide more
queuing space over sitting space.
6. Human resource and job design
This decision area involves activities that provide continuous improvement programs that
are reviewed regularly, provision of regular training to customers as well as conduct
employee satisfaction programs that will contribute towards success of this area. The human
resource at Starbucks collaborate the culture of organization in every areas of the business.
This culture is mostly composed of the first attitude that employees have. Starbucks employs
team works of baristas in its cafés and also use functional positions in some of the
organizations departments which include Human Resource Management and Inventory

OPERATION MANAGEMENT 4
Management positions. Starbucks ensures that their culture has been incorporated in every
tasks and in the process the fundamentals on specific tasks (Corcoran & Duane, 2017). For
instance, they use functional positions and focus less on team work in some of the stores.
7. Supply chain management
In this areas of operational management, emphasis should be put on finding ways to
streamline the supply chain, develop trustworthy partners and reduce costs. Starbucks have a
global supply chain, despite the fact that most of its coffee beans are obtained from
developing countries (Ivanov, Tsipoulanidis & Schönberger, J2017). To ensure stability of
supplies, the company has acquired a technique that involves diversifying suppliers. With the
help of Coffee and Farmers Equity (CAFE) program, the company is able prioritize and
select its suppliers. The program selects the supplier on the basis of ethics and sustainability.
Therefore, Starbuck combines corporate social responsibility and ethic in the supply chain
efficiency (Fredendall & Hill, 2016). For instance, Starbucks in New Zealand has its raw
materials provided by different suppliers to ensure constant a flow of these resources.
8. Inventory management
Different inventory strategies are applied to different business every business experience
their own unique challenges. The inventory of an organization can be affected by factors
such as weather, labor and supply shortage (Lee & Vachon, 2016). The inventory
management of Starbucks is related the strong supply chain and other facilities. Inventory at
the café is managed by manual monitoring aided by office automation. Automation is mostly
employed in Starbucks hubs. The main focus of Starbucks now is to reduce stock by
maintaining a non-stop supply of coffee beans to all the cafés. This operation area of
management is addressed by putting effort on the adequacy supply and automation. For
example, they use the TOQ system to manage coffee cups, milk, expressos and coffee cake
inventories.

OPERATION MANAGEMENT 5
9. Scheduling
This area of operational management involves both production and human resource
(Swink, Melnyk, Hartley & Cooper, 2017). It involves considering factors like the number of
products to be produced in a certain amount of time, the number of people or machinery
required to effectively perform a task. Automation and manual scheduling is used at
Starbucks for it different activities of the business. The schedules developed at the company
are flexible in nature. Starbucks relates with this operational management area in terms of the
company’s goal of streamlining its procedures and allowing a certain level of flexibility in
the management of the organization (Heizer, Render & Munson, 2017). At Starbucks, the
schedules are arranged in such a way that they accommodate the peak hours without any
issues and with maximum efficiency.
10. Maintenance
This operation management area revolves around maintenance of people, procedures and
machine. It aims at finding solution that will help maintain quality and ensure constant
supply of resources. Starbucks has a team that is trained for this particular reason, to maintain
facilities and equipment. It also employs third parties to help in maintenance services.
Through training and retention strategies that compensate highly, the company is able to
maintain high capacity in the human resource (Annarelli & Nonino, 2016). Starbucks
addresses this operational area by involving employees, dedicated teams for maintenance and
third party companies to aid in maintenance. System at the stores are regularly checked for
any errors and upgrades in all of New Zealand stores.
The Starbucks has been facing few challenges lately. One of these challenges is related to
the new mobile order and pay service. The service allows customers to make orders the stop
by the café to pick their orders. However, its success has come along with a problem. Many
customers are using the mobile ordering system and as a results they all collide at the cafés
leading to long queues which in turn result to disappointed and unsatisfied customers. This
issue can be addressed by creating more pick up locations for orders. The system should also
be able to compute and determine when the maximum number of customers in a specific café
is reached and therefore forward other requests to the next café. This will reduce the

OPERATION MANAGEMENT 6
congestion at specific cafes and also ensure that customers get the best service and
experience, therefore maintaining the premium image of this Company (Skrudupaitė &
Jucevičius, 2011).
Outsourcing is the practice of obtain resources necessary for manufacture or production
of goods within an organization. Starbucks obtains coffee beans from farmers in developing
countries. The company uses the Coffee and Farmer Equity (CAFE) program to prioritize
and select the best supplier for coffee beans. The supplier must guarantee quality and
consistency in supply of coffee beans.
involving employee in the company developments, it is possible to obtain classic ideas.
This can be attributed to the fact that many heads put together are able to generate more ideas
as composed to the few people who make up the board of director. Starbucks could also be
surprised to realize the potential employees have when it comes to giving ideas that will help
keep the organization thriving. In addition to this, employees can be involved in problem
solving activities. Problems facing the organization can be easier to solve when all people
come together. This is because, some of the problems have roots that are in the lower part of
the organization hierarchy and therefore the top management may fail to relate to such issues.
Involving the employees at this point would be a great step towards developing a solution
especially since solutions are obtained from the root causes of problems (Miller, 2018).
Benchmarking is the process by which organizations compare the cost, productivity and
cycle time. It involves analyzing the strategies of your competitors as well as non-
competitors (Bligaard, Bullock, Campbell, Chen, Gates, Gorte & Scott, 2016). The
benchmarks for Starbucks would be companies like, Amazon and Microsoft (Buckley, 2019).
These companies have excelled in areas such as customer service, globalization and unit
production. Starbucks can learn on how to dominate the online market from Amazon which
is doing excellent in the e-commerce sector (Dolata, 2017). By following their strategies,
Starbucks will maintain its position at the top of the market (Johnston, 2018).

OPERATION MANAGEMENT 7
References
Annarelli, A., & Nonino, F. (2016). Strategic and operational management of organizational
resilience: Current state of research and future directions. Omega, 62, 1-18.
Bligaard, T., Bullock, R. M., Campbell, C. T., Chen, J. G., Gates, B. C., Gorte, R. J., ... & Scott,
S. L. (2016). Toward benchmarking in catalysis science: best practices, challenges, and
opportunities. ACS Catalysis, 6(4), 2590-2602.
Buckley, A. (2019). A Strategic Audit of Microsoft.
Corcoran, N., & Duane, A. (2017). The Impact of Organisational Culture on Staff Knowledge
Sharing in Higher Education. In ECKM 2017 18th European Conference on Knowledge
Management (Vol. 1). Academic Conferences and publishing limited.
Dolata, U. (2017). Apple, Amazon, Google, Facebook, Microsoft: Market concentration-
competition-innovation strategies (No. 2017-01). Stuttgarter Beiträge zur Organisations-
und Innovationsforschung, SOI Discussion Paper.
Fredendall, L. D., & Hill, E. (2016). Basics of supply chain management. CRC Press.
Goetsch Davis, L., & Stanley, D. (2013). Quality Management Organizational Excellence.
Boston:.
Gupta, P., Nagpal, A., & Malik, D. (2018). Starbucks: global brand in emerging markets.
Emerald Emerging Markets Case Studies, 8(4), 1-22.

OPERATION MANAGEMENT 8
Heizer, J., Render, B., & Munson, C. (2017). Operations management. Pearson Education
Limited.
Ivanov, D., Tsipoulanidis, A., & Schönberger, J. (2017). Global supply chain and operations
management. A Decision-Oriented Introduction to the Creation of Value.
Johnston, C. (2018). Amazon opens a supermarket with no checkouts. BBC News, 22.
Lee, K. H., & Vachon, S. (2016). Supply chain sustainability risk. In Business Value and
Sustainability (pp. 245-280). Palgrave Macmillan, London.
Levering, R., & Vos, B. (2019). Organizational Drivers and Barriers to Circular Supply Chain
Operations. In Operations Management and Sustainability (pp. 43-66). Palgrave
Macmillan, Cham.
Miller, M. (2018). The Effects of Amazon Go on the US Economy.
Ross, J. E. (2017). Total quality management: Text, cases, and readings. Routledge.
Skrudupaitė, A., & Jucevičius, R. (2011). Critical success factors for the implementation of the
synchronized production system. Socialiniai mokslai, (2), 16-23.
Slack, N., & Brandon-Jones, A. (2018). Operations and process management: principles and
practice for strategic impact. Pearson UK.
Swink, M., Melnyk, S. A., Hartley, J. L., & Cooper, M. B. (2017). Managing operations across
the supply chain. New York, NY: McGraw-Hill Education.