Operations Management and Service Excellence in Starbucks: A Comparative Analysis

This report provides a comprehensive analysis of the operational management and service excellence in Starbucks. It includes a comparative analysis of the four Vs, performance objectives, and design analysis. The report also discusses the supply chain management, inventory management, and maintenance strategies of Starbucks.

Operations Management and
Service Excellence

Table of Contents.
INTRODUCTION................................................................................................................................3
Part A...........................................................................................................................................3
1. Comparative four Vs Analysis..........................................................................................................3
2. Comparative Performance Objectives Analysis...............................................................................5
3. Design analysis.................................................................................................................................8
PART B.....................................................................................................................................10
1. Overview........................................................................................................................................10
2. Starbucks global operations strategy and surrounding macro environment...................................10
3. Key requirements, capabilities and challenges...............................................................................11
4 Analysis and evaluation of chosen operational area........................................................................12
5 Recommendations...........................................................................................................................14
6 Conclusion.......................................................................................................................................15
REFERENCES...................................................................................................................................16

INTRODUCTION
The business practice administration which helps in creating the highest level of possible
efficiency in the company is known as operational management. Conversion of labour and material
into services and goods is the main concern of this department.
Managing patiently as well as consistently meeting the expectation of the customers, is the
ability possessed by the service provider is called service excellence.
The operational management and service excellence can be defined as philosophical
procedure in order to have improvements in the organization. Thus, this is the result of effective
leadership, problem solving as well as teamwork. Therefore, this process focuses on the needs of
the customers, by keeping the workforce empowered & positive along with the continuous
improvement in the current activities of the organization. In this report it has been discussed the
Starbucks organization.
In this report it has been discussed the for Vs analysis, performance objective analysis as well as
design analysis of Starbucks and Gregg. Moreover, in this report, it has been discussed the supply
chain management of the company Starbucks, followed by its various operational strategies as well
as the challenges and capabilities possessed by the company Starbucks.
Part A
1. Comparative four Vs Analysis.
The four Vs comparison of Starbucks and Gregg is as follows
The volume dimension
The main purpose of this dimension is to decrease the cost and to have higher volume of
outputs. This dimension generally refers to requirement of the amount of product in order to fulfil
the demands. This dimension is important for the managers to control, as mismanagement of this
dimension will lead to over or under produce. Moreover, mismanagement of this dimension will
lead the organization too unable to deliver the order as well as there might be wastage of resources.

Variety dimension
It is the fact that if there will be more varieties, then there will be higher costs. Variety refers
to the range of products delivered by the company. Moreover, if there will be more varieties than
the process of operations will required more variations whereas if there will be fewer varieties than
less operation processes will be required. Thus, due to this reason standardized products are
produced in large quantities.
Variation dimension
The variation dimension can be explained as the level of changes in demand overtime. Some
businesses like fewer variations while some like high variations. Thus, in order to track the
variations in business, the business observes the trends in demand. Both the business operations are
related to food industry and it is obvious that both this organization requires regular updates
according to the latest trends.
Visibility
The visibility dimension describes that the consumer of the service is capable to see, track its
experience as well as could order through the companies' operation process. As businesses related to
services has comparatively higher degrees of visibility.
The Four Vs of Starbucks
The volume dimension
For Starbucks operations volume is the key to their business organization. As in this
organization, the staff is capable to work repeatedly in a systematic manner and thus, this makes
their business well organized. Therefore, this helps the organization Starbucks to decrease the cost
of production and at the same time increase the volume of output. The company required one ton of
coffee beans everyday in total for all its running outlets to full fill the need and demands of the
consumers.
Variety dimension
The variety dimension of Starbucks products is lower. As there are fewer varieties at the
Starbucks , less staff is required and at the same time higher volume of outputs can be produced
thus, this results in lower per unit cost (Christopher, 2016).
Visibility
Starbucks requires higher level of visibility, as there products are sold depending on their
visibility at their stores. Moreover, presentation also matters for selling products in the organization.
Which is the actual advantage of possessed by the company. (Asnan, Nordin and Othman, 2015).
Variation
Starbucks is the popular coffee chain and it requires regular changes in order to cope up with

the latest trend and to full fill the demands with the customers. Thus, variations is present in
Starbucks as it require regular modifications in order to remain updated with the latest trend
(Suarez, Calvo-Mora and Roldán, 2016).
The four Vs of Greggs
The volume dimension
On the other hand, for Gregg the volume dimension is somewhat comparatively lower than
that of Starbucks due to which its cost of productions is higher competitively. The company needs
around half ton of beans of coffee every day. This is due to the fact the company serves some
additional food item other than coffee. So its particular coffee bean product demand is somewhat
less than that of Starbucks. (Lu and et.al., 2016).
Variety dimension
The variety dimension of Gregg products is comparatively higher, as Gregg is the largest
bakery chain of United Kingdom. The Gregg company produces large varieties of bakery products
but these variations in its products increases its cost of production.
Since Starbucks is a coffee chain, it serves coffee at its various outlets globally while Gregg
is bakery chain which is giving its services in united kingdom and is majorly focused on the bakery
products.
Visibility
Both the companies Starbucks and Gregg requires higher level of visibility, as there products
are sold depending on their visibility at their stores. Moreover, presentation also matters for selling
products for both the organization (Asnan, Nordin and Othman, 2015).
Variation
The variation attribute of Greeks is higher as it introduces several new it's within the time
and since Gregg is the chain of bakery outlet, it requires regular changes in order to cope up with
the latest trend and to full fill the demands with the customers. Thus, variations is highly present in
company Gregg, since regular variations help the company in order to remain updated with the
latest trend (Suarez, Calvo-Mora and Roldán, 2016).
2. Comparative Performance Objectives Analysis
The current operations' performance of Starbucks cafe and that of Gregg can be compared on the
following terms
Design of goods and services
The company Starbucks pays much emphasis on its design of goods and services. As to
serve its customers with the premium quality, the company focuses much on its production of goods
along with it the company focuses much on the prising strategy of the product. Whereas the
company Greeks to have a great focus on its products design as to maintain high end brand image in

the market place.
Quality management
Quality is the prime concerns of Starbucks. For this the company focuses on it product from
the very start i.e. from the sourcing of the beans to final product serve to the customer. Therefore,
the premium quality service ensures servant leadership as well as warm friendly culture. While
Gregg too focuses on maintaining premium quality in its products as to maintain firm's premium
brand image.
Location strategy
Several researches are done by the both the companies Starbucks and Gregg before setting
up to new location. Therefore, this selection of location is done by using specific strategies.
Supply chain management
Companies required continues, effective, reliable and responsible supply of all essential
resources and raw material for efficient functioning of both the organizations Gregg and Starbucks
Inventory management
For speed and flexibility in the service as well as for ensuring adequate quality of service it
is essential that both the companies must have up to date inventory in their store kitchen.
Maintenance
For the smooth functioning of the company, regular maintenance is very much essential to
remain competitive at the market place by Gregg as well as for the Starbucks.
Performance objective
Speed
Speed matters a lot in a business. For Starbucks it is essential for the company to serve there
customers at a fast speed. As keeping the customers waiting for too long affects the profitability of
the business. Thus, for ensuring the less time to serve the customer the organization must have
smooth internal communication as well as the inventory present in the kitchen must also be of top
quality.
Quality
Quality is one of the crucial factors that differentiate a company from its competitors.
Moreover, quality plays an important role in customer experience. This quality is majorly affected
by the quality of resources. Thus, the company Starbucks uses regular quality checks in order to
ensure the best quality is served to its customers (Suarez, Calvo-Mora and Roldán, 2016).
Dependability
In order to ensure best service quality as well as in order to have consistency in performance
Starbucks measures dependability of its product.

Flexibility
Both flexibility and speed are considered simultaneously, i.e. if there will be fast process
time then there will be better possibility to adjust process quickly. In order to timely fulfil the needs
of the customers' flexibility is required, thus, flexibility refers to remain updated to serve the
customers. Therefore, in order to increase the revenue of the company as well as to attract the
customers towards them, the company uses research and development techniques. This R&D
department of Starbucks gains the understanding of the economy they are working in as well as they
tend to design customized menu for country they serve.
Cost
Every company wants to maximize their profit. Therefore, in the case of Starbucks, the
company’s majority of cost is spent in acquiring coffee beans. Moreover, the company is very much
specific in growing their own beans called Arabica. Thus, in order to reduce the cost of supplier, the
company has started producing its own coffee beans, in order to have better control over its
operations. Additionally, the company uses technology in order to have enhanced inputs as well as
reduction in wastage.
The achievement of performance objective in Starbucks
Speed
It can be achieved by enhancing the level of technology within the various outlets.
Quality
By maintaining the quality of raw material from the suppliers.
Dependency
By using more machinery for production rather than staff.
Flexibility
By implementing software technologies in the functioning of the organization.
Cost
By having healthy relationships with the multiple suppliers for obtaining the raw material at the
minimum cost as possible without degrading the quality.
The achievement of performance objective in Gregg
Speed
By engaging more number of staff at the various outlets will enhances the delivery speed of
the company.
Quality
the quality can be maintained by ensuring hygiene at the various outlets of the company.
Dependency
By improving the supply chain network the company could achieve performance objective

on the dependency factor.
Flexibility
By engaging young staff at the service and manufacturing outlets of the bakery products,
this will helps in increasing the performance flexibility of the organization.
Cost
By optimizing the efforts and reducing the wastage as much as possible.
3. Design analysis
1) The customer service process
There is a availability of customer comment cards, at every outlet of Starbucks, in order to
get feedback from the customers as well as for the management of Starbucks to know where they
are lagging behind. The Starbucks experience helps the company knowing the customers experience
and their suggestions with the new product. It is the motto of Starbucks to satisfy its customers, if
the customer did not get satisfied with the coffee then the company claims that the company will
new coffee in the way the customers like.
In order to have continuous feedback from the customers, Starbucks uses several ways such directly
from the customer at the counter or through (SCC) Starbucks customer connections.
Trainings can improve customer service reliability
The company Starbucks has invested more on the trainings of the workers working there rather
investing large amount on advertisement. Thus, this makes a reliable coffee drink (Asnan, Nordin
and Othman, 2015).
2) Store layout evaluation
The store layout emphasis on the movement of material, customer as well as of work by
configuring equipment, work centres and departments. The decision of layout arose when there is
requirement to design new facilities or to redesign the existing facilities. The idea behind the layout
of Starbucks is to design the store layout in order to recreate the experience like Italy’s espresso bar
where people used to come to enjoy coffee. Youngster like to visit such places where they could get
quality coffee and where alcohol is not served. Therefore, before establishing to new location,
Starbucks undergoes research regarding nearby culture. The store location decision is based on
several factors such as lower in cost, convenient to attract market share, effectiveness on flexibility
and capacity as well as in order to have long termed supply chain, competitive advantages,
operations, huge revenues, nominal operating cost as well as long term commitment of resources.
The store layout of Starbucks shows that the company uses the approach of product layout where
the customer stands in queue, and move to station in order to get served.
Starbucks pays great attention toward the core operational characteristics i.e. the four Vs in order to
satisfy its customers as well as to full fill there needs by emphasizing on volume, variety, variation

and visibility.
The design layout of Starbucks
When the customer enters the out let it will first look at the menu and order its preference to
the receptionist of the Starbucks. Then this order is passed to the kitchen where order has been
prepared and then served to the customer. The service performance in Starbucks is maintained as
the company uses technology i.e. when an order is received at the reception, it directly gets
mentioned over the order display screen in the kitchen so that the order which is arrived first with
be prepared first.
The design layout of Gregg
When customer enters the outlet of the company it first checks the display counter of the
bakery as it tend to find out the product it likes to have. In the next step, the customer orders
according to its preference of the product and thus, the product is served to it. The service
performance in Gregg can be improved by taking feedbacks from the customers, regarding where it
could improve its services.

PART B
1. Overview
The key operational area of Starbucks is its effective supply chain management. The scope
of supply chain management in the operations of Starbucks is very crucial, as on supply base side
the program severed to lock in strategic and in high quality of supplier. This quality supply tends to
provide competitive advantage to the company Starbucks over the other coffee roasters of the
industry. Due to high quality of supplies, there is smooth supply fluctuations which provides base
supply of high quality growers. Since the cycle of purchase by Starbucks is signed long before the
crop is harvested to make sure that if there is any reduction, the uncertainties and fluctuation may
not lead to any shortage of supply. The CAFE practices has improved the reputation of Starbucks
which has made it capable to expand into purchasing from different countries and locations
(Calabrese and Corbò, 2015).
2. Starbucks global operations strategy and surrounding macro environment.
One of the key strategy that Starbucks follow since its interception is its product
differentiation offering differentiators as supreme customer service, coffee beverage reputations,
location as well as premium product mix which generates the premium value brand which is
comparatively costlier for other competitors to bear with. Moreover, the company has followed a
shrewd strategy of strategic alliance in order to make smart acquisitions. The company Starbucks
did not have outlets of franchise model or the outlets that of joint ventures or operated company
operated stores in the international market. For the product diversification strategy the company
Starbucks uses their key acquisitions such as evolution fresh for fresh juice products, Bay breads for
premium bread products and Teavana for tea products. One of the another strategy used by the
company Starbucks is, for its growth the company has international strategies to expand into key
developed as well as in the emerging market which are geographically diverse. Thus, this made the
company highly successful with its operations spanning in 80 countries. Therefore, all these
strategies derived considered providing competitive advantage of Starbucks in from its competitors.
This global operations strategy is developed by considering the improvement in supply chain area.
The PESTEL analysis of Starbucks Coffee Business
The political factors affecting business of Starbucks
The political factors which created opportunities of Starbucks business are regional
integrations of markets as well as government support for infrastructures while bureaucratic red
tape in developing countries provided threat to the Starbucks.
Disruptions in supply chain can be due to political disruptions of the company, which could
eventually affects the profitability and sales of the operations of the company.

The economic factors affecting business of Starbucks
Declination in rate of unemployment as well as increase in growth of developing countries
provided opportunities to Starbucks while at the same time increase in labour cost at the supplier
country has provided threat to the Starbucks coffee business.
As it is well-known that fact that businesses needs to suffer pressure due to the countries
economic environment. Therefore, due to instability in economy the purchase ability of the
customers is affected and which has resulted in lower sales.
The Social or sociocultural factors affecting business of Starbucks
The several factors which affects Starbucks business are growth in middle class, increase in
health consciousness as well as growth in coffee culture (Androniceanu, 2017).
Due to social culture the supply chain of the company is been affected as due to several spiritual
happenings in the country, the people engaged in the supplying of raw materials could not able to
fulfil the demands with the company most of the time.
The technological factors affecting business of Starbucks
Rise in mobile purchases as well as transfer of technology to coffee farmers has provided
several opportunities to Starbucks.
It is obvious that the supply chain can be improved by using technology. But this has affected the
company as it has given several benefits to the competitors of the Starbucks.
The Ecological or environmental factors affecting business of Starbucks
Growth in support towards environment friendly products as well as increase in business
sustainability trend has provided opportunities to the business of Starbucks
The country's more concern towards the responsibility of environment has affected the supply chain
of the company.
The legal factors affecting business of Starbucks
Increase in employment rules and regulation has proven to be the biggest threat in legal
factors affecting business of Starbucks.
Labour laws and several other law affects the supply chain of the company Starbucks.
3. Key requirements, capabilities and challenges.
Requirements
The key requirements for the Starbucks in the company's key operational area i.e. at supply
chain management can be explained as the outlets, of Starbucks are located the most prime and
strategic location across the globe. For the effective supplies of the raw and processed coffee beans
it is essential that there must be continued supply of quality coffee beans for its customers (Tickle,
Mann and Adebanjo, 2016).
Capabilities

The various capabilities associated with the company Starbucks in its key operational area of
supply chain management could be advancement in technology. As by using mobile applications the
managers company could track the order passed by the coffee farmers. Moreover, the technology
could be used for advance supply methods of the raw or processed beans from the farm to the
company. The another capabilities possessed by Starbucks could be introduction to new
distributions channels. This version of Starbucks is called beta version of delivery system and is
known as mobile pour. Therefore, this provided the great opportunity for future expansion of their
end product system of distributions. If this version is supplied successful then there would be more
generated revenue if implemented successfully (Gómez and et.al., 2017).
Challenges
The challenges faced by company of Starbucks coffee business in its key operational area
i.e. in its supply chain management as due to the fluctuation in the market price of the high quality
coffee beans. This fluctuation provided one of the biggest challenge for the company to business
effectively and this challenge can't be controlled by Starbucks at all. Thus, due to such conditions
the key operational area of Starbucks has been greatly affected. The another challenges to
businesses of Starbucks in its key operational area of supply chain management is the consumers
changing taste or one can say the customers choice of lifestyle. As more and more consumers are
shifting towards healthy food products and the culture of coffee has been moved towards risk (Wirtz
and Jerger, 2016).
Bad public relations, higher costs, insufficient technologies, retail problems and competitions are
the various challenges the company Starbucks is facing currently in its operations.
4 Analysis and evaluation of chosen operational area
Green supply chain
For the green supply chain the company Starbucks has attempted to take efforts to ensure the
single use cups which are recyclable. They converted a cup submit with the representation of every
part of paper and plastic cup supply chain. Thus, this included the suppliers of raw materials, retail
and beverage partners as well as the cup manufacturers. There fore, for the green supply chain the
company has offered farmer incentives to prevent deforestation. Thus, this encouraged the farmers
to take markable step towards recycling.
Starbucks operations
Coffee beans and beverages sold by Starbucks through their owned and licences retail
outlets. As company has established its brand image as the most recognized brand image in the
world.
The supply chain management of Starbucks can be explained in two points. One is material flow,
which means how beans flow form original supplier to the retail store all across the world and

secondly, purchasing system, which explains how Starbucks handle the purchase of such large
quantities in the global market.
1) Material flow
The material flow of Starbucks can be explained as
Purchasing coffee beans from the point of origin
At the starting, Starbucks had to submit material tested for contaminations before it gets
disposed off. The company has established GPS tracking devices in order to monitor the progress
from farms as well as to check whether no coffee has been stolen or tempered with en route. Once
the green beans are passed through several taste tests, the coffee is get loaded to the roasting system.
Roasting plants
Starbucks has three roasting plants in united states and Europe. These coffee roasters are
computerized, and they could identify hot spots and internal quenching systems in order to cool
coffee beans (Naser, Al Shobaki and Amuna, 2016).
Distribution Centres
In the next step once the coffee is being packed, it has been sent to the various distribution
centres, from where it is been picked by several partners who fill store orders.
Stores
This is the last point of material flow, where once the coffee is reached then from here it will
be available for retail selling either as a coffee bean or as a hand crafted beverage.
2) Purchasing System
The Starbucks generally purchase coffee on the negotiation basis, and the price of the coffee
depends on the demand and supply at the time of purchase. In order to have efficient and effective
supply chain management of the Starbucks coffee beans, the company ensures its several programs
and process for its all stakeholders.
Starbucks consideration in purchasing
For being recognized as the respectable and recognize brand the company majorly focuses on the
quality of coffee beans. As quality is the prime concern for the organization Starbucks.
Beans-related concerns to better choose the supplier
Here, the company find the effective suppliers for the continuous supply of coffee beans. The
company has set guidelines which protect the supply from high quality standards in order to have
long termed viability of quality.
The company ensures high quality of coffee supplies. The variety preferred by the company is
Arabica variety of coffee. The characteristics of flavour proffered by Starbucks is with a pleasant
aroma.
Other than beans related concerns to better choose the supplier

Some non bean related concerns to better choose the supplier are
Environmental impact
This concern covers several factors such as soil management, water reduction, clean water,
water buffer zone, energy use, acceptable agrochemical as well as waste management.
Economic issue
The economic issue concerns with the fact that, the production system must give benefits to
the rural communities by boosting their incomes, by giving them the opportunities of employment
as well as by giving them the educational opportunities. More over, it must also enhance their local
infrastructures & public services (Naser and Al Shobaki, 2017).
The company Starbucks manages its resources by using technology
Through various technologies such as continuous monitoring help the management of the
organization in utilization of resources in the most optimized and effective manner.
The company could use block chain method technology
Usage of block chain method could help in managing of resources as data structure that
representing a financial ledger entry, transaction or record is known as block chain.
5 Recommendations
It could be recommended to the company Starbucks that in order to have the most
recognized brand image, the company could enhance its supply chain management by cutting down
the delivery and management cost. Moreover, the company must pay attention to shortens the
customer lines and apply strategies to increase the foot traffic at their stores.
Additionally, in order to have continuous supply chain of the raw beans from the farmers the
company must establish a long term relationship with the supplier, along with it the company must
use strategies to eliminate the obstacles of cooperation. It is recommended to the organization
Starbucks to establish common goals as well as tools in order to have effective cooperation with the
suppliers. Moreover, the company could share and analyse the information of its supply to all its
participants.
Additionally, it is also recommended to the organization Starbucks that in order to have
responsible and reliable supplier base the company must invest in enhancing the measures of supply
opportunities. Moreover, the company must respond to environmental and ethical concerns under
the term of green marketing and must focus on marketing efforts to reclaim, produce and promote
environment sensitive products. Lastly, it is recommended to the company to pay more attention
towards the initiatives of renewable energy to reach its environmental targets (Campbell, Jardine
and McGlynn eds., 2016).
Moreover, it could be recommended that the of the smooth running of Starbucks the
company must improve its public relations, reduce is cost of production to provide services at the

lower cost, may take usage of technology and must use strategies to overcome the problems of retail
sector. Thus, in this way the company could work efficiently and effectively with it maximum
possible outcome.
6 Conclusion
Thus, from this report it could be concluded that the strategy of Starbucks is fairly simple,
i.e. to reach at the customers where they shop, travel, dine and work. In order to achieve the
objectives the company has increase its perception towards high quality, commodity production as
well as by adapting stores to consumers lifestyle.
Moreover, in order to achieve several objectives the company has used the strategy of
integrations. In order to have continues supply chain the company has built long term relationships
with the suppliers, the company has eliminated the obstacles to cooperation by using tactics,
strategies along with doing analysis and by sharing of informations to all supply chain participants.
There fore, in this report it had been discussed several concerns of the company Starbucks such as
the companies global operational strategies and its macro environment factors, followed by the key
requirements, capabilities and challenges associated with the supply chain management of
Starbucks coffee business. Lastly, it has been discussed the analysis and evaluation of supply chain
management of Starbucks (Cook, 2017).

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