Supply Chain Management of Starbucks

This report provides an overview of the supply chain management of Starbucks, including its global operational strategy. It discusses the key requirements, capabilities, and challenges in managing the supply chain. The report also includes a comparative analysis of the performance objectives of Starbucks and Greggs.

Operations management
and Service excellence

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A ..........................................................................................................................................3
Comparative Four Vs Analysis..............................................................................................3
Comparative Performance Objectives Analysis.....................................................................6
Design Analysis......................................................................................................................8
Impact on design of customer service process ......................................................................8
PART B ...........................................................................................................................................9
Supply chain management of Starbucks ................................................................................9
Overview ...............................................................................................................................9
Starbucks Global operations strategy and surrounding macro environment .........................9
Key requirements, capabilities and challenges 350 .............................................................10
Analysis and evaluation of supply chain management of Starbucks ..................................12
Mercantile theory: .............................................................................................................12
Recommendation .................................................................................................................13
Conclusion....................................................................................................................................14
REFERENCES .............................................................................................................................16

INTRODUCTION
Operational management is defined as the administration of business practise for creating
the highest level of efficiency that is possible within the company. This includes conversion of
materials and labour into services and goods and to maximise the profits earned by the
organisation. The operations management team is responsible for maximising profits of the
organisation. The following report includes information regarding supply chain management of
Starbucks. This is an American coffee company that is founded in Seattle, Washington.
Starbucks uses automated espresso machines for increasing the sales of the company. There are
two parts of this report. Part one includes comparative four V analysis, performance objective
analysis and design analysis. On the other hand, second part includes supply chain management
of Starbucks and its global operational strategy.
PART A
Comparative Four Vs Analysis
The main element of this process is to transform each and every resource or raw material
in a way that it is productive for classifying it into four assorted attributes (Zdeblick, M.J,2016).
The different attributes which are present in business are raw material, equipment, money and in
return, these are changed into finished products and goods. The four dimensions included in
comparative four Vs analysis are visibility, volume, variety and variation. There is fundamental
management of creating values and belief in effective manner. This is concluded that in every
business, there are lot of operations required for converting each and every resource in
productive output. The differentiation between Starbucks and Greggs on the basis of 4 V's is
mentioned below -
Starbucks is an American coffee company and coffee house chain which was founded in
the year 1971. This is a well known coffee shop that provides services across the world. On the
other hand, Greggs is an organisation which has the largest bakery chain in UK and the
specialisation of this company is savoury products like bakes, sandwiches and sausage rolls and
vanilla slices. The headquarters of this company are located in North Tyneside. The Four Vs
model of these organisation is listed below -

Four Vs
Elements
Starbucks Greggs
Volume This is a factor which is involved in
producing high volume of services
and products. When this organisation
want to increase volume of sales ,
this helps in producing high volume
of goods and services. In context of
Starbucks, there is requirement of
focusing on bulk manufacturing that
minimises cost of production.
Starbucks is dealing with product
naming coffee.
The managers of Greggs have an
objective for increasing the volume
of the products produced by the
company. They want to earn more
profit and money in marketplace. It
is required to maximise the bulk
production and this automatically
aids in minimising manufacturing
cost.
Variety According to this factor, it is seen
that managers of Starbucks require to
maximise dimension area. The
managers of Starbucks must
maximise their competitiveness by
adopting new and strong strategies
for providing good services.
Starbucks is involved in innovating
it’s products and services. This
attracts lot of customers across the
world. Starbucks offers a wide
variety of coffee.
Managers of Greggs are increasing
the type of food dishes and food
items they are selling. This will help
in attracting new customers and
retention of existing customers by
providing them something new. This
company is offering bakery items
and it is attracting a lot of customers
Variation Starbucks has to do variant addition
in it’s offerings and services. This
company offers it’s coffee by a
unique style. It writes names of the
buyer on cup. This differentiates
The managers of Greggs are adopting
an attractive idea. In this, they try to
make their food items and dishes by
adding new flavour and spices to
them. They also focus on decorative

Starbucks from other coffee
providers. This is good example of
creativity.
presentation of food.
Visibility This is the method which needs to be
adopted by the management team of
Starbucks. It is ensured that
customers are getting their orders in
minimum time and they do not have
to wait for it for longer. For example
if a customer place their order
through online sources, they can
easily identify the current location of
their product.
It refers to the last element where
customers can see their products and
services which are provided to them
(Durach, Kembro, and Wieland,
2017). The Greggs has it’s physical
stores where food items and bakery
is sold to the consumers in a
traditional method.
Comparative Performance Objectives Analysis
Comparison between operations performance of Starbucks and Greggs
Current operations Starbucks Greggs
Designing goods and services
This company emphasises on
premium design and this is
linked to the broad
differentiation generic
strategy.
The different products offered
by Greggs is sausage rolls,
vegan products, balanced
choice pasties, sandwiches,
seasonal ranges, etc.
Quality management
This company carefully
sources its coffee beans from
coffee farmers who comply
with Starbucks quality
standards. This company buys
coffee beans from Farmer
equity (CAFE) program.
In Greggs, the labour standards
were measured using
traditional time study
techniques across thousands of
stores.

Layout design and strategy
The layout design of Starbuck
cafes maximises workflow
efficiency. This supports
friendly and warm ambience to
match the organisational
culture of company.
Greggs is currently going
transition from traditional
bakery retailer to a food on the
go retailer that has involved
investment for improving
operational efficiency.

Polar diagram of Starbucks
There are various type of performance objectives which have to be adopted within the
organisations. Some of the most essential performance objectives are as follows:
Speed: It is the element which is all about customer experience where how long customer
need to wait to buy their goods and services. It is very essential for the management team to have
high speed and efficiency among their services.
Cost: It has been analysed that the major cost of Starbucks associated with the purchase
of coffee beans. The cost of coffee beans are quite high and this affects overall profit margin of
the company. Thus it is very important for all organisations to manage their cost of resources

utilised within the organisation. Starbucks manages the cost in effective manner (Uygun, and
Dede, 2016). In context of Greggs, the raw material used for making delicious food dishes is
comparatively high and it is not easy to manage cost of raw veggies as it buys best and fresh
fruits and vegetables. If the managers want to manage cost production then they can emphasise
on production of bulk products and in this way, overall cost is managed.
Design Analysis
Impact on design of customer service process
Starbucks’s managers are providing after sales services to the customers. This helps in
retaining of potential clients and customers. so that they can retain their potential customers for
a long duration of time. This can be explained with an example – Starbucks must take feedbacks
and reviews from it’s customers. This will provide information to the management about the
problems customers are facing by their offered products and services (Luthra, Garg, and Haleem,
2016). In context of Greggs, they focuses on maintaining positive environment at the
marketplace. This helps in increasing the overall profitability and sales of the company.
Impact on design of store layout and flow
Stores are made attractive and so that they can influence customers towards buying
products from these shops. There are basically two types of stores like physical and online
stores. These are kept attractive in order to attract lot of customers. In context of Starbucks, they
have physical stores where they traditionally sell their products to their customers. In context of
Greggs, managers provide all the bakery products through physical and online platforms. With
the help of this, company gain various advantages at the marketplace.

PART B
Supply chain management of Starbucks
Overview
Starbucks is an American coffee shop started in Seattle. This company is been described
as the main representative of second wave coffee. The third wave coffee makers have aim of
quality minded coffee drinkers with hand made coffee based on lighter roasts. This is also using
new automated espresso machine for efficiency and safety reasons. Supply chain management of
Starbucks is strategy of how a barista pours a good cup of coffee. The supply of Starbucks
includes journey of coffee bean to coffee cup.
PART B
Overview
Supply chain is a system in organisation which is related with moving of product from a
supplier to the final consumer.
Scope of supply chain: with the increasing complication the supply chain networks and
globalisation of various business, shortening of the product life cycles has resulted into a need of
proper supply chain management in organisations.
Starbucks is an American coffee shop started in Seattle. This company is been described
as the main representative of second wave coffee. The third wave coffee makers have aim of
quality minded coffee drinkers with hand made coffee based on lighter roasts. This is also using
new automated espresso machine for efficiency and safety reasons. Supply chain management of
Starbucks is strategy of how a barista pours a good cup of coffee. The supply of Starbucks
includes journey of coffee bean to coffee cup.
Starbucks Global operations strategy and surrounding macro environment
As Starbucks is a well known company due to it's attractive services and products, it is
analysed that it has a very strong operational strategy in international markets. This company
ensures that it is adapting itself to the local surrounding of the country. The supply chain of
Starbucks has always focused on expanding it's stores and shops around the world. With the
advancement of technology, it is seen that Starbucks is planning to build locally relevant
Starbucks experience that has blend store experience with the digital space (Cimorelli, 2016).

This is exploring the strategic partnerships for implementing digital innovations in the country.
This company has also opened e-flagship store in Alibaba's T mall that has provided a social
gifting for different customers. Starbucks focuses on Reserve stores in different countries that
have specialisation in experience stores. This highlights exquisite and rare coffees which are
available in various global countries (Bernhardt, Hand Held Products Inc, 2017). The main step
for Starbucks transformation plan is recognition of supply chain of Starbucks. This also includes
taking a complex structure and simplifying it in order to perform different tasks including
planning, sourcing, making and delivering. The involvement in planning includes production
planning, replenishment and new product launch. The sourcing activities are divided into two
groups coffee and non coffee procurement. When the supply chain functions are recognised,
there are other different departments that turned into attention for the second objective of supply
chain transformation.
Key requirements, capabilities and challenges 350
Requirement: there is a requirement of sustainability and efficiency as the two key
elements which help in smooth running of their functions in the overall process of supply chain.
It make sure that there is no space for inefficiency in the supply chain (Tseng, Lim, and Wong,
2015). For this Starbucks is focussing on its core business model. Having adequate planning
before starting of supply chain process is also a requirement which has to be fulfilled to
minimize various issues which can arise in the overall process of supply chain. There is also a
requirement that final delivery of product must be in accordance with set standards only, as there
are situations in which a company may not be able to match their planned level of performance
which can have a negative implication in terms of dissatisfaction amongst their customers.
Development of a proper structure is a requirement that there has to be a structure which has to
be according to supply chain process.
capabilities of Starbucks in areas related to supply chain management:
 People: Starbucks has competitive advantage in terms of its employees. This provides
strategic advantage to this company as they provide training to employees according to
their requirements. They also try to keep their employees satisfied by providing timely
compensation and benefits, which helps them in rating their skilled employees for a
longer period of time.

 System: Starbucks has a well defined system which they use in managing their logistics
and supply chain network across six continents. The “scorecard-system” of this brand
helps them in evaluation of efficiency of their overall supply-chain system. This leads to
correction of any defects which is taking place in company.
 Infrastructure: There are approximately 15000 stores which are operating in around 50
countries. Starbucks is a brand which has a potential for procuring waste and building
efficiency in their sustainable supply chain network. They also have one centralised
system which is used for managing their supply chain and logistic network in all six
continents. This leads to managing multiple distribution centres with complete control.
Challenges: There are many challenges which are being faced by Starbucks and they are
making efforts to handle those challenges in an efficient manner (Ayers and Odegaard, 2017).
Such as recently there has been a growing trend for people staying at home and developing a
preference for home delivery with help of various new application which have been developed
and are helping them to order on just one click. Also, there is a barrier of increasing cost which
is incurred because of maintaining effective supply chain network. It leads to a situation of more
investment and financial resources. There is also bargaining power of suppliers which is having
affect on increasing the prices of raw materials. This leads to situation where focus has to be
made on maintaining long term relationships with their suppliers so that the overall network is
not getting much affected.
Business process improvement There is a requirement for development of a new technology in
the overall process of supply chain. Adoption of latest technology has become a very big
challenge for logistics department in various business processes (Chen, Preston, and Swink,
2015). Also, nowadays customers are demanding full transparency which is also leading to
increase pressure for companies to have adequate transparency in their overall process of supply
chain management.

Analysis and evaluation of supply chain management of Starbucks
Mercantile theory:
Mercantilism is a theory in which government is seeking to regulate economy and trad so that
there is promotion of domestic industry. This is associated with policies of free trad prevailing
amongst countries. This is also used by Starbucks in implementation of its strategy by expansion
of its operations in other countries where they are not having presence. This helps them in
removing tariff barriers, increasing accumulation of reserves of foreign currency. All this helps
Starbucks in increasing their area of operations.
There is a policy in Starbucks with the help of which is helping in maintaining of effective
supply chain management system in their company such type of elements are mentioned below:
 Centralised system: There is one centralised system which Starbucks is using to mange
their supply chain and network of logistics in all their outlets which are present in
different parts of world (Marshall and et.al 2015). They are trying to maintain “score card
system” to evaluate their supply chain efficient
 Usage of digital technology: Starbucks is using latest developments in technology to
make sure that their supply chain system is very efficient and they are able to cope with
increasing demand for quality products. They are developing schedules which are related
with production & distribution which can add flexibility in their operations and functions.
Managing relationship between suppliers: Majority of suppliers of Starbucks is present in
rural areas hnece it becomes very important that there must be maintenance of supplier
relationship so that suppliers can realise their importance in overall process of supply chain.
Innovation: There is a decline in production because of some issues related to presence of
fungus affected this brand in a negative manner. This company has a vision that they have to
create their own coffee blends which can help them in creating large scale production of coffee
in future (Hitt, Xu, and Carnes, 2016). Also, Starbucks is a brand which is committed towards
innovation and they have spend their resources in forming various innovation strategies which
can help them in building up of a competitive advantage. Such as their strategy of promoting
wrong name of their customers on the coffee cup is a very innovative strategy which has helped
them in getting attention of large number of customers.
Reduction of waste and avoidance of inefficiencies: Starbucks has made attempts so that they
can remove all the inefficiency which can have a negative impact on their overall process of

supply chain (Hoyos., Morales and Akhavan-Tabatabaei, 2015). They have made made various
policies related with engagement of employees, growth of business, improvements in their
products in accordance with their customers demands.
Strict rules for various suppliers: Suppliers are major stakeholders in every company and it is
necessary on part of companies that they are able to maintain long term Starbucks has made
attempts that all suppliers are using a sustainable and efficient approach in their production. They
have set standards for their suppliers who are involved in raw material production. They have
also make attempts that such guidelines as directed by Starbucks will met then a producer
cannot be approved as their supplier (Hoyos, Morales and Akhavan-Tabatabaei, 2016). Only
after such guidelines are followed there can be a formal and contractual relationship between a
buyer & vendor in case of Starbucks.
Managing services platform: Starbucks is making enough efforts so that they can accessible
successfully able to access to various innovative platforms, improve overall relationship with
hire suppliers all such activities have a positive outcomes in terms of improvement in quality of
their products which are offered by Starbucks. This is tool which has been used by Starbucks in
enhancing the satisfaction level of customers is enhanced and improved with time (Heizer, J.,
Render and Munson, 2017).
Above mentioned are some of the tools which have helped in maintenance of
effectiveness & efficiency in overall process of supply chain management in Starbucks. There
are aspects which Starbucks is managing in their supply chin process but apart from that they
must make continuous comparisons of their set performance standards so that if there is any type
of inefficiency, then those can be corrected and adequate steps can be taken for such loopholes.
Recommendation
There are some recommendations with regards to their supply chain network as discussed
below:
The overall roasting process of Starbucks must be such that they are able to deliver the same
quality standard of coffee in all their outlets (Merigó, and Yang, 2017). This is a necessary step
for to ensure equal level of satisfaction for all their customers across all their outlets.
Starbucks is supplying and making efforts to offer best quality of ingredients to their final
customers on affordable prices.

 The supply chain model of Starbucks must be differentiated with their customer so that
they can have a distinguished advantage in comparison with their competitors which can
help in effectiveness in their process of supply chain.
 Value chain analysis is very necessary framework which is used to analyse relationship
between various operations and this can help the company in contribution of in terms of
increased revenue, a value chain can be divided into two types that is primary and
secondary.
Effective integration, this is also a very important tool which can help Starbucks in having proper
integration among various aspects of supply chain process (Hitt, M.A., Xu, K. and Carnes, C.M.,
2016). This can be done with the help of effective integration of various activities which are
involved in the process of supply chain process procurement of raw materials, storage and
warehousing, distribution to various units and final usage in delivering ultimate product to the
consumers. All such activities have to be in proper synchronization so that there are no
duplication and adequate quality standards are being maintained in the final product. This will
also help in ensuring effective ns in process of Starbucks.
Management of prices: there has been a situations which Starbucks is facing which is related to
rise in prices of their raw materials there has to be attempts made by this company that they are
not getting affected by such rise in prices (Mahadevan, B., 2015). Otherwise this may have a
negative impact on present level of profits of company.
Conclusion
From above discussed topics it can be said that there are various aspects in the process of
managing operation in a company. All such help in adequate functioning of whole organisation.
Operations management is related to administration functions which are being performed by
employees and all the staff members in a company. Also, it has been identified that supply chain
management is a very important tool which is used by organisations to maintain their overall
process and to ensure that value which is delivered to their customers is according to their
requirements

.

REFERENCES
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