Operations Management and Service Excellence

This study focuses on the operations management and service excellence of Starbucks. It includes a comparative analysis of Starbucks and Greggs, performance objective analysis, design analysis, and an overview of operational management. The study also discusses the importance of quality management and the challenges faced by Starbucks in maintaining quality.

Operations Management and
Service Excellence
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Table of Contents
ss
PART 1 3
Four Vs analysis of Starbucks and Greggs 3
Comparative performance objective analysis 5
Design analysis 6
PART 2 7
Overview of operational management 7
Global operational strategy surroundings macro-environment 7
Requirement, capabilities and challenges 9
Analysis and evaluations of operational area of Starbucks 10
RECOMMENDATIONS 11
CONCLUSION 12
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INTRODUCTION
Operations management is a function and management of business activities for creating
effectiveness in all functions and operations of the company (Swink and et.al., 2017). This study
is divided into 2 parts and the whole study is based on Starbucks Company. Starbucks is an
American Coffee company, founded by jerry Baldwin, Gordon Bowker in the year of 1971.
Headquarter of this company is in U.S. 1 Part of this study, is going to show comparative
analysis shows this company its actual position of the company as compare to its rivals.
Comparative and design analysis of Starbucks also helps it out in taking competitive advantages.
2nd part of this study is going to show the importance of operations management and important
quality management area. In implementation and making this area successful, company faces
several challenges which this study shows. Further it will also show some ways of improving
them and solving all those barriers and maintaining quality.
PART 1
Four Vs analysis of Starbucks and Greggs
Four Vs is an effective comparative analysis by which company can analysis its actual
position in the market as compare to its rivals and also measure the financial relationship
between variables in some periods. It is the best way of identifying competitive position in the
market. Greggs Plc is one of the top most performing fast food companies in the UK. This
company has increased competition for Starbucks, McDonalds and other top brand restaurants
and companies. It is stated that Greggs version contains freshly ground coffee made from
Arabica beans which contains 240 calories which is less than the 383 in Starbuck’s version.
Greggs’ version is cheaper as well. In comparison it is stated that Greggs has performed better
than Starbucks. Starbucks is one of Greggs’ high street rivals.
As per the research, there is an increment of visiting to Starbucks by approximate 7% over its
pumpkin spice latte season. It is also stated that it is now possessing a scarce commodity which
makes its consumers feel unique. It helped Starbucks pumpkin spice latte become as successful
as it is now.
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On the other hand, Greggs began to expand its business by increasing range of hot drinks with
the main aim of competing with global coffee giant Starbucks by targeting coffee drinkers. Its
premises is affordable and cheaper than Starbucks. It is also stated that due to affordability and
accessibility, approximate 58% of UK consumers view value for money to mean low price in
food or drink (Financial value of Greggs’, 2019.).
Figure 1Best valuable brand
Sources: (Valuable brand in Coffee industry., 2018.)
It is stated that Greggs give its coffee lovers the most caffeine per pound at approximate
103.50mg. On the other hand, Starbucks offers approximate 61.54mg per pound. There is the
only one category of Greggs who give the best value and it is known as sophisticated milky latte.
Volume: In the context of volume, it is stated that Greggs have approximate 1,823 Greggs
bakeries throughout the UK. Approximate 25,000 people per each Greggs bakery is the tab’s
benchmark. It has approximate 22,000 employees as per the data of 2018 and has 2009 locations
where it serves. On the other hand, Starbucks serves in approximate 28,2018 areas and has about
291,000 employees. It shows that Starbucks is larger than Greggs in the context of volume and
size (Sivarajah and et.al., 2017).
Variety: In the context of varieties of products for Starbucks it can be said that it provides coffee
beverages, smoothies, tea, baked goods, sandwiches, chips, crackers, refreshers etc. Whereas,
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Greggs offers sandwiches, pies, pastries, baked goods, beef and vegetable pastry etc. varieties of
products shows that Greggs have more varieties of products than Starbucks.
From the above it can be said that both Greggs and Starbucks are at a point where anyone can
take competitive advantages as they are on neck-to –neck competition. But Starbucks is the top
and recognized brand and have more sales and revenue than Greggs.
Comparative performance objective analysis
In the context of current operations of Starbucks it can be said that it is operating
effectively. Since, 1971, it has been committed to ethically sourcing as well as roasting the
highest quality Arabica coffee. It is selling coffee beans without adding any artificial flavor and
satisfy all types of customers by all means. In the context of operational management strategies it
is identified that it makes an effective use of combination of strategies such as: competitive
strategy, qualitative strategy, process strategy, layout strategy, inventory management strategy
and global strategy. It has unique and differentiate strategies to serve its target buyer segments.
In the context of quality strategy it uses, mystery shoppers. For quality strategy it uses
total quality management, just in time strategies. In addition, it uses several areas in operations
management:
Quality management: In this regards, it uses premium quality. For managing quality and
creating qualitative products and coffee it sources coffee beans from an effective source and
farmers who follows its CAFÉ standards. In this area of decision making, Starbucks implement
high quality for aligning with firm’s premium brand (Reid and Sanders, 2019).
Process design: It is also one of the most important and effective contributor to star
bucks’ success. Its process and designs are highly effective which helps it out in taking
competitive advantages. The main feature of this company and process design is it has flexile
workforces which can make a balancer between demands and supply. On the other hand, in the
context of Gregg it is identified that it also has an effective process design but do not have
flexible workforces as compare to Starbucks. It creates problems in making a balance between
customers changing demands and supply.
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Location strategy: Starbucks’ locations strategy focuses on urban centers and mainly
target middle and upper class of people. It occasionally uses strategic clustering of cafes in the
same geographical area with the main aim of getting a large market share and competitive
advantages. On the other and Greet focuses on all type of customers like lower, middle and upper
class as its products and services are cheaper than Starbucks. It helps it in taking competitive
advantages and attracting wider range of customers.
Job design and HR design: s HR design refers organizational culture in all areas which
involves employees’ attitude who shows the way of working and treating with others. It also
shows its codes of ethics which plays an important role in accomplishing pre-determined goals of
the company. In this decision area of operations management focus on making sure that the
Starbucks’ culture is woven into entry job. On the other hand, in Gregg also focuses on recruiting
effective employees and its HR is mainly concerned with motivation and training of employees.
The main aim of providing training to employees is to increase knowledge of employees as make
them compatible (Moutinho and Vargas-Sanchez, 2018).
Design analysis
In the context of Starbucks and design, it can be said that it has developed a strategy
which allows it to make a balance and regularly changes its designs themes. Using different
designs is the best way of adding value in consistent service experience to its customers. For
design analysis it has a separate and individual design group who is mainly responsible for
furniture, fitting and layout its brand.
Process and capacity designs: It is one of the main key of the success of Starbucks. It
makes an effective use of capacity and capability by designing processes in order to satisfy and
meet fluctuations in demands of customers. For example, processes at its firms’ cafes are more
flexible and adaptive which means it makes its employees able to adapt changes and manufacture
as per the changes in the demands during peak hours. The main aim of design process is to
increase efficiency of its processes and workflows. It also focuses on premium design which can
be seen in its mugs (Lohr, 2019).
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So, from the above it can be said that it helps it out in maintaining and having a strong
visibility among 4 V’s.
On the other hand, it can be said that Greggs is a trusted brand with a strong bakery
heritage. Its layout design of the space directly impacts and shows the way of working like the
flow of work, materials, information’s through the system etc. There are several factors which
affects its design and layout such as: transport facilities, raw material supply, availability of labor
and utilities etc.
PART 2
Overview of operational management
Operations management can be defined as an area which consists of several functions and
elements which helps out an organization in creating the highest level of efficiency possible
within a business. Operations management is mainly concerned with converting raw materials
and inputs into finished goods for delivering it to customers. In the context of Starbucks it can be
said that Its success is linked with proper application of all 10 decisions of operations
management which includes: Quality management, designs of goods and services, location
strategy, process and design capacity, layout design, HRM, inventory management supply chain
management, scheduling and maintenance. The main element and factor of its success is quality
management For this purpose and maintaining quality, it gets its coffee beans from those coffee
farmers who comply with Starbucks quality standards. Those farmers who certified under the
Starbucks coffee and farmer equity (CAFE) program. It also uses premium quality for quality
management and also make sure its quality via a warm friendly culture (Operations management
of Starbucks, 2017).
Global operational strategy surroundings macro-environment
There are several factors that are affecting operations and performance of Starbucks in
both positive and negative manner such as: political, social, technological etc. But with the help
of an effective quality management element and area of operations management it has made
itself able to solve all barriers and take competitive advantages. Some macro environmental
factors and importance of quality management in this environment are discussed below:
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Political: There is a political stability in the UK and that is the reason that many foreign
investors perceive the UK as the best investment destination. It is beneficial for Starbucks. UK is
in a free trade agreement. There are several competitors in this industry but with the help of an
effective quality management and using all standards and laws regarding maintaining quality, it
is taking opportunities to attract foreign investors and become the market leader (Sammut‐
Bonnici and Galea, 2015).
Economic: Due to some changes in economy there are several adverse affect which are
creating several barriers in the path of organizations including Starbucks. It is also stated that due
to recession, Starbucks experienced a decline in its sales revenue. It also increased
unemployment rate that directly affected consumers’ buying decision and capacity but an
effective quality of Starbucks helped it out in attracting some of its customers as compare to
others.
Social: Due to changes in economic conditions several customers became unable to buy
Starbucks’ products as they are costly as compare to others. It created several problems as it
decreased sales of this company. Due to uncertainty, consumers have reduced their spending. But
there are several people who prefer quality over prices and if they get satisfactory quality of
products then they pay for that. By implementing some tools of quality management like TQM,
Starbucks solve this problem.
So, from the above, it can be said that quality management and its approaches helped it
out in solving problems of macro environmental factors (Zhang and et.al., 2017).
There are several global marketing strategies of Starbucks which makes it able to
operate internationally in an efficient manner. One of the best strategy of this company is
differentiation and competitive advantages strategy (Global marketing strategy of Starbucks,
2017). As per this strategy, it mainly focuses on serving niche customers than rivals. It has an
effective resources and capabilities to serve its target and niche market. One of the main element
which helps it out in making its differentiation strategy more successful is quality management.
For this, it implements six sigma and total quality management approach which reduces its
operational cost and also improve continuous quality of its products.
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Requirement, capabilities and challenges
Requirement of quality management:
Quality management is a competitive dimension which is being used to create The
Starbucks Experience. Quality management in operations management is very important and
required for Starbucks to focus on and consider. In the context of requirement of quality
management, it can e said that Since, Starbucks is famous for the coffee; the quality control on
coffee beans is strict and tight. The main aim and requirement of quality management is to take
competitive advantage. There is a high intensity in competition in this industry and several rivals
who also provides qualitative coffee and attractive services. For being in the competition and
becoming the market leader, its is essential for Starbucks to focus on this area and consider this
as the main element of operations management (Mas-Machuca, Akhmedova and Marimon,
2018).
Challenges Managing quality is not an easy task as there are several challenges and
problems occur on the path of the company which needs to be solved out. For maintaining
quality it is important to buy quality raw materials and also pay higher to employees. All these
factors increases the overall cost of the product. Due to economic uncertainty and recession in
this environment, customers do not prefer to pay for that coffee and services. It is argued that an
increase in the federal minimum wage will adversely impact the company and its already thin
margins. Responding technologies is other challenge for satisfying current and changing needs of
customers. Managing operational cost and influencing customers for paying for qualitative
products is the main challenge. Implementing all approaches and tools for managing quality can
also increase operational cost.
Resources and capabilities: With the help of an effective resources and capabilities,
Starbucks solved out this challenge and problems. Starbucks is known for its premium quality
products and continuous quality management. The main strength and ability to manage its
quality is its effective supply chain as it sources its cocoa from some of the best suppliers in the
world. It helps its suppliers to sustain their quality of raw material and works to empower them.
It maintains a strong relationship with them (Merino and et.al., 2016).
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Analysis and evaluations of operational area of Starbucks
In the context of quality management area of operations management it can say that, it
plays an important role and it is the main factor of the success of Starbucks because it is known
for it premium quality of coffee. There are several resources which are being used by this
company such as maintaining relation with suppliers, customers and employees. To make an
innovative and disease free working environment. For managing all resources they perform
several activities for quality management: In addition, it is also stated that for maintain a better
quality of its products and services, Starbucks has provided a quality control room which they
need to test the coffee. They do not only test coffee but also make sure that if company is
following all standards of quality management. Health unit also come in their factory for
checking and measuring effectiveness of the coffee and standards. For knowing health and safety
at workplace in regards to their products, they also hold a medical check up of their employees 2
times before hiring them (Rasmani, Widodo and Wibowo, 2017). Some issues have been
identified which occur in managing and implementing resources for quality management such as:
technological issues and competitive advantages. The main requirement and aim of Starbucks for
managing quality and importance of managing resources are described as below:
Greater customers’ satisfaction: Customer satisfaction is one of the main requirement
and aim of Starbucks of managing resources of quality management. With an effective use of all
resources and managing quality, it makes itself able to attract wider range of customers and
satisfy them. In the survey, it identified needs of customers and many people prefer quality rather
quantity and prices. So, it uses effective resources and satisfied needs of customers.
Fewer human errors: Quality management practices and employing skilled and disease
free candidates, it reduces chances of making errors in the process of manufacturing and others.
Employees have a set of guidelines and standards under which they perform during their day-to
day operations.
Keep up with competition: The main aim of quality management is to satisfy customers.
When customers satisfy and get value then they pay for it and it increases loyalty among the,
They stay with the company for the long run and even do not go to other shops. When customers
stay with an organization because if higher quality products then it directly leads to competitive
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advantages for the company. It is a requirement of Starbucks to beat the competition which
happened because of managing resources of quality management.
Quality planning, control and improvement is a process of quality management which is
being used by employees of Starbucks. There are several approaches and theories which are
being used by Starbucks for an effective quality management and reducing all barriers related to
the quality management. Some approaches of quality management used by Starbucks is
described as below:
Total quality management: It is the best approach ad model which helps out companies
and Starbucks in improving its manufacturing process and get out the best and errorless products.
It is a customer focused process which involves all employees in continuous process. The main
aim of using this model is to satisfy customers, improving brand image and taking competitive
advantages by developing qualitative products and make continuous quality. This approach of
Starbucks is found to highly efficient because company takes use of the best management
practices It analyzes logistics and distribution of its business it is also identified that this
company has number of efficient distribution channels that helps it increasing efficiency of its
operations (Damanhuri, 2018.).
In addition, it is analyzed that Starbucks uses random check-ins from district mangers in
which they check the baristas and talk to their customers to get feedbacks and knowing
effectiveness of their drinks and products. They also make an effective use of eco sure for
checking required qualifications in every 6 months for all its stores in order to make sure that
quality standards are being maintained by them (Ways of analyzing effectiveness of quality
management of Starbucks, 2013).
RECOMMENDATIONS
From the above study it is identified that Starbucks faces several problem in managing
quality. There are several external factors which is affecting its operations. It is stated that this
company has a strong relation with its suppliers which helps it out in providing effective and
qualitative raw materials. But there are several other factors which needs to be considered such
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as employing diverse workforce. By employing diverse workforce and focusing on external
recruitment it can bring out new and innovative ideas in its organization. Different backgrounds
and skills of employees provide learning opportunities to others and make an creative working
environment which can not only helps it out in providing satisfactory services to customers but
also in making successful to its differentiation strategy. So, it can be said that by carefully
developing human resource process, it can solved out the problem of responding current needs of
customers and adapting advanced technology.
In addition, it can also be suggested to Starbucks on the basis of analysis that, it should focus on
implementing an effective leadership style which can helps it out in making all approaches
successful like implementation of total quality management and six sigma approach of managing
quality. The weakness of this company is lack o skilled workforce. Due to lack of an effective
workforce, it faces problems in implementing total quality management approach successfully so
by providing training it can solved it out. Leadership plays an effective role in managing quality
and approaches of quality management as they guide employees to improve manufacturing
process and reducing cost. Training and development given by leadership satisfy employees.
Satisfied and motivated employees are considered as the main key of its success. So, by using the
best leadership style, training and developing to employees it can get success in all areas of
operations management including quality management.
CONCLUSION
From the above study it has been summarized that operations management played a vital
role. There are several areas and elements of operations management which helps out to an
organization in taking competitive advantages. It has shown increasing importance of quality
management area of operations management by which company attracted wider range of
customers and became the market leader. It has also shown some challenges and problems occur
in making successful to quality management area. Further, it has shown some solutions for
removing all barriers like training to employees. Improved relations with suppliers, effective
recruitment process for innovation etc. This report and first part has shown that importance of
design analysis of products and services of the company. Comparative Four Vs analysis helped
the company in analyzing its actual position in the market and characteristics of the company as
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compare to competitors. This analysis also helped an organization to take competitive
advantages by making changes in strategies and operations accordingly.
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