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ProgrammeMSc Management with Streams Module nameOperation Management Schedule TermSpring 2020 Student Reference Number (SRN)BP0230934 Report/Assignment TitleAn Analysis Of The Operations Of Starbucks Date of Submission (Please attach the confirmation of any extension received) 23thSeptember/2020 Declaration of Original Work: Ihereby declarethatIhave readandunderstoodBPP’sregulationsonplagiarismandthat thisismy originalwork,researched, undertaken, completedandsubmittedinaccordancewiththerequirements ofBPPSchoolofBusinessandTechnology. The word count, excluding contents table, bibliography and appendices, iswords. 3450. StudentReferenceNumber:BP0230934Date: 23/09/2020 1
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MSc Management with Stream Operation Management Spring Term 2020 Student Number : BP0230934 Submission Date : 23th, September 2020 Submission mode:Turnitin 2
TABLEOFCONTENTS PAG E Part A- Comparing the Operations of Starbucks to that of Greggs 1. Four Vs analysis of Starbucks and Greggs................................................................................................4-7 Volume Variety Variation Visibility 2. Performance Objectives Analysis of both the companies....................................................................8-10 3. Design Analysis.....................................................................................................................................11-12 Starbucks Design Analysis 9Gregg’s Design Analysis Part B-The Operations of Starbucks Overview........................................................................................................................................................13 Starbucks global operations strategy and surrounding macro-environment........................................13-15 Key requirements, capabilities and challenges.......................................................................................15-16 Analysis and evaluation of chosen operational area..............................................................................16-17 Recommendations....................................................................................................................................17-18 Conclusion......................................................................................................................................................19 3
References................................................................................................................................................20-21 Part A SECTION 1: FOUR Vs. ANALYSIS OF STARBUCKS AND GREGGS Most modes of operation have a single factor in common; they always take and turn their 'input' into products (goods and services) such as resources, information, energy, equipment and time. They do this in different ways, and the 4 major aspects are called four Vs., Volume, Variety, Variation and Visibility. Ultimately, the accurate combination of these four features will decide how best to design an organisational process for optimal performance. Usually, based on these four considerations, trade-off decisions would need to be taken with regard to operations management. In this section, I discuss the comparative study of the Starbucks and Gregg’s four- Vs. service. This is shown in below: 4
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4 Vs. Diagram Volume: Businesses formulate their practices based on their amount of production and revenue. In this respect, the structure of the operation changes at the activity stage. Therefore, it is claimed that companies with low volume sales or production have adjustable and dynamic operating practices and high-volume companies go for mass customization and static operating processes (Parisio, Rikos and Glielmo 2016). Starbucks versus Greggs 5
Compared to Greggs, Starbucks has a comparatively higher sale ratio based on price. The Starbucks has a big brand name is the reason behind it. This high selling ratio also impacts their operation. Compared with Greggs, Starbucks has a very rigid menu and sells fewer items. They have a low revenue ratio, which is why they have provided a range of food on their menu. When a restaurant has a high volume of sales, the menu appears to be more rigid and organised. Otherwise, there would be a general stock-out scenario. Variety: Variety aspect means how much variety in a single product can be given by the business. Introducing various sizes and shapes of a single product, for example. Companies that have variety in their goods and services tend to some degree to have flexible operations, the process is always complicated, and the unit cost is high (Parisio, Rikos and Glielmo 2016). Starbucks versus Greggs Starbucks does have a variation of coffee, just like Greggs did, they also provide a wide range. In their operating processes, Starbucks has standardization, their food offering is very routine- based, and thus they have easy operation and low-cost operation. On the other side, due to low volumes, Greggs has a versatile activity where they sell a range of foods. Their product offering can be said to be highly flexible but has a high unit cost. Variation: 6
Due to certain external influences, such as changes in consumer taste and other monetary factors, variation relates to or is correlated with changes in demand over a given period. For a business, however, the variation is very difficult to predict (Gino, Coffman and Huizinga, 2019). Starbucks versus Greggs The company diversifies its product portfolio based on the past of Starbuck and food supply, but still, the changes are not so important. Without bringing any change, they give distinct food from decades. However, on the other hand, Greggs has launched new products and even discontinued different products. Because of this, it can be assumed that Starbuck has a reliable operating pattern that can be seen and felt from observation. Visibility: Visibility indicates how certain events influence the client and the resulting experience. In this respect, highly visible organizations strive to make processes more seamless and error-free. Routine and error-free activity (Ichinose et al, 2018) should be based on it. Starbucks against Greggs Starbucks, relative to Greggs, has a clearer process and visibility based on the above-mentioned description. Coffee making and even packing is done in front of the client. Therefore, their actions have a profound effect on consumer behavior and, through it, help to shape a favorable view. Greggs, on the other hand, has a high range and flexibility option because of which the process is not very visible from the customer end. Visibility at Greggs can be said to be quite limited. 7
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VolumeVarietyVariationVisibility Section 2: Performance Objectives Analysis On the basis of the 4V Analysis, the operating strategy of Starbucks and Greggs differ completely. Starbucks have high volumes, low variety, low visibility and low variation, while Greggs have low volumes, high variability and high visibility. Their success goals and focus areas are also totally different. Starbucks Performance Map 8
Starbucks has a cost target in operation on the basis of the polar diagram. This is why standardisation and low variability have to be achieved in the business. It has a large volume that helps it to achieve its cost target. In the face of extreme competition, Starbucks must slash its costs so that it can gain more market share (Sholihah et al . 2016). Standardization helps the organisation to achieve economies of scale that are known as the big leap in cost reduction. Besides that, the organisation has set time goals, based on the high volume , low variability and high visibility. In the specified time, they must satisfy the customer. By results of a 4V study Starbucks has become streamlined by regular service and the time to serve customers food is much less. Moreover, due to the fact that time taken to serving food is significantly perfect, Starbucks will make some substantial operational steps due to the low choice, and the consumer has to wait no longer in queues (Slack and Brandon-Jones 2018). Moreover, in organisational standardisation, guidelines are quite a few because of routine operations and Starbucks is considerably time effective in its service in this regard (Li and O'Neill, 2019). 9
But there is no versatility in its working due to standardisation. The staff must comply with strict rules and procedures in order to make a regular meal and to satisfy customers ' demands. No space for innovation and creativity exists in this respect. The rules and processes for making food and serving the customer are described. Consequently, the goal of versatility is low (Zhang, Wang and Lin, 2019). But there is no versatility in its working due to standardisation. The staff must comply with strict rules and procedures in order to make a regular meal and to satisfy customers ' demands. No space for innovation and creativity exists in this respect. The rules and processes for making food and serving the customer are described. Consequently, the goal of versatility is low (Zhang, Wang and Lin, 2019). Finally, Starbuck doesn't rely on different manufacturers or sellers. Rather, the organisation will have considerable influence over its supplier due to its high volume and standardisation. This is because Starbucks depends heavily on its supplier. Greggs Performance Map 10
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Greggs have set the key goal on the basis of 4V analysis. The organisation has done an unstandardizedprocedureinthatrespecttoimplementarangeoffoodsandbeverages. Furthermore, diversity is not feasible if their processes are not versatile. Greggs found their procedures inflexible, since workers would cook food differently. Often workers are overcharged with flexible working conditions and the production of different foodstuffs (Ichinose et al, 2018). Moreover, the quality is their main priority, but quality can not be achieved 100% due to such a complex operating mechanism. The process would be faulty and errors. However, the codes of conduct that regulate workers are developed in order to keep an employee engaged and oriented to error-free operations. Greggs does have a time goal, but is not given priority as Starbucks. The organisation tries to service the client quicker, but compared with other structured operations such as Starbucks it is very slow. Section 3: Design Analysis 11
Impact on the design of the customer service process The customer service process has a huge effect because of the Standardization at Starbucks, inflexible processes, low turnover and high volume. First of all, customer service is very sensitive and effective with standardisation. The production and operation of the customer is not delayed and most orders are prepared within the agreed time span. Moreover, Starbucks typically have high sales volumes and, as a result, standardisation in their customer service area is critical (Gino, Coffman and Huizinga, 2019). The customer is requested to choose a low variety menu, so it is not long and hectic to order food. In addition, in response to customer inquiries, the client representative is comfy and truthful (Meredith and Shafer, 2019). Greggs have various customer support systems on the other hand. Owing to the great variety and changing demand the customer representatives also had to justify their menu to the customer. In addition, customer support requires explicit guidance from consumers as to whether they should tailor the food to their particular needs (Zhang, Wang and Lin 2019). This can also be very unsuccessful, as customer service does not have established rules and processes. Impact on the design of store layout and flow The layout of the store Greggs and Starbucks is designed such that self-service is encouraged. The client orders food on the counter and only takes food when the number arrives. The risks of error and failure are therefore very low. In addition, the self-serve shop layout supports both the traditional Starbucks operation form supporting high volume , low variance, high visibility and low variation, and the versatile Greggs operation supporting low volume, high variability, low visibility and great variation (Slack and Brandon-Jones 2018). For example , Starbucks may cater to a large number of customers with a self-service operation layout. The customer service can order and require the customer to wait. The customer must not wait in Que in this way. Instead, the customer may be clarified by Gregg 's representative or appoint a special employee at the counter (Meredith and Shafer, 2019). This helps us to take customer orders more accurately. 12
PART B: OPERATIONS OF STARBUCKS Section 1: Overview Companies have also undertaken numerous activities to support their operations. Supply - chain management is an essential source of knowledge exchange, financial flows and product flows in a business. The operations of the supply chain are deemed too important and are dominated by operations that have a direct impact on organisational performance (Kleindorfer, Singhal and Van Wassenhove, 2005). A particular form of operation, including sourcing, delivery and rendering of goods and services, is carried out in supply chain management. Supply chain management is considered to be critical because if properly carried out, an enterprise is more likely to achieve substantial profit and operating productivity (Walker et al., 2014). In order to put value in the operations process, coffee cafe and other restaurants use the supply chain management activities. There is therefore a possibility of further product and service monitoring, 13
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when conducted in the manner needed, helping to fulfil consumer requirements rapidly and efficiently (Grant, Trautrims and Wong, 2017). (Grant, Trautrims & Wong, 2017) Section2:Starbucksglobaloperationsstrategyandsurroundingmacro- environment Starbuck Global Operation Starbucks 's global activity decides that there is a sense of creativity on the basis of critical assessment and analysis. The organisation still aims to establish an innovative, imaginative and forward-looking field of practise. This helps Starbucks to achieve a market place, benefit and edge contributing to sustainable development (Abdel-Baset, Chang and Gamal, 2019). In addition, such transactions are closely aligned with Starbucks' business models, organisation, and vision to help them further increase their revenue. Coffee preparation and snacks are required for daily tasks in a café or restaurant, such as Starbucks. Starbucks activities are huge and not necessarily in a regional region such as the UK (Fahimnia et al., 2019). If Starbucks fulfils the recruiting conditions, the organisation recruits staff from various states. It has built an overall supplier pool that can meet annual and unpredictable requirements in Starbucks, including coffee beans from different countries (Hazen et al. 2018). The role of the supply chain in the global operations strategy The global organisational Strategy of Starbuck remains very successful and important with the support of the supply chain.For example,Starbucks' Managementcan maintaina good suppliershipby performingsuccessfulsupplychainactivitiesandestablishcontractsand agreements so as to offer Starbucks advantages and competitive advantages (Fahimnia et al. 14
2019). Those primary providers who provide fine coffee bean food at fair and low prices and have a strong business link have been reached by Starbucks in this way (Schönsleben 2016). In addition, their global sourcing process is so effective that any store across the world has adequate material supply. The world's stores are not in the system (Meredith and Shafer, 2019). The commodity such as coffee is of high quality and a natural taste, and Starbucks has only received standardised quality coffee beans because of their successful procurement strategies. In addition , the organisation is able to offer high customer satisfaction due to the uniform quality of raw materials (Schönsleben, 2016).The organisation has also been able to standardise its supply chain operations in line with the franchising model for expansion (Grant, Trautrims and Wong, 2017). The organisation is able to concentrate on expansion-related activities and effectively grow and expand in the new and existing markets through "supply chain operations." Therefore, in geographical diversification it can be assumed that the supply chains play an integral part. This means that, by franchise or direct expansion, Starbucks has now extended into 60 different countries. The business is thus deemed to be efficient and profitable (Zhang, Wang and Lin, 2019). Section 3: Key requirements, capabilities and challenges Starbucks has distinct structure, personal qualities and distinguishing abilities. The company has numerous material and intangible resources to direct the company to sustainable profitability and to achieve other tangible and immaterial benefits including the competitive financial position, high level of consciousness of staff, high brand awareness, a good presence on the market and valuable brand recognition (Li and O'Neill, 2019). Furthermore, there are different competences relevant to the organisational tasks. Employees are a vital part of the supply chain operation and 15
can achieve productive and successful processes through their proper performance of tasks. Business workers are educated in the development of skills through the use of organisational tools (Hazen et al. 2018). This helps them to provide goods and choose an appropriate, affordable and reliable provider that can produce considerable skills. Consequently, professional jobs are essential skills (Fahimnia et al., 2019). As a key necessity for their global activities, Starbucks wants consistency. Quality criteria are present in the procurement of raw materials and quality standards are chosen by the supplier and quality standards are transported to various stores and franchises (Abdel-Baset, Chang and Gamal, 2019). Furthermore, more emphasis is placed on time. The raw material is intended by Starbucks both on time and on demand. Starbucks also has different platforms that are important to their companies and to their sustainability. The supply channels are focused on coffee beans and packaging materials and are connected to the backward channels. Starbucks often have forward networks that have a franchising scheme connected with them. In addition , the main business goal is for the customer portion or customer satisfaction. The firm targets at individuals between 15 and 45 years of age and is regarded as a prime focus (Hazen et al . 2018). Some of Starbucks' key strengths and needs apply to the various businesses in the supply chain: inbound logistics is one of the company's most significant operations in the field of various goods purchased from different suppliers. The organisation ensures clear and organised contact, making the supply chain management system effective. In addition , the company operates in approximately 60 countries and has been authorised and implemented by local laws and regulations in various regions (Abdel-Baset, Chang and Gamal 2019). Sales to consumers at various companies and franchises are another big operation for outgoing logistics. The customer pays by credit, prepayment fee, cash point and mobile payment (Fahimnia et al . 2019). 16
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Starbucksisfacedwithnumerousobstaclesandproblemsincludingrisingrivalry,as management faces difficulties in the supply chain. Increased competition also influences coffee bean demand and supply, thus, the prices of raw materials such as coffee boots can be volatile and reduce profit margins. Section 4: Analysis and evaluation of operational area On the basis of the above analysis, Starbucks supply chain management is the biggest example and price example of the hospitality franchising model. To measure the quality of the business of the supply chain, customer satisfaction, amount of sale and sources used for various goods must be observed. In this respect, the business activities in the supply chains have given Starbucks a major boost by procureing quality goods that keep consumers highly satisfied with quality products consistently (Walker et al. 2014). If the supply chain region of Starbucks becomes inefficient, the product would have a huge effect on distribution, potentially leading to consumer dissatisfaction. Starbucks has set high expectations and standards for other rivals through successful supply chain operations (Grant, Trautrims and Wong, 2017). Starbucks' production and distribution are reliable and good because it makes the business popular in 60 countries. The above are not situated in a single geographical area. In addition, in one week, the Organization will support 70,000 outbound deliveries. Starbuck 's ability to satisfy expanded and uncertain consumer requirements has been strengthened (Kleindorfer, Singhal and Van Wassenhove, 2005). Some financial results can provide a sustainable and better financial position, according to financial data and analysis. Starbucks can save substantial running costs and increase the output margin through the supply chain activities. Moreover, the cost of the commodity is lowered dramatically due to improved supply chain operations, since the Profit Margins of Starbucks are far more favourable than other big corporations (Walker et al., 2014). The organisation can be successful by professional workers in the supply chain industry. In five years , the company improved its efficiency. Starbucks' supply chain operations can align inbound and outbound logistics appropriately and can be handled on a timely basis by the customer (Fahimnia et al., 2019). In addition, its extended operations are very extensive, with 70 per cent of the supply chain activities being outsourced to other core businesses. Outsourcing of 17
supply chain activities is only feasible, however, if Starbucks achieves full productivity and sets expectations for the third party in this sector. Different storage, transportation and agreements with the manufacturers and vendors are included in this outsourced field (Kleindorfer, Singhal andVanWassenhove2005).Inlate2008,ManagementStarbucksconcentratedonthe centralization and simplification of the supply chain. The role of managers in this respect is to delegate specific tasks to their processes. Process management involves preparation, source, supplyandproduce.Thishelpsmanagementtodelegatetasksandresponsibilitiesmore accurately. This is a reorganisation phase in which every team has several tasks to develop those areas (Walker et al., 2014). Section 5: Recommendations Starbucks' activities should be more diversified in order to be sustainable. This eliminates the risk associated with the various operations. Moreover, information and general activities and initiatives may be exchanged amongst various departments and operational teams by the organisation. Starbucks will thus establish a congruence of objectives that are required for strategic objectives to be achieved. In addition , knowledge sharing and strategic practises also make for synergistic benefits for Starbucks (Hazen et al . , 2018). In addition, Starbucks' operations should focus on retrograde integration which allows it to remove the dependencies of various providers from reverse channels. This will help Starbucks to buy coffee beans, enabling the business to produce additional profits (Schönsleben, 2016). The organisation is motivated to adjust how the organisational plan is formulated and executed. Since they have an established supply chain and franchise model, their franchising method can be more profitable and cost-effective when purchased. Starbucks management will cooperate in the implementation of the KANBAN system in organisation with employees and experts. This helps the company to find ways to reduce costs continuously. This will boost the company's profitability, sustainability and competitiveness (Walker et al . 2014). 18
Section 6: Conclusion The Starbucks Supply Chain operations will help the organisation identify and recognise various important, additional and unnecessary activities. This helps the organisation to concentrate on key operations and develop and reduce unnecessary cost cutting operations. The supply chain is the centre of corporate performance and can generate tremendous value for shareholders if management can carry out all operations correctly. 19
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