Operation management (MO) : Assignment

Programme MSc Management with Streams
Module name Operation Management
Schedule Term Spring 2020
Student Reference Number (SRN) BP0230934
Report/Assignment Title An Analysis Of The Operations Of Starbucks
Date of Submission
(Please attach the confirmation of
any extension received)
23th September/2020
Declaration of Original Work:
I hereby declare that I have read and understood BPP’s regulations on plagiarism and that this is my
original work, researched, undertaken, completed and submitted in accordance with the requirements
of BPP School of Business and Technology.
The word count, excluding contents table, bibliography and appendices, is words. 3450.
Student Reference Number: BP0230934 Date: 23/09/2020
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MSc Management with Stream
Operation Management
Spring Term 2020
Student Number : BP0230934
Submission Date : 23th , September 2020
Submission mode: Turnitin
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TABLE OF CONTENTS
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
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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:
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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
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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:
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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.
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Volume Variety Variation Visibility
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
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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).
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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
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Greggs have set the key goal on the basis of 4V analysis. The organisation has done an
unstandardized procedure in that respect to implement a range of foods and beverages.
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
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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.
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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,
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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)
Section 2: Starbucks global operations strategy and surrounding macro-
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' Management can maintain a good
suppliership by performing successful supply chain activities and establish contracts and
agreements so as to offer Starbucks advantages and competitive advantages (Fahimnia et al.
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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
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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).
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Starbucks is faced with numerous obstacles and problems including rising rivalry, 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
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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
and Van Wassenhove 2005). In late 2008, Management Starbucks concentrated on the
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,
supply and produce. This helps management to delegate tasks and responsibilities more
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).
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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.
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