Purchasing Management Analysis for Starbucks: Supplier Selection, ICT, and Cost Analysis

Running head: PURCHASING MANAGEMENT ANALYSIS
PURCHASING MANAGEMENT ANALYSIS
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Author Note

PURCHASING MANAGEMENT ANALYSIS1
Introduction
As discussed by Dabhilkar, Bengtsson and Lakemond (2016), purchasing
management is considered to be a vital component for the operations of business
organizations. The companies are able to recognise high levels of cost savings that mainly
takes place due to effective decisions related to purchasing. The poor purchasing based
decisions can also lead to disasters that have an impact on the operations of various
organizations. The costs related to development of products can be controlled effectively with
the support of proper cost control techniques. The managers tend to analyse the suppliers who
are selling various inputs that are considered to be important for proper manufacture of the
products (Gadde & Wynstra, 2018).
The essay will be based on the ways by which an organization is able to select the
suppliers and develop the purchasing goals as well. The use of ICT in the purchasing
operations will be able discussed in the essay in detail with respect to the information related
to operations of the firm. The organization that has been selected for analysis of purchasing
management activities is Starbucks. The purchasing management based activities that are
performed by Starbucks will also be discussed in the essay (González-Benito et al., 2016).
Starbucks Corporation is a coffee based company of American origin that was
established in Seattle, Washington in the year 1971. Starbucks has developed its position as a
major representative as “second wave coffee” that is a movement which has popularized
coffee in different parts of the world. The purchasing management process that is used by
Starbucks will be mainly discussed in the essay in detail (Starbucks.com. 2019). The use of
ICT in the purchasing management process of Starbucks is also an important part of the
analysis that will be made in the essay.
Supplier selection criteria and issues

PURCHASING MANAGEMENT ANALYSIS2
The CEO of Starbucks Mr. Howard Schultz has always stated that the company is not
interested in the vertical integration of the supply chain. Currently Starbucks purchases coffee
from more than 300,000 growers in different parts of the world. Starbucks has also developed
plans with respect to the changes that can be made in manufacturing strategy implemented by
the firm. The suppliers of Starbucks are mainly selected by the organization with respect to
the premier Arabica beans that are used for improving the taste of coffee (Starbucks.com.
2019).
The coffee beans that are used for making the coffee of Starbucks mainly thrive in the
high elevation based climate. The organization has selected the suppliers with respect to the
fertility of the land and temperature levels of the areas as well. The research and development
based programs that have been owned by Starbucks are helpful for generating the coffee
seeds which have the ability to resist the current diseases and pests that can inflict the crops.
Starbucks is thereby able to experiment with various types of coffee beans as the organization
owns the farms (Jääskeläinen, 2018).
The suppliers of Starbucks are considered to be the direct recipients of payments that
are provided for the coffee beans and the organization currently sources the coffee from more
than 300000 growers in different parts of the world. The selection process of Starbucks has
been established as an internal program that has been named as Coffee and Farmers Equity or
C.A.F.E Practices. This is also considered to be a selection of the environmental, social and
economic coffee based guidelines that are able to support the farmers and the coffee buyers
as well (Jääskeläinen & Heikkilä, 2019).
The high quality coffee that are provided to Starbucks by the suppliers are able to
promote the long term based equitable relationships. The organization has also used verifiers
who are third party approved and are able to assess the coffee based supply chains against

PURCHASING MANAGEMENT ANALYSIS3
internal C.A.F.E. based practices and evaluation guidelines. The social responsibility of
suppliers is considered to be highly important by Starbucks in order to maintain the
operations (Starbucks.com. 2019). The critical issues that are considered by Starbucks with
respect to the social responsibility of the firm are,
 Transparency of the suppliers of the operations, processes, company records
and the policies.
 Suppliers need to provide a healthy and safe working environment for the
employees.
 The rights of workers and treatment provided to them needs to be set out in a
clear way (Starbucks.com. 2019).
 The compensation and worker hours have to be made clear to the employees.
 The suppliers of Starbucks have to comply with the local environmental laws
totally and conduct the operations in such a manner that is helpful in
conserving the resources (Starbucks.com. 2019).
The supplier guidelines that have been developed by Starbucks do not require high
levels of improvement as the company is mainly known for the comprehensive nature of the
guidelines that are offered to the employees (Johnsen, Howard & Miemczyk, 2018).
ICT for Purchasing Operations
Goals and Progress of Starbucks – Coffee Purchasing
The success gained by Starbucks is mainly related to the levels of growth of the
farmers who grow the coffee beans. Major goal that has been set by Starbucks is mainly
based on the long term based supply of the high-quality coffee with the help of responsible
coffee purchasing based practices. The company has made investments in the communities