Operational Principles and Supply Chain Objectives of Starbucks

This article analyzes the crisis faced by Starbucks from the perspective of operational principles and the use of 4Ds and 5 performance objectives for turning around the company. It also discusses the supply chain objective of Starbucks and its rationale. The article provides insights into the demands of customers and suppliers of Starbucks. The study concludes that Starbucks needs to improve its cost efficiency and lean towards its practices.

MBO Starbucks

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Analysation of crisis of Starbucks from the operational principles.............................................3
PRINCIPLES OF 4 D AND THE 5 PERFORMANCE OBJECTIVES.....................................5
DISCUSSION ON SUPPLY CHAIN OBJECTIVE OF STARBUCKS.....................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Starbucks corporation is a USA based multinational organization of coffee-houses and
roastery reserves that are headquarters in Seattle. The strategic direction of this organization has
been to expand its operations in the international market through multiple stores in different parts
of the world. The products of this organization was primarily different types of coffee however it
differentiated from different practices and application of organizational operations. In this project
the analysation of a crisis faced by Starbucks from the perspective of operations principles have
been discussed. In this project the use of 4Ds and the 5 performance objectives have been
discussed for Starbucks for turning around the company and its performance. With the help of a
chart the supply chain objective of start bucks and its rationale is provided. In this project
calculation of average time for waiting at thee Starbucks cafe in Swansea has been provided. Due
to the Covid-19 pandemic the business of Starbucks like every other organization was also
affected. This resulted in company facing an overall loss of $915 Million till now. This was due
to the decrease in the revenue which the company experienced in its business. The organization
said that it was able to totally recover its down fall from the sales it made in the US for the first
three months of the pandemic. After that the organization started to expand its digital business to
improve the productivity of the organization and also be able to grow in these dark days.
MAIN BODY
Analysation of crisis of Starbucks from the operational principles
The crisis which the Starbucks faced was in its supply chain. This crisis was upon this
organization in 2008 in which it faced issues with its supply chain and as a result of which its
operations were affected. As a result of supply chain which was considered to be the reason of its
supply chain expansion which it did. It can be said as the victim of its own success which was
due to the rapid expansion it made for its work in the world (Li, 2018). Thus according to the
operational principles the analysation of the organizational crisis can be done in the following
ways,
Quality :
In this crisis the mistake made by the organization was not in reducing the quality of the
product rather it was the due to the increase in the application of the right thing. The right thing
which was needed to be done in the situation Starbucks was at the beginning of its operation was

to expand its business as it needed to do so for ensuring growth in the organizational operations.
Thus, the crisis has not been the issue of quality principle of operations. Rather, what the
company did was correct in every shape and form.
Knowledge :
The experience which the company had about the international market was kind of low
this can be said as an issue which the company did not address (Shirdastian, Laroche and
Richard, 2019). The sudden increase in the operations of the Starbucks in the international
market was considered to be a very bold strategy for the company. However, the right thing
which should have been done was to expand its business one market at a time. This was the way
through which the business was able to influence growth opportunities and avoid the risk of lack
of knowledge and experience in their plan which led to this crisis.
Innovation :
This organization has brought innovation in its products and services which it provides
multiple times in the organization and also develop innovative food items for its customers to
enjoy. In this crisis the innovation which the business planned was to expand its business which
lead to sudden issues in its management of the supply chain. Due to its lack of capacity in the
supply chain it was not able to successfully manage the supply chain practices as a result of
which helps the business to grow successfully.
Simplicity :
For this business keeping the operations of the business simple it can be considered to be
an effective way through which it would be able to create consistency in its operations. The
application of the organizational performance in the organizational practices was considered to
be the way through which it was able to improve its products and services that it provided.
However, as far as the crisis is concerned the business should have focused on the increasing the
simplicity of the organization way of expanding its business (Tsai and et.al., 2020).
Service :
Starbucks has been known for its services which it provides to its customers and as a
result of this the organization has been suffering due to the lack of supply chain management
issues which it faced during the crisis of 2008 in front. The services which the company provided
were also affected due to its lack of proper management which would have helped the business

to sustain the success in the organization practices. Thus, the company needs to ensure the
organizational operations.
PRINCIPLES OF 4 D AND THE 5 PERFORMANCE OBJECTIVES
Starbucks transformation after its supply chain crisis was can be understood with the help
of 4D principles as follows,
DIRECTION
Transformation of Starbucks started with a departure point that consists of the following
directions and purpose, VISION- For Starbucks the vision was to create a balance between cost and performance
for make significant change in operations. MISSION- To decrease the cost of operation in its supply chain. PURPOSE- In order to uplift the organization from the financial crisis which was upon
them. VALUES- Starbucks brought back some of the most transformational leaders it had,
Schultz.
 STRATEGY- Its strategy was to simplify all the operational areas as a part of its
transformation.
DESIGN
Design issues for Starbucks were, SAFTEY PERFORMANCE- The complexity of the operations was what was needed to be
changed for less operational cost. STRUCTURE– The organization changed its structure as in, it brought back few ex
employees and directors for better leadership and management. VALUES AND BEHAVIOUR– Acting with courage and facing challenges with
transparency and dignity. LEADERSHIP AND MANAGEMENT- Starbucks adapted a transformational style of
leadership and its management of supply chain was divided into the functions such as
plan, source, make and deliver.
 PROCESS- There were two process coffee and non-coffee.
DEVELOPMENT

The development of the business functions in the supply chain lead to reorganization of the
different departments which turned their attention toward their second objectives. Starbucks was
able to successfully divide its supply chain successfully in different groups which simplified the
process. This lead to individuals doing tasks which they were delegated.
DELIVERY
All the discussed process and changes in the operations as a result of the transformation was
successful for Starbucks. As a result of this the organization was able to save over $500 of
savings in the last two years.
FIVE PERFORMANCE OBJECTIVES
QUALITY
At the starting of 2008 when the organization was facing a crisis Starbucks was falling behind in
the quality department. However, since the organization has been able to transform its business it
has influenced a focus on the service and quality for providing what its customers needs.
Starbucks believes that their business strategy will be worthless if its is not able provide the
quality in its products.
SPEED
The customers ordering a product and service in Starbucks already know that they are going to
receive it in moments (Richey and Ponte, 2021). This is a result of consistency in its performance
and organizations ability to satisfy its customers with the quality and speed of their services they
provide for better experience.
DEPENDABILITY
The success of Starbucks is mere reflection of the trust and loyalty which has been developed
between the customers and the company. Thus, it can be said that the customers can rely on this
organization for their products and services. This company has been able to ensure that it has
already consumed the product which its influences to return to for making future purchase.
FLEXIBILITY
Since the supply chain crisis which this organization has faced it has adapted to certain process
and methods in its operations which has made it quite flexible. This can also be seen in its
efficiency in adapting to online platforms for success even during the pandemic times. Through
the product wise the company has always been flexible.
COST

This business has focused on the implication of its operations with the help of simplification in
its operations which has allowed the business to be successful in the management of the
organizational operations. This has resulted in successful reduction of cost which is helps the
company make more and more profit.
DISCUSSION ON SUPPLY CHAIN OBJECTIVE OF STARBUCKS
As a customer of Starbucks all we need is gain personalized offers, and get asked for our
feedbacks such that we can suggest. The customers think that the suppliers of the Starbucks need
to have the followings things in their arsenal,
 They need to make delivery of goods always on time.
 The suppliers need to provide the adequacy of flexibility.
 Suppliers need develop a more personal relationship with the organization and customers.
 The suppliers need to share the information about their goods so that trust can be created.
 To fulfil the demands of the customers.
 Suppliers need to be cost effective so that it does not add to the customers price.
Suppliers at Starbucks which are producers in Latin America, Africa and Asia produces green
and unroasted beans directly from the farm by the Starbucks buyers (Yu and Melnyk, 2019).
These are then transported as to the storage site which for the beans are roasted and packaged.
This organization supplies in over 80 markets either form company or directly to the stores or in
licensed stores.
 Due to the increase of stores the supply chain of the suppliers were unable to deliver the
goods always on time.
 The flexibility of these suppliers were test during the Covid-19 pandemic and it can be
said that their performance was fairly good.
 There is literally no relationship between the customers and the suppliers of the
Starbucks.
 Starbucks keep the information about their supplies a secret for the gaining a competitive
advantage in the market.
 During the crisis the suppliers failed to be cost effective, and as a result of which the
organization had to transform its operations for saving the cost it was incurring due to the
supply chain issues.
The suppliers of Starbucks believes that the following are the demands of the customers,

 Customer want loyalty as the main part of the suppliers according to the supplier.
 The customers want the services of the Starbucks to be more simplistic so that they are
also less costly.
 The customers desire are always to have creativity in the services they are getting from
the company.
 Customers of Starbucks desire accessibility to the operational information which cannot
be revealed.
 Customers are always looking for accountability from the organization so that they can
feel trusted and not betrayed (Alaali and Pitsaki, 2019).
The needs of the suppliers of Starbucks are performing as follows,
 They want to increase the demand for the business products or services for a greater
requirement towards their own.
 Suppliers want to build their reputation for which they want to provide the products and
services to the customers with excellent quality.
 Here the suppliers want to earn profit from their operations.
 It is essential for the suppliers to have good relations with the stakeholders.
 They look to create opportunities through partners and customers to develop their
business through the analysation of trends (Robles, 2018).
It has been concluded with the help of this chart and discussion that most demands of the
customers are met by Starbucks. However, there are certain areas in which Starbucks can
improve. Such as the cost efficiency needs to be improved by the company for ensuring that the
products of the available to the company at the cheapest rates. The reason there is a mismatch in
the customer and supplier perspective is that customers want to be aware of the operations of the
suppliers by for maintaining the competitive viability the suppliers are refrained from doing so. I
would consider the organization to be more lean towards its practices as it has shown once how it
has been successful through the transformation after its crisis.

REFERENCES
Books and journals
Alaali, A. and Pitsaki, I., 2019. Experience design at Starbucks: from global brand management
to local spatial experiences. In Research Perspectives In the era of Transformations (pp.
893-907). Academy for Design Innovation Management.
Li, C.Y., 2018. Consumer behavior in switching between membership cards and mobile
applications: The case of Starbucks. Computers in Human Behavior. 84. pp.171-184.
Richey, L.A. and Ponte, S., 2021. Brand Aid and coffee value chain development interventions:
Is Starbucks working aid out of business?. World Development. 143. p.105193.
Robles, M.G., 2018. Tax planning in multinational corporations after the discussions referred to
immorality of base erosion and profit shifting (BEPS): With focus on Starbucks
Corporation (No. 7/2018). UASM Discussion Paper Series.
Shirdastian, H., Laroche, M. and Richard, M.O., 2019. Using big data analytics to study brand
authenticity sentiments: The case of Starbucks on Twitter. International Journal of
Information Management. 48. pp.291-307.
Tsai, P.H., and et.al., 2020. Exploring the effect of Starbucks' green marketing on consumers'
purchase decisions from consumers’ perspective. Journal of Retailing and Consumer
Services. 56. p.102162.
Yu, W. and Melnyk, M., 2019. INTERCULTURAL COMMUNICATION IN BUSINESS
COMMUNICATION–A CASE STUDY OF STARBUCKS (CHINA). Innovational
Processes of Economic, Social and Cultural Development: Domestic and Foreign
Experiences, p.213.

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