Operations and Supply Chain Management of Starbucks

This report provides a comprehensive analysis of the operations and supply chain management of Starbucks. It includes an analysis of the crisis of Starbucks from the perspective of operations principles, principles of the 4Ds and the 5 performance objectives, supply-chain objectives for Starbucks, and calculations to determine the average number of customers arriving at the till and the average time they must wait before exiting Starbucks Drive-Thru.

Case Study of
Starbucks

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Analyse the crisis of Starbucks from the perspective of operation principles.......................1
Principles of the 4Ds and the 5 Performance Objectives.......................................................3
Supply-chain objectives for Starbucks...................................................................................5
Calculate the average number of customers arriving at the till and the average time they must
wait before exiting Starbucks Drive-Thru. You are encouraged to use calculations to prove
any challenges if there is any and suggest any solutions, based on the calculations.............6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Starbucks Corporation is basically an multinational chain of coffeehouses founded in 1971
and headquartered in Seattle, Washington, United States. The company has grown from a single
location in Seattle Washington to a multibillion dollar enterprise which has its operations in more
than 17,000 retail stores in around 50 countries. The company use to originally only sells in
ground coffee and coffee beans and afterwards it added cold blended drinks, premium teas,
prepared coffee and beverage related equipment and accessories. In context to the company, the
organisation is disruptively using the COVID 19 pandemic which helps it to further differentiate
and move aggressively as compare to its competitors. The company is taking number of actions
in order to protect the well being and health of the employees and customers for the purpose of
controlling the spread of coronavirus.
MAIN BODY
Analyse the crisis of Starbucks from the perspective of operation principles
The operating principles are considered to be important way through which the companies
get their things done and put their values into practice. In order to get things done fastly, the
organizations rely on operating principles which also influences their values and culture. In order
to analyse and better understand the need of the customer the company conducts 4Vs analysis.
Volume: It involves the number of products that are delivered or created within the organisation.
In context to the organisation, star bucks has a variety of products and has also converted the
bakery into coffee shops (Kimbal, 2021). Moreover, the organisation is firmly involved in
providing variety of coffee and food items to the customers in order to create more and more
volume.
Variety: It involves the variety of products or goods that has been offered by the organisation to
its consumers. As compared to its competitors, star bucks has a lot of products to offer its
customers. The organisation focuses on basically four areas which involve coffee equipments,
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brewages, food and coffee beans. The organisation also offers 11 breakfast choices and also
offers 24 variety of sandwiches, 13 tea options, espresso based drinks etc( Hong and Jung, 2017).
Variation: It involves the changes in the demand of services or products provided by the
company. All these changes can occur due to various reasons which include offers, weekends
and holidays. Although the consumer’s tastes and preferences shifts from time to time and so
their preferences in food also changes. During the peak time, stores which are situated near
universities have rush during early morning and lunch time (Foster and Knox, 2021).
Visibility: It involves the way through which the products catch the attention of the customers. It
involves the way through which products are displayed in a manner that it can be easily visible to
the consumers in order to make them choice. When it comes to star bucks the products are
clearly displayed in a way that it catches the attention of the consumer in a easy way. In context
to star bucks, the company has a unique selling technique where they wrote the name of the
customers on the “Jar” which is marked as a unique selling technique.
In terms of analysing the crisis of star bucks from the perspective of operation principles,
the performance analysis plays a very important role in any organisation and that basically
involves three parameters which involves dependability, speed and flexibility and quality. All
these parameters helps in providing a clear image of the company’s operations and its
performance (Lee , Han and Suh, 2018).
Quality: In context to star bucks, the organisation always focus on being a global brand and is
very particular towards the quality of their products. The company specially put much efforts
into its operations in order to provide best quality services and products to the customers.
Through comparing reviews with its competitors, the organisation has better performance as
compare to its competitors.
Flexible: The organisation being a global brand has always focused on giving priority to its
customers according to different regions. The product and services are being altered according to
the regions and customers. According to study, various regions prefer Tea and Asia milk coffee.
The brand always alters its services and products according to the customer demands.
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Speed: It basically involves the speed at which the food is being prepared and delivered. It a
human nature and nobody likes to wait for hours and hours and customers always give speed
priority as compare to the performance of the store. The performance level of any organisation is
dependent upon factors which also involves speed (Singh, Klarner and Hess, 2020).
Dependability: It involves the flexibility factors and the menu of star bucks is prepared
according to the requirement of customers all over the world which the organisation more
flexible and dependable (Alabdan, 2019).
Principles of the 4Ds and the 5 Performance Objectives
The principle of the 4Ds involves four terms which involves design, develop, deliver and
direct. The operations management basically involves the administration of business practices in
order to create highest level of efficiency possible within a company. It basically involves the
conversion of labour and materials into services and goods in an effective and efficient way in
order to gain maximum benefits for the organisation. The operations are considered to be one of
the major functions which the management of day to day production and strategy( Chuang and
Hu, 2017).
Direct: It involves directing the overall strategy of the operations and understanding the
translation of strategy into reality. In context to star bucks, the directing helps in analysing the
overall strategy of the operations. It basically involves prerequisites in order to design the
operations process. In context to star bucks, the organisation focuses on providing the best coffee
to customers.
Design: It is basically the activity of determining the shape, physical form and composition of
processes and operations along with the process and products which they produce. In context to
star bucks, it is very essential for the organisation to understand its stakeholders which involves
both the external and internal stakeholders. The main stakeholders involves customers and the
organisation is very particular about the taste and preferences of its customers.
Deliver: It involves controlling and planning process of the delivery. In context to star bucks, the
organisation must plan and control its delivery of the services or products from suppliers for
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effective operations. It also helps in checking the quality and enabling the control in order to
seamlessly alter process of owners in order to find deviations( Jia, Zhang and Chen, 2020).
Develop: It involves the process through which managers continuously develop the existing
process, products and services. In context to star bucks, it is the responsibility of the managers to
develop there capabilities through the process of continuous improvement. The main objective of
any organisation is to continuously revisit its operational activity in order to further refine and
optimise its processes. In context to star bucks, the organisation is continuously involved in
applying new changes in its operations.
The 5 Performance Objectives
It involves the five operational performance objectives. In context to star bucks, the
company provides services and goods with premium quality to its customers. It also involves
efficient and fast service delivery and also promises timely delivery of the products that helps in
achieving cost advantage, flexibility and embracing changes. The main objective of the star
bucks is its employees. The organisation understand the importance of its employees and
consider them as the driving factor and important source of the company. The organisation pays
its employees above the minimum standard wages as well as also provide them with various
benefit packages and quality health care( Ballet, Gondard-Delcroix and Cedras, 2021).
Speed: In context to star bucks, the main factor of the customer experience is that it not involves
letting its customers wait. When it comes to star bucks operations, the speed is considered to be
an essential factor for the overall organisation. In order to maintain the speed, the organization
uses ways which are smooth and efficient internal communication that ensures organised kitchen,
well working space and keeping an adequate quantity of the inventory.
Quality: It is considered to be an important aspect in achievement of organisational goals and
objectives. The quality of a product or service is something which differentiates it from other
competitors. The quality plays an important role in customer experience. The quality of a product
encompasses a lot of factors and the perception of the customers is highly depended upon the
quality of the product. In context to star bucks, the organisation can adopt a TQM approach and
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also quality checks and should ensure taking proper feedbacks from the customers in a timely
manner in order to review its performance.
Dependability: In order to achieve its objectives, the organisations need to be very much
consistent in its quality of the products and performance. The only way too measure
dependability of the company’s products is to look into the records of the warranty that each
product claims against a particular product.
Flexibility: The flexibility and speed are highly interrelated with each other. The fastest is the
processing time, the chances of the process gets easier. It also involves the degree of
accommodating customer needs from time to time and being up to date. In order to be flexible in
their operations, the R&D department of star bucks need to identify the new mechanisms and
flavours which could helps in attracting the new consumers and benefitting the organisation. It
also involves better understanding of the economy and creating a customized menu for the
countries (Greco and Polli, 2020).
Cost: It involves the cost factor, as it plays an important factor of how the organisations perform
its objectives as all the organisation’s main objective is to maximise objectives. In context to star
bucks, the main objective is to acquire coffee beans and also the organisation is very particular
about its Arabica beans.
Supply-chain objectives for Starbucks
The supply chain objectives plays an important role in operations of the company. In
context to star bucks, the organisation follows a vertical integrated supply chain that depicts
various steps of supply chain process. In order to achieve its objectives, it requires a well run
supply chain in order to ensure that a consumer receives a good cup of coffee. In order to offer
variety of products to the customers, coffee and other merchandise are sourced from various
parts of the world and is delivered to the starbucks’s corporations. In context to star bucks the
organisation was the victim of its own success as the company was opening stores all around the
world at a faster pace and always focus on expansion (Roberts, Frazer and Thaichon, 2020).
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The supply chain that star bucks follows involves vertically integrated supply chain that
involves the company is involved in each step of its process of supply chain from the process of
sourcing coffee bean to cup of coffee sold to customers. In order to change its supply chain
management, the organisation focuses on clearly defining the functional roles and also it focuses
on reducing the cost of the raw materials while improving its service levels. It also results in
enhancing the supply chain capabilities into the future. In context to star bucks, the organisation
has transformed its supply chain and the coffee retailer has established three key objectives in
order to recognize its supply chain organization that basically involves the reduction of its costs
in order to serve stores and improve the execution by laying the foundation for the capability of
future supply chain (Chen, 2020).
In context to star bucks, the organisation uses a vertically integrated supply chain which
basically involves how the organisation is involved in the steps for the supply chain process
which starts from searching for coffee beans to the selling of cup of coffee to customers. As per
the customer point of view, the company’s key suppliers are basically from the countries which
include Hongkong, India, Canada, Indonesia, Singapore, United States and various other
countries. Moreover, the company gets its coffee and has also managed to become the most
popular and recognizable coffee brands in the world. Through the use of vertically integrated
system, the organisation works directly with almost 300,000 coffee growers in the world. The
organisation focuses to provide the favour standards and achieve the same quality through
sourcing best coffee beans.
Calculate the average number of customers arriving at the till and the average time they must
wait before exiting Starbucks Drive-Thru. You are encouraged to use calculations to prove
any challenges if there is any and suggest any solutions, based on the calculations.
Average number of units in the system= u/(1-u)
= [5/ (1-5)]
= [5/-4]
= [-1.25]
= 1.25
Working Note:
u=ra/rs
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=25/5
= 5
Average waiting time in the system= ts/(1-u)
= [5/ (1-1.25)]
= [5/-0.25]
= [-20]
= 20
Service rate= ts*12
= 5*12
= 60 Minutes
= 60 minutes per order
When cars enter at Starbuck's Drive-Thru at a pace of 25 miles per hour but only one ticket
office is available for travelling, the basis of the created exponential increase will be comparable
to the projected service frequency of one automobile. It takes 5 minutes on average to submit and
receive an order, meaning that 12 cars are served per hour.
CONCLUSION
From the above report it can be concluded that operations principles plays an important part
in the supply chain management of the star bucks. The report briefly helped in analysing the
crisis of star bucks from the perspective of the operations principles. In addition to that it also
involves how the use of principles of the 4Ds and the 5 performance objectives have turned the
company around. Furthermore, it discusses the most-likely supply chain objectives for the
organisations. . In context to the company, the organisation is disruptively using the COVID 19
pandemic which helps it to further differentiate and move aggressively as compare to its
competitors. The company is taking number of actions in order to protect the well being and
health of the employees and customers for the purpose of controlling the spread of corona virus.
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