Starbucks Supply Chain Management: Crisis, Principles, and Objectives

This report analyzes Starbucks' supply chain crisis and how it turned around with the support of operation principles and 4Ds and five performance objectives. It also discusses the most likely supply chain objectives for Starbucks and calculates the average number of customers arriving at the till and the average time they wait before exiting the drive-thru.

Starbucks

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Evaluate about Starbucks crisis into the context of operation principles..............................3
Discuss in which manner Starbucks has turned around with support of principles of 4Ds and
five performance objectives ..................................................................................................4
Discuss supply chain objectives of company in most likely manner which is based on case
study into the rationale manner with support of this chart.....................................................6
Calculate customers on average level that ariving at the till and time in average manner they
must wait before existing Starbucks drive thru .....................................................................7
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Management of supply chain basically described as flow of services management and
goods which includes all those processes that transforms materials into raw form into final
products. It involves business supply side activities streamlining for maximising the value of
customers and also gain advantage at competitive level into the market place(Baek and et.al.,
2019).In the present report , a case study is taken into consideration on Starbucks. The case study
is about supply chain of Starbucks who is not sure about its goal that can be meet out into
appropriate manner. The present report will cover analysis about crisis of Starbucks from
perspective of operation principles and also about with support of principles of 4Ds and
performance objectives in which manner company has turned around. In addition to this the
report will cover discussion about objectives of supply chain for Starbucks which is most likely
in terms of nature. Moreover, the report will cover analysis about average number of customers
which has arrived at the till and about the time in average manner they have to wait existing
before company's drive thru.
MAIN BODY
Evaluate about Starbucks crisis into the context of operation principles
Starbucks was facing crisis in terms of financial aspect where their costs of operation
have been rising with support of sales were cooling. Another fact is that company was opening
stores on a very fast pace manner due to which they had to aim for maintaining with the
expansion. When stores have been opened into different places then they have to bear running
cost of supply chain and expenses at operating level that were rising on the steep manner (Bazán
Silva., 2021). According to this crisis, there are certain principles of operation management
which basically includes planning, organising, staffing, leading and controlling as well. For
resolving the crisis, it is important that to consider principles of operation and they have made
significant changes to its operations. With respect to case study, Gibbons and his colleagues have
taken certain steps in order to achieve results into appropriate manner.

For resolving the problem, Schultz Returns has announced a transformational agenda of
strategic initiatives in order to revitalize the company. First of all they have identified that in
which manner the chain of supply serving to the stores and also identify about cost spectrum that
where it is coming from. After the analysis of cost it has been observed that majorly company's
operating expenses of supply chain were tied to agreements of outsourcing for transportation,
contract manufacturing and logistics of third party (Lee and et.al., 2016). In order to
strategically find out the solution, they have planned a supply chain transformation plan into
three step manner. Under this plan, company has reorganised the supply chain organisation
which simplify its structure and also clearly define the functional roles. In the further step, the
company is focusing on cost reduction for serving their stores in order to improve supply chain
execution. After that they have laid foundation in terms of improved supply chain capability
from future perspective.
For simplifying the supply chain functions, it basically includes four functions which are
source, plan, deliver and make. Anybody who is involved in planning basically includes
replenishment, new product launches and production planning as well. Sourcing activities were
grouped into two categories which includes two main areas coffee and non-coffee procurement.
When supply chain were reorganised then they have focused on transformation of supply chain
which includes improving efficiencies and reducing costs as well. In order to deliver coffee
beans to its processing plants the manufacturing group has developed a more efficient model
with the focus on regional manufacturing where the product is sold(Gordon., 2017). With the
support of supply chain transformation effort they have curtailed costs on the world wide basis.
In this way, Starbucks has resolved its crisis situation with support of principles of operation and
with proper planning and strategy they have resolved this issue into appropriate manner.
Discuss in which manner Starbucks has turned around with support of principles of 4Ds and five
performance objectives
Principles of 4Ds basically focused on Do, Defer, delegate and delete parameters where
task has been placed into one of the categories which support in terms of managing the limited
time into more effective manner and also stay focused on what matters to an individual. So these

principles help in terms of coming out the company from a particular crisis situation because
these principles act as support system for achieving their goals and objectives into appropriate
manner. Starbucks has turned around its crisis situation through transformational agenda of
strategic initiatives.
This transformation has delayed due to two reasons that they have take time in order to
identify how supply chain serving to its stores and also identify the costs where it is coming from
(Nelwan and et.al., 2019). Delay has been happened due to this reason that they have face
problems in order to identify the main reason of rising the cost of operation and supply chain
expenses as well. The entire process of transformation of supply chain was delegated by gibbons
and his colleagues. In addition to this, Schultz Returns act as active role in terms of taking any
decision and making an announcement as well. In this entire process, Starbucks have analysed
that their major operation cost or supply chain expenses was due to outsourcing agreements for
third party logistics, transportation and contract manufacturing as well. For deleting this
outsourcing agreement and reducing the cost of operation Gibbons has created a three step
supply chain transformation plan which basically includes reorganising the supply chain
organisation, simplify the structure and define the functional roles into appropriate manner.
There are five performance objectives which help Starbucks in improving from the crisis
situation which basically includes cost, quality, speed, dependency and flexibility factor as well.
These performance objectives are important because they provide focus on employees work in
order to ensure their actions which are directed towards achievement of important outcomes of
mission-related. In order to reduce the operational cost, Starbucks has adopted a transformational
plan. For improving its quality they have more focused on the process of executing the product
into appropriate manner to their customers(Papac., 2020). The speed of process also get
improved through adopting the transformational plan and with support of deeper analysis as well.
For removing the dependency factor they have reorganised the supply chain organisation,
simplify the structure and also define the functional roles into appropriate manner. For making
smoother function and flexible in terms of nature it is important that company should laid on the
foundation for improving the supply chain capability from future perspective.

The supply chain transformational plan not only reduces the expenses but also put the
process into flexible manner due to which company can perform into more better manner. In this
manner, Starbucks has turned itself with support of principles of 4Ds and five objectives of
performance as well.
Discuss supply chain objectives of company in most likely manner which is based on case study
into the rationale manner with support of this chart
According to case study, the most likely supply chain objectives for Starbucks is to apply
low cost into efficient manner so that supply chain management work can be done into effective
manner. With support of management of lean supply chain, it is easy to avoid non value added
time and consequent reduction of lead time at each step of supply chain from manufacturing of
raw materials by suppliers to delivery of finished goods to the end user(Sulina and Syah., 2018).
As lean supply chain management help in improving the unnecessary steps and also contribute in
terms of making the process more efficient so that they can contribute in terms of earning profits
into efficient manner. When operational cost has been reduced into efficient manner then
Starbucks get assurance about this spectrum that their supply chain can achieve goals into
appropriate manner. Reduced cost also help Starbucks in terms of using this cost for purpose of
investment and growth which will help an organisation to grow themselves into positive
spectrum. When costs have been reduced it is not always sure that this change is good for
Starbucks. It has been observed that cost reduction sometimes involve changing processes which
is not always favourable for an organisation growth and development as well.
Another most likely objective of supply chain for Starbucks is about high utilisation
which act as support system for positive growth of an organisation. When cost has been reduced
into efficient manner then supply chain have been used on large scale and Starbucks has opened
their stores in various countries due to which they have extra pressure to handle stores into
effective manner(Takahashi and et.al., 2016).As Starbucks has their its own brand name so its a
challenging task to run all stores into efficient manner in different countries. When supply has
been utilised on large scale then sometimes mismanagement has diverted the organisation from
its main target. Due to this reason they can't deliver the products into appropriate manner to
particular countries.

With high utilisation of supply chain company has to be more aware about this spectrum
that no one can do fraud with an organisation which will result into loss for the company (Zhang
and Prasongsukarn., 2017). So the high utilisation needs a proper eye on it so that execution can
be done into appropriate manner. Although through reduction of cost it is easier for the company
to deliver products and satisfy customers into appropriate manner. These are the most likely
objectives for Starbucks according to case study which is applicable according to the given chart.
Calculate customers on average level that ariving at the till and time in average manner they
must wait before existing Starbucks drive thru
Average Number of customers = Lq + λ / μ
= 5 + (25 / 12)
= 5 + 2.08
= 7.08 customers
Average time of waiting = 5 minutes
CONCLUSION
The above stated report concludes that supply chain plays a very important role within
the business. It has been concluded that for delivering products into appropriate manner to its
customers then supply chain plays a very effective role in it. It has been determined that an
organisation success and its goal achievement also depends on its supply chain as well. It has
been analysed that if supply chain cost is high then it also affects the budget of the company as
well. With the high cost and high operational cost it is difficult to execute its task into successful
manner. It has been determined that high utilisation of supply chain also creates mismanagement
in terms of executing the work into successful manner. For improving the situation of an
organisation, it is important to use transformational plan which will help in terms of re
organising the organisation of supply chain and also simplify the structure as well. The
functional roles can also be performed into appropriate manner with support of this
transformational plan. An organisation can achieve its goal of supply chain when their working
is planned and should be strategic into result oriented manner. So supply chain is very important
for delivering its services into appropriate manner.

REFERENCES
Books and Journals
Baek and et.al., 2019. A study of the acceptance intention of customers in coffee franchise using
extended technology acceptance model (E-TAM): focused on starbucks mobile
application. Culinary Science & Hospitality Research, 25(4), pp.146-155.
Bazán Silva, M. P., 2021. La influencia de la marca Starbucks en la percepción del valor del
producto.
Gordon, K., 2017. Business site selection, location analysis, and gis.
Lee and et.al., 2016. Applying GM (0, N) Model in the Study of Relationship between Service
Quality and Customer Satisfaction in Hualien Starbucks. International Journal of
Kansei Information, 7(3), pp.55-63.
Nelwan and et.al., 2019. ANALISIS FAKTOR DETERMINAN KEPUTUSAN PEMBELIAN
DIGERAI STARBUCKS MANADO TOWN SQUARE. Jurnal EMBA: Jurnal Riset
Ekonomi, Manajemen, Bisnis dan Akuntansi, 7(4).
Papac, I., 2020. Organizacija međunarodnog marketinga na primjeru Starbucks kompanije
(Doctoral dissertation, Josip Juraj Strossmayer University of Osijek. Faculty of
Economics in Osijek).
Sulina, A. R. and Syah, T. Y. R., 2018. How Service quality influence of satisfaction and trust
towards consumer loyalty in starbucks coffee Indonesia. International Advanced
Research Journal in Science, Engineering and Technology, 5(10).
Takahashi andet.al., 2016. A method for opinion mining of coffee service quality and customer
value by mining twitter. In Knowledge, Information and Creativity Support Systems (pp.
521-528). Springer, Cham.
Zhang, Q. and Prasongsukarn, K., 2017. A relationship study of price promotion, customer
quality evaluation, customer satisfaction and repurchase intention: A case study of
Starbucks in Thailand. In Proceedings of (Vol. 6).