Operational Management and Service Excellence Report: Starbucks

This report provides a comprehensive analysis of Starbucks' operational management and service excellence, comparing it with Greggs. Part A of the report employs the 4 V framework to analyze volume, variety, variation, and visibility for both companies, followed by a comparative performance objective analysis, emphasizing ethical considerations and strategic approaches to process and quality management, job design, and HR practices. Part 2 delves into Starbucks' global operations strategy, macro environment, key requirements, capabilities, and challenges, with a focus on supply chain management as a chosen operational area. The report concludes with recommendations to enhance Starbucks' operational efficiency and success, highlighting the importance of adaptability, quality, and ethical practices within the competitive coffee market. The analysis covers design analysis, process and capacity designs, and the impact of these designs on decision-making and performance.

OPERATIONAL
MANAGAMENT AND
SERVICE EXCELLENCE
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Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
Comparative 4 V analysis............................................................................................................3
Comparative performance objective analysis.........................................................................5
How designs affect decision and performance of companies.................................................7
PART 2............................................................................................................................................7
1. Overview..................................................................................................................................7
2. Global operation strategy and macro environment..................................................................8
3. Key requirements, capabilities and challenges........................................................................9
4. Analysis and evaluation of supply management strategy as chosen operation area..............10
5. Recommendation...................................................................................................................11
REFERENCES..............................................................................................................................13
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INTRODUCTION
Operation management is termed out as function that is responsible for managing the
process that enables the creation of goods and services (Bag, Wood and Kayikci, 2020). This is
inclusive of planning, organizing, coordinating, and controlling all kind of resources that needed
to produce a company's goods and services. Henceforth, operation management and service
excellence both are interlinked and this aids to accomplish the organizational objectives.
The present report will lay emphasizes on business activities of Starbucks. It is multination
chain of coffeehouses. It is global leading brand that competitive advancement.
Furthermore, report will cover the activities as to draw out the information on public domain
such as Four vs analysis, performance objective analysis and design analysis will be conducted.
Also, chosen operational area will be considered Supply chain management. Lastly, critical
evaluation will be conducted on operational areas to define the success of Starbucks.
PART A
Comparative 4 V analysis
It provides a framework of entire operational process of an organization. By this it is easy
to determine efficiency of operation and how it can be increased. Basically, there are four
elements in this that are
Volume- it refers to number of products which is produced. A high volume shows more number
of products and vice versa.
Variety- it shows the flexibility within operational process. This can impact on overall process or
either it rises operational costs or delay in operations.
Variation- this show the change in demand pattern of products during a specific time period.
Visibility- it describe about the vision of customer of extent of delivery of products or services.
Thus, the 4 V of Starbucks and Gregg’s is as follows
Elements Starbucks Gregg’s
Volume In this the volume of
operations is high as
Starbucks produces variety of
products. Basically, it offers
variety of coffee flavor and
In volume of products is low
as compared to Starbucks
because they only produce
products related to bakery.
So, there are limited food
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other food items to people. items.
Variety In Starbucks there is little
flexibility in operational
process. It is because all
method and procedure is
defined that how coffee is to
prepared, order is taken, etc.
sometimes order preparation
may take time which led to
delay in operations.
As Gregg’s is bakery store
there also exist a high
operational flexibility. The
food item ordered may
consume lot of time to get
baked. Also, there might be
large order to be delivered at
same time. Thus, it will result
in delay of further operation
to be performed.
Variation Here, in Starbucks the
demand of food products is
low in summer and high in
winters. So, the occurs a high
change in demand of pattern.
Moreover, coffee demand is
high in winters.
It can be identified that the
variation in moderate. It is
because demand for bakery
product may be high or low
over particular period of time.
Usually, it depends on
customer needs.
Visibility As Starbucks operate on
concept of bricks and mortar
model so there is high
visibility to customers
regarding delivery of
products and services. This
means customer will have a
short tolerance time to wait.
They will get delivery of
products in less time.
Similarly, as also work on
brick and mortar and is
having a physical store thus
visibility is high in this. Here
as well tolerance time will be
less as bakery product are
quickly delivered.
It is analysed that profile of two companies are similar because they both operate in retail
sector and provide food services. So, in this the operation volume is high and visibility is same.
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The companies are having physical stores. Thus, tolerance time for customer is low and products
is delivered in less time. But difference is found is variation as food products offered by two
business are different. Starbucks offer coffee whereas Gregg’s offer bakery items. So, the pattern
of demand of these depends on season and needs of customer.
Design analysis- it can be analysed that Starbucks process is specified which is related to its
design. The layout of kitchen and sitting is done is such a way that they can operate a large
volume of operations. Besides that, during high variation design and layout decision is taken. It
enables them to maintain balance between order and delivering processing. Furthermore, by
using various designs Starbucks improve customer capacity and operational process. Also, they
are having a flexible design and layout process which enable then to maintain fluctuations in
customer demand during winter and high demand. Here, layout is modified which results in
increasing capacity of employees and fulfilling customer needs.
Similarly, Gregg’s also change its design and layout process in order to enhance staff capability.
The overall store layout is modified to maintain flexibility in variety. The large order is delivered
in quick time to customers. With this they are able to increase volume of bakery product as well.
Besides, design of customer service process has changed. Now, instant order placing and
delivering is done. All the unbaked product is baked and customer is given time duration of order
processing.
Comparative performance objective analysis
Before comparing performance operations of Starbucks and Gregg coffee company, it
can be said that analyzing their performance is important. In the context of operations of
Starbucks which has made it able to become popular, it can be said that its all operations are
effective than Gregg because it has skilled workforce which helps it out in managing operations.
Comparison of performance operations: There are several factors which show that
Starbucks is somehow better than Gregg’s coffee. One of the main key and consideration of
Starbuck is ethics. Its all operations and functions are being performed and completed in an
ethical manner. It is operating for around many years and for 49 years its operations are being
completed in an ethical manner. On the other hand, Gregg’s operations are effective but they do
not make an effective use of operational management strategies and it is the reason that this
company is somehow lacking behind.
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One example of Starbucks of ethics is: It sells qualitative coffee beans without
making use of artificial colors and making limited use of natural products (Mason, Cole and
Goza 2017). This process and example shows that it is concerned about the environment and
people as well. There are several strategies which are being used by Starbucks in order to
manage performance and operations such as: process strategy, inventory management, process
and qualitative strategies. Some strategies and their effectiveness are being discussed below
which are being used by both Gregg and Starbucks:
Process design: There are several factors which are being considered by customers while
making buying decision of coffee and design is one of the main key factors. In the context of
Starbucks, it is analyzed that it uses an effective design for its coffee. Sign of its brand and
disposable cups is one of the main examples of its design. Whereas, Greggs coffee company has
somehow effective design but as compare to Starbucks its design and process are not popular in
the market (Chukwu, 2017). It is also analyzed that this company does not have flexible
workforce but Starbucks has.
Quality management: Quality management is the main key of the success of Starbucks.
It is stated that people who love coffee, they see quality and it is the main key consideration. For
quality management, Starbucks make an effective use of Total quality management tool, six
sigma tool. These tools help it out in reducing error in the process of manufacturing and
improving quality on continuous basis. It is the reason of its premium quality coffee. On the
other hand, it is stated that Gregg does not make use of TQM and six sigma tools but it sources
raw materials for effective suppliers. Suppliers are bind to follow its quality standards
management guidelines and it is the way of Gregg of managing quality.
Job and HR design: HR is all about improving working environment and managing
employees’ performance in a manner which can help company in accomplishing their goals. It is
considered one of the main area of Starbucks which helps it out in taking competitive advantages
and improving image. It also helps it out in making decision regarding operation management
because HR of this company motivate employees and try to make their behaviors effective. It
uses external recruitment strategy for employing people and bringing innovation in the company.
Whereas, Gregg also have potential and abilities to use the best recruitment strategies (Busby,
Moore and Eppler, 2018). There are main 2 areas on which HR of this company focuses the most
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which are; training and motivation, Training is being given to them for strengthening their skills
and make them competitive.
There is one other main difference in which Gregg is better than Starbucks which is
target market. Starbucks focuses on middle to uppers class of people. This strategy can de-
motivate lower class of people. On the other hand, Gregg focuses on all age group of people. In
addition, it can also be said that Gregg and Starbucks need to focus on operational management
for reducing wastes and managing sustainability.
How designs affect decision and performance of companies
Process and capacity designs: This design affects performance of both companies to the
great extent. It is stated that working environment of Starbucks is flexible which makes it
employees able to adapt changes which occur in business environment. With this ability they can
improve their productivity without getting affected. On the other hand, with the help of design
process, Gregg increases efficiency of its processes and workflows as well.
Other main design which helps both companies and affect its performance is layout
design. This design shows people about the way of working like work flow, ways of using raw
materials in the manufacturing coffee. On the other hand, Starbucks’ layout design like raw
material supply and availability of employees makes it able to improve image and productivity.
PART 2
1. Overview
a. Introduction of operation area.
Operation management is the key function of the enterprise (Dev, Shankar and Qaiser,
2020). This overseas the end to end execution of activities by establishing process and
monitoring the desired output to accomplish the desired objective.
b. Scope of operation area.
Starbucks is coffee provider and this entity satisfy the needs of customers through
physical products and services. Department in the organisation work with aim to accomplish
specific objective. Marketing department works as to reach the customers and to identify the
requirements, and create the demand for the products. Thus, operational areas of entity as supply
chain management, quality management, in-sourcing and outsourcing, planning and control and
process improvement.
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c. Impact of supply chain management to Starbucks performance.
Starbucks coffee supply chain is global and majority of company coffee beans come from
farmers in developing countries. Hence, the Starbucks uses the vertically integrated supply chain
that means the firm involved in each steps of its supply chain process (Chakraborty, Sharma and
Vaidya, 2020). Also, Starbucks did supply chain transformation that clearly defined the
functional roles. This aids to improve the service levels and create the basis for sustaining and
enhancing supply chain capabilities.
2. Global operation strategy and macro environment.
Explain Starbucks global operations strategy
Starbucks is continually evolving its international strategy that helps to accelerate long-
term growth. Thus, global operational strategy of Starbucks enables the entity to accelerate
growth across these markets (Rich and Shararah, 2020). Therefore, this can be stated that
Starbucks business strategy can be categorised classified as product differentiation. Accordingly,
Starbucks as the coffee chain giant mainly focuses on the quality of its products and customers to
demand premium prices for high quality. Therefore, the chosen firm has strategy for its supply
chain and this is inclusive of the diversification of suppliers to ensure stability of supply at the
global level.
Role of supply chain in the global operation strategy.
Supply chain activities of the Starbucks plays crucial role in global operation strategy. In
order to ensure the business activities at the global this is crucial to implement better supply
chain mechanism. Global supply-chain management termed out as distribution of goods and
services throughout a trans-national companies and effective global network aids to maximize
profit and minimize waste. In addition to this, it can be stated that Global supply chain strategy
can be termed out as the process that works as to company to creates the connections at global
level (Roth, Deuse and Biedermann, 2020). Therefore, producing, handling, and distributing
specific goods or products on a global scale by managing supply chain activities. Global supply
chains aids to facilitate entry into within the new segments to grow business activities. Effective
use of supply chain management enables business growth and provides firms with access to new
technologies through partnerships with foreign firms.
Influence of macro and micro business environment.
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The working of the Starbucks hits by the macro and micro environment factor at the
greater level. The micro-environment inclusive of the components that affects operation of
chosen firms and this also impact its performance and decision making. This covers the
competitors, customers, distribution channels, suppliers etc. On the other hand, this can be stated
macro environment inclusive of the components such as inflation, unemployment rates and taxes
etc. In addition to this, macro environment factors have huge impact on working of businesses
and consumers on a day-to-day basis (Odhiambo, Micheni, and Muma, 2020). The economy and
consumers are influences in the macro environment that can huge impact on operational working
of Starbucks.
3. Key requirements, capabilities and challenges
Key operational requirements and challenges faced by Starbucks.
In order to maintain day to day functions of working of Starbucks, this entity uses centralised
system to manage its supply chain and logistic network. In addition to this, Starbucks operate
and manage multiple global distribution as this makes the whole working activities in
streamlined manner. To manage the working proficiently, the Starbucks takes the initiatives to
maintain long term supplier relationship as this is the one of key to its success and future growth.
Better relationship management of the chosen enterprise enables Starbucks to make its supplier
to feel like integral part of its operations. In order to manage the day to day working the SRM
strategy assist better collaboration and communication with supplied. In the past, the chosen
enterprise such as Starbucks has very poor visibility in their supply base, as coffee farmers and
processors were not very technologically sophisticated to maintain the process of business in
streamlined manner (Odhiambo, Micheni, and Muma, 2020). With help of increasing the
transparency of their supply management activities Starbucks takes the continual steps to gain a
better understanding of the needs and the working conditions of their suppliers. Henceforth, this
can be stated that increased visibility helps to quoted enterprise to improve its relationships with
supply chain management. Starbucks also needs to purchase coffee with help of agents such as
individual estates, producer associations, suppliers or directly from the processors. In order to
maintain the operational requirements of the enterprise, Starbucks has on-demand access to
constantly-updated information about the wide range of things such as stock inventory, transport
scheduling and storage capacity and this also allows the company's supply chain to operate at
maximum efficiency at all times.
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Challenges of Starbucks supply chain
In the present era, there are number of the enterprise that has huge competition in the
market. Thus, global supply chain affects the working of Starbucks due to fierce competition in
market. With the globalization of manufacturing operations, the global procurement network
works as to support and react to with the need of supply chain. In addition to this, the selection of
the strategic supplier that provides manufacturing locations with consistent global quality and a
reliable local service is one of the huge challenge in deal with the supply chain management
force (Odhiambo, Micheni, and Muma, 2020). Therefore, the supply chain managers of the
Starbucks need to understand the major issues that has huge impact on the supply chains around
the world and this also create strong reporting and management plans to resolve issues in the
quick manner. Hence, this can be stated that the Warmer temperatures and changing rainfall
patterns are restricting the Starbucks and this is also affecting the supply chain management
activities, Coffee Leaf Rust is the diseases that has impacted the productivity of the million
coffee farmers and workers composing Starbucks' global supply chain.
Discuss the capabilities of Starbucks in the operational working.
Starbucks takes the number of initiatives that aids to maintains its physical assets with help of
dedicated teams of employees trained for maintaining facilities. In addition, the company
maintains its human resource capacity with help of providing training and retention strategies
and this needs to relatively high compensation (Dev, Shankar and Qaiser, 2020). Thus, Starbucks
addresses decision area of operations management through the involvement of café personnel,
dedicated maintenance teams and the third-party service providers. Thus, chose entity needs to
hire the skilled labour workforce who are able to carry out the better working in the enterprise.
People, process and capabilities are the crucial aspect that leads to undertake the business
activities in the streamlined manner. In order to manage the proficiency, the entity needs to
maintain quality practices so that smooth functioning can be undertaken.
4. Analysis and evaluation of supply management strategy as chosen operation area.
Evaluation of management of resource and capabilities in supply chain management.
Starbucks is the leading coffee brand at the global level. This is global supply chain that has
extensive global presence. It is entity that uses premium quality products and provides the great
customer service in-store environment. The company has chosen leadership status and this leads
to put consistent focus on quality of products, customer service and take the initiatives to bring
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excellent supply chain management (Dev, Shankar and Qaiser, 2020). Products and service of
Starbucks can be differentiated from its competitors and this entity has effective brand
recognition. Therefore, this is the entity which has built a strong competitive advantage in the
coffee industry. It is the entity that has been growing profitability and productivity on continual
basis. However, the major resources and capabilities that has helped to Starbucks in terms to
build a strong and sustainable competitive advantage in the coffee industry.
Impact of operational performance in supply chain management strategy.
In the increasingly flattening world the working of the enterprise is continually evolving and
impacting the ways the business is performing their working (Bag, Wood and Kayikci, 2020).
Thus, success and better operational performance of the enterprise is mainly dependents on
developing the innovative supply chain management plan of action that help the company to
driving continual improvement. Managers of the Starbucks needs to integrate the supply chain to
ensure all functions and activities to bring out harmony in business practices. Henceforth, supply
chain management works to bring the supplier and distributor in the one cohesive price.
Use of theory and concepts
In order to manage the supply chain management activities in the enterprise the Starbucks
must use Theory of constraints, it is one of the simplest and powerful supply chain concepts.
This is one of the effective theory as this tuning an entire supply chain as the same pace as the
slowest step in the process. Hence, this is theory that works to engages the SCM in the
management of flows between and this also leads to supply chain to minimize total cost.
5. Recommendation
On the basis of above report, the Starbucks needs to maintain the supply chain
management with help of streamlining the supply chain activities so that operational
performance of the enterprise can get improved. These as are-:
 The entity must take steps to manage and maintain better relationship with their suppliers.
So, it can provide the function in proficient aspect. Thus, better supply chain impacts
operational working positively.
 Supplier chain manager of the Starbuck must work as to managing and organising the
business activities as this is inclusive of identification, acquisition, distribution and
production of the goods that needs to provides to its customers.
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 In order to manage the supply chain, the chosen entity needs to use better technical
advancement that improves the supply chain performance within the enterprise.
Managing the supply chain aids to improve operational performance and enhance brand
recognition.
CONCLUSION
Hereby, it can be concluded that operational management is the mindset that has certain
principles and tools which creates sustainable improvement in the organization. Operational
management and service excellence aids to bring better operational capabilities. The present
report has covered business activities of Starbucks. Thus, report has covered the information
about the public domain such as four vs analysis, performance objective analysis and design
analysis of chosen entity. Also, report has cover the activities such as discuss the role of
operation area as supply chain management in order to bring operation management that enables
the success of Starbucks.
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