Operations Management and Service Excellence Report: Starbucks

This report provides a comprehensive analysis of Starbucks' operations management and service excellence. It begins with a comparative Four Vs analysis, examining volume, variety, variation, and visibility in relation to Starbucks and Greggs, followed by a comparative performance objectives analysis using a polar diagram to highlight cost, dependability, flexibility, speed, and quality. The report then delves into design analysis of customer service processes and store layouts. Part B focuses on Starbucks' global operations strategy, its macro environment, key requirements, capabilities, and challenges. It evaluates the chosen operational area, emphasizing quality management's role and concluding with recommendations for improvement. The report highlights the importance of total-quality-management and its impact on long-term sustainability and competitive advantage.

OPERATION
MANAGEMENT AND
SERVICE EXCELLENCE

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Comparative Four Vs Analysis...................................................................................................1
Comparative Performance Objectives Analysis..........................................................................4
Design Analysis..........................................................................................................................6
PART B............................................................................................................................................7
Overview.....................................................................................................................................7
Starbucks Global operations strategy and surrounding macro environment .............................7
Key requirements, capabilities and challenges...........................................................................8
Analysis and evaluation of chosen operational area...................................................................9
RECOMMENDATION.................................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Operational management is referred as a business practice to develop maximised level of
operational efficiency so that a firm can achieve high profits. Operational management
incorporates the transformation of labour and materials into finalised offerings so that high
revenues can be attained by a company (Bernhardt, Hand Held Products Inc, 2017). Operational
team in an organisation have the role of plan, organise, control and direct business processes in a
systematic manner. This assignment report is based on Starbucks which is a US based coffee
house chain, headquartered in Seattle, Washington. This company is operating in global manner
and manages their outlets at around 29,000 locations. This assignment is bifurcated into two
parts. Part A is going to compare in comparative four and analysis. Also, performance objective
analysis and design analysis will be discussed. In part B, information about supply chain of
Starbucks is mentioned in detailed manner. At last, necessary recommendations are given to
company to achieve high revenues.
PART A
Comparative Four Vs Analysis
Four Vs analysis is defined as factors or elements which are needed to assure that process
design of a company is appropriate. It is a combination of different characteristics which helps in
analysing if the processes of company are implemented in efficient manner or not. Also, there
are different decisions that can be taken by a company on the basis of these characteristics.
Four Vs analysis
There exist different elements in four Vs analysis. All of these elements are significant
for a company yo analyse the efficiency of operations management. These elements in context
with Starbucks are stated below:
Volume: It is defined as the food volume which is produced at an organisation. Also, this
elements is not only concerned with the food manufacturing, but it is also related to the product
distribution processes of organisation (Chiarini, 2015).
Variety: It is concerned with operational flexibility that is very important for a company.
By offering varieties in product and services, Starbucks can retain their clients for the maximum
time.
1

Variation: This is related with the change in demand pattern that takes place over a
particular time period. Thus, it is related to the resources and material allocation of an
organisation.
Visibility: It is related with the transparent nature of Starbucks. Delivery procedures of
company are needed to be clearly visible to the clients. This will help the firm is sustaining
positive appearance in market place.
Illustration 1: Process Characteristics:
The Four Vs
(Source: Operations Management, 2019)
Differentiation
Different factors which are related with Four Vs analysis are needed to be compared with
another business firm. This will helps in gaining depth applicability for these elements. In this
context, a comparison in Greggs and Starbucks is mentioned below:
2

BASIS STARBUCKS GREGGS
Volume
 Production and manufacturing
system in Starbucks is
efficient as company posses
many production plants that
helps them in producing
coffee beans at mass level.
Also, company delivers
around 70,000 coffee cups
each week (Durach, Kembro
and Wieland, 2017).
 Compared to Starbucks, Greggs
posses a better production
system and supply chain. Also,
production volume of this
company is very high in
comparison with Starbucks.
This company sells around 2.5
million sausages every week
which is way more than sales of
Starbucks.
Variety
 To assure high flexibility in
their business operations,
Concerned company uses a
Hybrid approach named
“Assemble to order process”
to assure that varieties of
offerings will be produced by
the company for their
customers.
 To fulfil this criteria, concerned
firm has adopted digital
transformation. For example,
manager of firm use SAP's
business suite so that operations
related with order management
and delivery can be performed
digitally.
Variation  To increase this function,
organisation is needed to
work in favour of
customisations so that
changing demand of
customers can be served
properly. For example, in
Asian Countries people like
sugary products more rather
than European nation. This
 In order to deal with this
element, organisation uses
market research strategy. By
this, organisation is able to
acknowledge the change in
demand and other strategical
requirements in a proper
manner. By this, carrying out
variation is easy for firm.
3

variation can be adopted by
firm for high sales.
Visibility
 In this context, company had
adopted for capacity
optimisation. By this, more
flexibility will be given to
staff and customers in terms
of location due to which
visibility of firm will increase.
 Greggs uses on the go process in
which an organisation locates
their outlets in industrial estates,
retail parks and shopping
centres. This helps them in
boosting their sales (Hoyos,
Morales and Akhavan-
Tabatabaei, 2015).
Comparative Performance Objectives Analysis
In case of both the business organisation, there are various performance objectives that
helps these firms to boost up their performance standards in a positive manner. But,
implementation and scope of these performance objectives is very different. These performance
objectives are contrasted below with the help of a polar diagram:
Illustration 2:
Polar Diagram
4

Hence, in accordance with the above mentioned picture, there exist different performance
objectives which are stated beneath: Cost: In case of business firms, one of their major objective is to spend lest cost and
earning high revenues. In context with Starbucks, this objective scope is very high as
compared with the Greggs. This is because Starbucks use vertical integration to control
their production system and eliminating their waste. Due to this, company is able to
maintain low cost in profitable manner. But, Greggs is comparatively weaker in this
aspect. This is because company do not focus on their production and manufacturing
aspect due to which their production cost is high (Luthra, Garg and Haleem, 2016). Dependability: Another important objective for an organisation is to increase their
dependability in terms of management cost and timely delivery. In this respect, Greggs
uses outbound logistics to assure timely delivery and cost management of their products.
Also, company has digitalised their business operations by using technological software
for order processing. In case of Starbucks, company manages its supply chain by tying up
with delivery companies so that customers can be provided products in timely manner.
Also, to manage their cost, company manage their supply chain on the basis of contracts.
Thus, Starbucks manage this aspect in more appropriate manner. Flexibility: This kind of objective is related to the flexibility of business operations, this,
in relation with Starbucks, company adopt different menu to deal with different markets
in appropriate manner. For example, company introduce Almond milk in China to retain
their customers on long term basis (Marshall, McCarthy Heavey and McGrath, 2015).
Flexibility in case of Greggs can be seen on the basis of organisational processes. For
example, company support part time working and flexible working hours so that their
workers can be retained for maximum time.
 Speed: This organisational objective is very essential for both business organisation as
speedy delivery of their products and fast operational processes will help them in
sustaining a strong place in market. Greggs ensures their fast delivery through
digitalisation. This helps them in booking orders in advance so that timely delivery can
be given to the customers. Starbucks manages their speedy work by focusing on
digitalisation only in robust manner.
5

 Quality: It is an important aspect that management of both organisation must consider as
it makes easy for them to influence the buying behaviour of targeted customers. In the
context of Greggs, the management put efforts in implementing IT systems so as to
ensure quality of products and delivery of services and maintained on constant basis. On
the other side, Starbucks uses detailed approach to improve the quality for an instance
using such approach enable company to carefully source its beans from particular farmers
which are certified on industrial quality standards. Also, company has a program named
CAFE which helps the company in acquiring high quality raw material (Reid and
Sanders, 2019).
Design Analysis
It is essential for both organisations to design their operational processes in a proper
manner. In this context, some elements are mentioned below:
Design of Customer Service Process: Starbucks: Service process for customers is very supportive in case of performance
management and operational characteristics. This is because of the high scope of
company in context with visibility, variation, variety and high end production.
 Greggs: Manufacturing system of concerned company is very advanced due to which
coping up with four Vs analysis is very easy. But, company needs to enhance their
performance objectives by modifying IT management systems and supply chains (Uygun
and Dede, 2016).
Design of Store Layout: Starbucks: Capacity utilisation best ways by which a company assures support for
various operations in their outlets and stores. Also, this allows each operation and
activity to support different characteristics. For example, proprietary systems of
company benefits them in producing high products volume, with various variations and
effectual display.
 Greggs: Display operation of organisation is highly supported by their layout designs.
For example, the IT systems adopted by firm are able to assist the function associated
with variety and variations in proper manner, including supply chain management.
6

PART B
Overview
Operations management is an significant part for a company as it helps in performing of
business operations in a systematic way. There exist various kind of departments that works in
Starbucks so that organisational targets can be attained desirably. In order to manage their
operational processes, concerned company uses quality management. For firms which operate in
food and beverage sector, high product quality is important so that health of customers can not
be compromised in any manner. Quality management posses a wide scope in development and
success of Starbucks (Calabrese and Corbò, 2015). Good quality will assure that customers will
be retained for maximum time frame. Aspects of quality management posses a direct link with
the overall performance of Starbucks as if the quality of offerings will be bad then overall
revenues and performance of company will be low. Also, if quality of products will be low,
company will have to face legal compliances as health of customers will be compromised.
Hence, quality management has direct impact on the performance and productivity of Starbucks.
Starbucks Global operations strategy and surrounding macro environment
Global operations strategy of Starbucks
Manager in Starbucks use total-quality-management to maintains standardised quality for
their offerings and business processes. As quality of working processes improves, it became
easier for employees to adopt organisational changes in a positive manner. Under this quality
management, more emphasis is on the customers rather than other aspects due to which long
term relationship with customers is sustained without any complexities. TOQ will help Starbucks
in attaining long term sustainability so that high advantage over rivals can be achieved. There are
generally eight elements of TQM which are Process centres, fast based decision, communication,
customer focused, integrated system, continual improvement etc. All of these elements benefits
in improving quality for this sustainability.
Role of quality management in global operations strategy
TQM is considered as one of the most relevant and basic method by which manager in an
organisation can maintain a positive image in a company. In situations where the change is
taking place in operational efficiency, it is very important for an individual to evaluate the
business policies in an appropriate manner. To operate their business at international level,
7

Starbucks is needed to acknowledge operations by which quality of produce can be highly
maintained. This is possible when manager of company will carry out monitoring and controlling
operations on regular basis. By this, high quality of coffee and other resources will be purchased
from supplier and overall quality of final product will be maintained.
Impact of macro business environment
Strategies of quality management are very essential for a business firm so that internal
and external business factors will not creates a barrier in business operations. In case of UK,
political stability is high and purchasing power of people is good. This will benefits the firm in
earning high sales. But, now a days UK society is very health conscious. Due to presence of high
calories and caffeine, people may feel reluctant to buy the products of Starbucks. Then,
productivity of firm will be impacted in negative manner. Also, legal policies in UK like Food
Licensing Act has changed. These changes are needed to be followed by manager in Starbucks
so that firm do not have to pay legal penalties. In overall terms, impact of Macro environment on
working of Starbucks is positive (Gómez, Martínez Costa and Martínez Lorente, 2017).
Key requirements, capabilities and challenges
For a business organisation like Starbucks which operate their work in a global manner, it
is important to identify their key capabilities, requirements and challenges which are related with
company. By this, a tough competition to the competitors can be given in a proper manner. In
this context, some of the requirements and capabilities of Starbucks are discussed below: Adaptability: In order to adopt new technique and methods to perform work, one of the
basic requirement of Starbucks is to include adaptability in their working procedures. In
this context, company needed to adopt an appropriate working culture so that workforce
of company can agrees to required change management without any resistance. By this,
overall productivity of company will improve and high quality services will be given to
customers.
 Information Management: It is concerned with the smooth flow of information and
knowledge in a company. This communication capability and requirement is essential for
Starbucks as it will helps in identifying which customers already has used the services of
company. By this, it will be easier for the employees of Starbucks to increase the
experience of customers in a proper manner.
Discussion of Challenges
8

In context with implementation of quality management, there are different challenges
which are faced by Starbucks. These challenges reduces the overall outcomes of company in
terms of profits and productivity. Some of these challenges are listed below: Complexity in Supply Chain: This is considered as one of the main challenge in
implementation of quality management strategy. It is due to the reason that there are
some partners in supply chain which do not supports technological advancements. This
leads to difficulties in performing work due to which overall supply chain management
disturbs and attaining expected results became difficult (Kerzner, 2018).
 Resistance to Innovation: Another challenge which is faced by the organisation is
resistance of employees towards innovation. Employees in firm do not wants to
incorporate change associated with innovation. This restricts the company to embed
advanced technologies and method at their workplace.
Analysis and evaluation of chosen operational area
Chosen operational area for Starbucks is it supply chain management of Starbucks. It is
important for the manager of firm to evaluate and analyse the selected area in a detailed manner
so that advantages of adapting that particular area can be identified properly. Information in this
context are stated below:
Evaluation of capabilities and resources management at Starbucks
This is very essential to assure that each of the capabilities and resource in an
organisation must be managed in an appropriate manner. This will help a company in planning,
executing and organising business strategies in a systematic manner. Below is mentioned the
manner in which resources and capabilities management is taken care of properly: Technical Resources: In case of technical resources, Starbucks has adopted Product
Testing method to ensure that each of the available resource can be used in optimal
manner. By this, all the operations and activities of firm will be performed efficiently.
 Information Management: In order to manage their information properly, Starbucks is
using different channels of communication and intranet. Due to this, flow of information
is smooth and authentic. Also, to manage their order company uses technological
software so that work can be performed in systematic manner.
Evaluation of operational performance in quality management
9