Sustainable International Supply Chains: Starbucks & UK Food Industry

This report delves into the realm of sustainable international supply chains, with a specific focus on the food and beverage industry in the United Kingdom, using Starbucks as a prominent case study. The report commences with an introduction to supply chain management, emphasizing its significance in delivering value and establishing connections between companies and their target markets. The academic literature review explores the concept of sustainability within supply chains, highlighting the importance of social and environmental factors, and the increasing consumer-centric approach. The report then investigates the UK as a country case, discussing its coffee consumption habits, reliance on imports, and the government's role in influencing the coffee supply chain. The industry case examines Starbucks' efforts in building a sustainable retail chain, including its sourcing strategies and ethical considerations. The report concludes with a discussion of the findings, summarizing the challenges and opportunities within sustainable international supply chains, and proposing strategies for improvement.

Sustainable international supply
chains

Table of Contents
INTRODUCTION...........................................................................................................................1
2. ACADEMIC LITERATURE REVIEW......................................................................................1
3. Country case.................................................................................................................................4
4. Industry Case...............................................................................................................................7
5. CONCLUSION AND DISCUSSION.........................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Supply chain is mentioned to be a system of people and resources which help in
conversion of raw material and ensure that they reach customers in an effective and profitable
manner (You and et al., 2012). Development of an ideal supply chain carries the capacity to
provide value to an organisation. It can also refer to the network which has been established by
company to procure resources from various suppliers and to further distribute it to the target
market. Supply chain of the company is established according to size of operations of an
organisation. Small business possess a chain which is confined to the target market. On the other
hand, there are mega corporations that cater customers worldwide through their distribution
network across the world. It helps in establishing a contact between companies as they can
deliver and assemble the product. This is where concept of supply chain management is
applicable. It consists of efforts to monitor and supervise supply chain of an organisation to
ensure that they are working in the best interest of organisation (Bai and et al., 2012). It works to
optimise supply chain so that it can provide competitive edge to the organisation.
It is essential to build a network of supply chain so that there will be no shortage on
inputs to the manufacturing department and distribution channel is to be constructed in such a
manner that company's offerings are available to prospects around the globe. Company which is
fulfilling the needs of customers will definitely carry a supply chain and process of same begins
way before when a consumer places an order (Beske, 2012). This assignment takes into
consideration the supply chain in food and beverage industry in the United Kingdom with special
reference to Starbucks. This organisation has worked hard and emphasized on building a retail
chain that is profitable and sustainable for business in competitive market.
2. ACADEMIC LITERATURE REVIEW
According to Michael Hoban (2016), sustainability is defined as an ability of a business
to carry out its operation in the market for longer period of time and considering social and
environmental factors as well. Starbucks is a company which is diverting its efforts and
resources to build a supply chain which is foundation of a business model. Company has
formulated a separate centralised system for ideal management of supply chain for an
organisation. Introduction of scorecard system has been opted to measure the efficiency of
supply chain of company.
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According to Anne-Titia Bove and Steven swartz, (2016) it has become essential for a
company to keep a close watch on the supply chain as it can protect an organisation against
social and environment impacts therefore keeping an organisation in a strong position. The next
coming years are going to be more consumer centric which means that there is crucial need for
an organisation to build a strong supply chain so that these needs can be fulfilled. There is an
expected increase of 75% in terms of consumers. This projections in consumer’s growth arises
need for strong consumer network to make the best of current situations.
Main factor which is to be countered by the organisation is poor performance of industry.
This performance is measured in terms of social and environmental grounds. Company has to
make continuous efforts to attain sustainability i.e. carrying out operations in the market for
longer duration. To achieve a defined level of sustainability, it has become necessary to build a
supply chain that is affordable and reliable as well as able to carry out its functions in the desired
manner. Company can locate the vital issues across supply chain so that discrepancies can be
addressed and chances of occurrence of losses can be minimized.
According to Jessica Wollmuth and Velislava Ivanova (2014), sustainability has taken
into consideration the environmental, social and economic impact on supply chain of a company.
The research conducted depicts that sustainability in terms of supply chain is seeing a rapid
growth. Major organisations are making efforts for ensuring a certain level of sustainability but
are failing to achieve the desired results. By implementing sustainability in business functions, a
company can conserve resources, innovate and increase productivity as well as optimisation of
processes. Due to all these factors, organisations are making efforts to expand their efforts to
create a sustainable business. There are several steps which assists a company into building a
competent and sustainable supply chain are as follows:
Mapping supply chain: This is done to have a better understanding of operations which
are carried out by business. Company in this step aims to identify and develop strong ethical
relations with the suppliers (Wolf, 2014).
Communicate expectation: Communication is a great tool to inform people about the
values and culture of an organisation to concerned parties. This tool is helpful involving
suppliers into efforts to build a sustainable future for company.
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Baseline supplier performance: The efforts of suppliers are set with standards to
measure their performance and take appropriate actions to improve the same. The inculcation of
code of conduct will help in complying with standards established by government.
Capacity programmes: This step takes introduction of behavioural changes among
people who are managing and monitoring the supply chain of an organisation. The external
sources such as training and education are employed to broaden employees' horizon (Wolf, J.,
2011).
Drive performance improvement: The thorough understanding of performance of
responsible people will help in adoption of suitable right channel of training which will
ultimately lead to improvement of concerned people.
Industry collaboration: The last step involves collaboration of efforts of an organisation
with industry. It is known to be a great tool through which knowledge and information can be
shared between companies carrying out their operations in the industry.
According to Brammer and Walker (2011) Souring strategy undertakes efforts to
develop a through understanding of business strategy so that they can be fulfilled. It identify
various sources through which raw material for particular manufacturing process can be taken so
that they can be aligned with goals and objectives identified by the company. It can be
categorised on the basis of number of sources. When inputs are availed thorough a single
supplier it is single sourcing and when number of supplier are considered it its multi sourcing.
According to Ole Nielsen (2015), food and beverage sector is one of the first sector
which implemented technology in souring process. The complexity of sourcing strategy is to be
countered with technology so that it can be optimised and managed effectively. The supply
chain which are expanded to international borders are often disruptive and complex. This
situation arises due to hostility between small and mega suppliers. To counter the situation an
organisation employs diverse suppliers which worsen the situation. This is when strategic
sourcing comes to rescue these large corporations. The development of robust spend analysis
programmer help in ideal procuring of inputs through purchase price variances.
According to Brandenburg and et al. (2014) organisation working in beverage sector are
looking for secure supply of ingredients so that business can be sustained for a longer period of
time. The companies are already struggling with decline in the growth rate and demand for the
offerings. These organisations are re-evaluating their procurement process so that volatile nature
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of prices and demand in the international market can be understood. The outcomes of this
evaluation were such that international service provides ended up with formulation of refined
supply chain. The emphasis on development of suppliers, processors and distributors and are
aligned to business strategy (Wu and Pagell, 2011).
According to Caniato and et al. (2012) The coffee segment has seen a growth in the
operating market. Innovation is introduced into coffee production which have resulted in
development of premium products. The reason of the same is that the consumption of prospects
have increased in the away-from-home sector in markets such as of United Kingdom. However
substitute of coffee, tea is experiencing a decline in the market. The production of tea is falling
as well and have seen a shortage of approximately 5%.
According to Julie craves (2015), Starbucks claims that its input is ethically sourced. This
was presented through a video published by the country. This means that company is opting for
sustainably grown and processed. But it drew certain criticism regarding its role sustainability
standards adopted by the organisation. The organisation alleged to buy a very small amount of
coffee which can be termed as “Certified coffee” and rest is to be procured from unethical
manner.
According to J Paul Dittmann (2014), the international supply chain is more vulnerable
when operating at a global level. The reason for the same is that it is exposed to variety of
economic, social and environmental rules and policies. Risk in supply is introduced due to the
variety of forces which influence its functioning which includes primarily quality and safety
challenges accompanied by legal and regulatory practices by the government. It is essential to
inculcate risk planning in supply chain which is often ignored. The company while formulating
contingency plans against the risk can help in attaining competitive advantage for the
organisation along with making sure of abundance and ideal supply of inputs which can further
be delivered to consumers.
3. Country case
This assignment takes into consideration United Kingdom. It is comprised of four
countries named as England, Scotland, northern island and Wales. The combination of culture of
four countries provides it a distinct culture (Chaabane, Ramudhin and Paquet, 2012). The people
of England are comparatively dominant when it comes to sharing the population which
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comprises of approximately 80%. it is a democratic nation along with a pinch of constitutional
monarch.
This country is one of the largest consumer when it comes to coffee. Approximately 93%
of the total population consumes coffee in numerous forms. Some of them are cappucinno,
espresso, mocha and latte. There is a steady increase in the demand for coffee in this particular
region. The research conducted by Gimoka Coffee UK found out that annually 400 billion cups
are consumed in the country which values approximately 730 million euros. It is clear from the
above data that people in UK have a strong preference for coffee. But the another side to it is that
it is not produced in the country. To meet the requirements it is to be procured from the coffee
production nations (Gimenez and Sierra, 2013). Below is a list and data related to coffee
production nation around the world.
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(Source: Coffee producing nations, 2016)
It is clear from the above graph that UK is not even in the top 10 coffee production
nations so to match the requirements of people it is to be procured from coffee production
nations. Brazil is considered to be largest producer of coffee beans with output of 49 million
60kg bags which encompasses over 75% of the total production. The supply chain for coffee is
considered to most complex and mostly dependent on variety of nations. This undertakes various
steps which are essential make sure that coffee reaches to retailer.
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Illustration 1: Coffee producing nations

The government of the country plays a crucial role in influencing supply chain for coffee
in the world (Walker and Jones, 2012). Listed below are the primary ways in which government
of a nation affects the supply chain i.e.
Trade restrictions: Government plays a crucial role in determining where to import the
products. The government also establishes trade restriction which are influence supply chain.
Brazil and UK share an ideal relation and does not involve any trade bans or restrictions.
The government imposes import duty: It is another manner through which government is
able to influence supply chain. Any increase in import duty will make it difficult for concerned
organisation to procure inputs for raw materials (Gopalakrishnan and et al., 2012). The UK
government have seperate import duties to countries which are in EU and which are not. The fall
in demand will lead to lower production of coffee.
Quality standards: The government determines the quality standards which are to be
followed by coffee producers. But coffee production is hindered by pests and bacterial due to
which they are unable to meet requirement set by the government. The food standards agency of
UK government looks after to maintain ideal quality standards of fresh produce which is being
imported into the country this data conforms with guidelines published by producing and
distribution food department.
Ban on pesticides: the environmental agencies have put a ban on use of pesticides and
insecticides into growing coffee. This is done to protect consumers against the harm which is
done by such fertilizers to humans. The coffee producing nations are still using these substances
due to lack of availability of alternatives in the market. These factors make it difficult to get their
hands on the inventories therefore suffering from the fluctuation in price and its volatile nature
(Hassini, Surti and Searcy, 2012).
4. Industry Case
UK coffee market have been experiencing growth for quite sometime now. The retail
coffee sector of the country have winning hearts with their quality services to people. The current
growth rate of coffee industry in the country measure at aggressive 7.5%. The turnover of this
market valued at 5.8 billion euros. In this industry there are some mega retailer who were
benefited due to this growth at a significant level. Some of them are Costa Coffee, Starbucks
coffee and Caffe Nero. These organisation have taken full advantage of their established brand
name in the market and ensured that small size coffee retailers struggle for their survival (Liu,
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Kasturiratne and Moizer, 2012). The mentioned organisation is one of top retailer in terms of
coffee. Starbucks coffee company carries out is operations through its 757 outlets around the
nation. This organisation along with costa coffee owns a share of whopping 54%.
it is fact that these organisation operates in the market which is competitive and dynamic.
The present trend in the coffee industry is in the favour of these mega retailers. There is a boom
in the coffee consumers and aggregate revenue of the coffee retailers increased by 11. 2% in the
financial year of 2016. it is said that there is significant alteration in the dynamics of coffee
industry in context of a nation. The boom in the market can be countered effectively if an
organisation can get their hands on the inventories and serve to consumer in the market through
retail outlets. The future prediction of this industry stands at 6 billion euros. The market of
United kingdom is directing to be more competitive in such circumstances a business have to
ensure that it carries enough inventories to serve its purpose (Nagurney and Yu, 2012). The
efforts of the company are as follows:
Securing finest raw materials: the first and most crucial task which is being carried out
by this organisation is securing of raw materials. The company is purchasing high quality coffee
beans named as Arabica. This organisation sourced their inputs from Indonesia, Kenya and
Guatemala and aims to maintain an ideal relation so that there is no shortage of inventories.
Pricing strategy: The company aimed to achieve a dominance in the market so they a
adopted a market penetration strategy (Taticchi, Tonelli and Pasqualino, 2013). This organisation
ensured that there is increased footfall on its outlets. This losses of a one outlet was compensated
by other performing retail store. This strategy helped company in attaining a competent position
in the market.
Sustainable production: It is another strategy which is being mentioned by the company
to maintain their position in the market. This organisation are collaborating with coffee
producers so that 100% sustainable coffee can be produced. This step helped a company to form
a long term relation with the farming communities. This step of company made sure that they are
possessed with quality beans at all times.
Building a unique culture: the employee oriented culture and policies is the another
strategy which is adopted by this organisation to achieve its benchmarked standards of coffee
production. The ideal treatment of employees help a business in achieving a superior position in
the market. They are treated as partners in business rather than employees. The development and
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promotion of empowered culture will help in attaining its goals and objectives (Pagell and
Shevchenko, 2014).
5. CONCLUSION AND DISCUSSION
It can be concluded from the above report that supply chain constitutes as a crucial
component for a business. This sector of business is often under looked but a suitable business
chain can provide a value to good and services offered by the company. The strength of a supply
chain is determined by the level of relation that it carried between various organisations. It is
essential for a business to form long term relation with other concerned parties so that there is no
problem in procuring and delivering goods to consumes. The passage through which is adopted
to ensure that manufactured product reaches consumers is through distribution channel. The
future of the coffee industry in UK is very positive and organisations such as Starbucks can be
benefited in a significant manner. Under such circumstances it is important for a company to
possess adequate raw material to fulfil requirements of people. The coffee beans are to be
procured through international market at a cost effective manner so that operations are carried
out in manner desired by the company.
There are some areas in which Starbucks have to work in order to establish a chain that
provides value that too at an ideal manner. Some recommendations are as follows:
 There should be an separate domain established for supply chain. It should be done so
that there is a seperate strategy formulated for the same and the efforts are aligned with
organisational objectives.
 The employees operating under supply chain domain must be provided with proper
training so that operations are carried out in a desired manner.
 The introduction of technology will help in achieving efficiency and optimisation in the
function carried out in supply chain functions.
 Supplier are most crucial part of supply chain and organisation should make efforts to
establish alliances with the supply to ensure flow of inputs at a continuous flow.
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