Starbucks – Supply Chain
The expectations of Starbucks’ customers regarding coffee beverages would be to receive a perfectly made coffee, which is also recognized by the Starbucks’ mission statement. The notion of perfectly made coffee at Starbucks will include freshness and richness of taste, choice (varieties by origin, type and flavor), consistency of taste, image of “premium coffee”, some exotic experience, gourmet beverage, unique blends, same consistent quality and same price at every location and every day.
The idea is to help “customers find a beverage that’s right for them from over 19,000 choices, by giving them an opportunity to try new things they didn’t know about and find a new beverage. ” The primary goals of Starbucks’ coffee bean supply chain as being a customer focused organization
The primary goals of the coffee bean supply chain will be to provide total customer satisfaction by ensuring the coffee is available in all varieties, at reasonably affordable prices, and the coffee meets and exceeds customers’ expectations, along with providing the unique experience (as described above), while keeping costs possibly low throughout the whole chain from supplier(s) to end customer(s). How purchasing helps Starbuck achieve their supply chain goals
Being an integral part and the core activity of the supply chain, purchasing is also a key strategic process of the business. At Starbucks, purchasing is ensuring an interrupted flow of coffee at optimal cost and of consistent quality. This is achieved by
- searching varieties and sources that would meet SB standards in terms of supreme and sustainable quality, and careful selection of coffee and contracting reliable suppliers (Coffee Sourcing Guidelines, Preferred Supplier Status Program);
- building ong-lasting relationships with coffee growers and exporters, including co-ops and individual farmers;
- hands-on checking on agricultural conditions and crop yields, “audit from crop to cup”;
- paying premium prices to coffee growers, along with using fixed-price contracts and future contracts; 5
- Green and social initiatives promoted by SB. How the operations elements of Starbucks’ supply chain support them at achieving their goals.
Objectives of These Elements
Objectives of operations elements will be to ensure the next step in the supply chain meets strategic and tactical goals and provides for compliance with SB’s standards, while constantly minimizing costs by controlling and managing inventories. That is the right quantity of the product has to be forecasted, planned, scheduled, delivered, processed, and distributed in order to secure smooth operations of every SB outlet and distribution channel.
A set of tools is being used to this end: RFID for “dark deliveries” by suppliers, and for shipping containers (Operation Safe Commerce), Integrated Supply Chain Operating systems, Lean operations, Inventory control and forecasting accuracy to SKU level, High-tech roasting and grinding equipment, automated POS systems, DRP (distribution resource planning), TRP (transportation requirement planning), ERP systems. How distribution and warehousing support the supply chain goals of Starbucks. Objectives of the Starbucks’ distribution and warehousing functions.
Distribution and warehousing functions will be the final steps in delivering the product to the end customer, along with ensuring ultimate satisfaction. Again, minimizing costs and maximizing profits. Long-term agreements with logistics providers and foodservice distributors (Sysco, HAVI) complement the Company-operated retail stores and the network of distribution channels, which include retail and grocery store licensing agreements, wholesale club accounts, joint ventures and direct-to-consumer channels, via mail orders and online.
Convenience stores, department stores, movie theatres, businesses, airports, schools and medical facilities are other examples of the network. Why effective integration of activities is required for Starbucks to achieve their goals. Activities Integration plays a crucial role in the whole SB supply chain, as poor performance or failure at any step or activity of the supply chain will jeopardize the whole venture.
Activities and elements involved into integration include building long-term relations with reliable partners, elimination of obstacles in the way of cooperation, working out common goals and tools for such cooperation along with strategies and tactics, effective communication and introduction of modern integrated systems, prompt collection, analysis and sharing of information by all supply chain participants, supply chain performance measurements and monitoring.
Some examples of such activities at the very beginning of the chain will be: common work with coffee growers on cultivation practices in order to improve coffee quality and provide consistency and continuity, which will better match the roasting process, paying premium prices to growers which will contribute to creating sustainable sources of coffee beans, CAFE practices, etc.
