Supply Chain Analysis

1 Starbucks Supply Chain Starbucks Corporation, founded in 1971 in Seattle, Washington, is a world-renowned coffee chain with over 28,200 branches globally. The founders of the company are Gordon Bowker, Jerry Baldwin, and Zev Siegl who learned the art of roasting coffee beans from coffee-brewing entrepreneur, Alfred Peet. Due to its high-quality coffee blends and flavors, Starbucks stood out from its competitors and this has enabled it to develop a wide customer base. By 1978, Starbucks had four new locations in Seattle. From 1987, Starbucks went through a rapid and aggressive expansion plan after acquiring new management. It opened stores in prime locations internationally and was listed in the stock market in 1992. Starbucks success can be attributed to its innovative supply chain strategy that has ensured that it meets the customers' needs promptly and through quality products.

Starbucks has a supply chain that spans six continents and over 100 countries. Most of the ingredients used in its stores come from different countries across the world. Starbucks owns only six roasting cent roasting centers, but through its centralized supply chain system, it can promptly transport its roasted coffee beans to its stores.

Buy this excellently written paper or order a fresh one from ace-myhomework.com

STARBUCKS’ SUPPLY CHAIN MANAGEMENT 2

At the roasting centers the beans are prepared and packaged through a standardized process which guarantees the quality of its products. Starbucks delivers a large quantity of coffee daily from the farms to its warehouses and finally to its stores through a vertically integrated supply chain. The company deals with nearly 300,000 coffee growers whom it interacts with to ensure that all its coffee is grown according to the required standards. This paper examines the efficiency of Starbucks' supply chain. It also seeks to establish the key challenges in the planning and operations of tis supply chain.

How Starbucks Achieves its Supply Chain Objectives The primary objective of the stores' supply chain is to effectively utilize economies of scale and obtain and supply the required products at the right time, price and quality.

Starbucks used a three-step process to enhance the performance of its supply chain. Firstly, it created a reorganization plan which was aimed at improving the activities involved in the supply chain, for example, the transportation of raw materials to storage and the roasting plants. This step resulted in the saving of time and money. The second step in the process was to simplify every task involved in the supply chain process into four essential functions; planning, procurement, production, and distribution. These processes were kept separate and distinct from each other to avoid the duplication of duties and thus increase the optimization of the supply chain. The planning unit involved all the activities that were involved in creating an efficient supply chain such as replenishment and developing new products (GolinskaDawson, and Kolinski, 2016). Procurement involves sourcing for the right materials at the right price. There are two main categories of purchases the company makes. These are; coffee and non-coffee products. Production involves the conversion of the raw materials into

STARBUCKS’ SUPPLY CHAIN MANAGEMENT 3 finished goods; it can either be done by the company or sub-contracted to third parties. The distribution unit includes all the parties involved in the transportation, delivery and customer service in the corporation. The reorganization of the supply chain functions enables Starbucks to reduce its costs significantly, and to increase the efficiency of its operations.

Analysis of Starbucks’ Supply Chain One of the company’s key strengths is an effective supply chain that comprises three primary activities; inbound logistics, operations, and outbound logistics. Inbound logistics involves matching the sourcing, production, and distribution to the needs of the business. It begins with the purchase of beans from farmers, distribution to storage facilities and then transferred to shipping facilities so that they can be delivered to roasting plants. At the roasting plants, they are roasted and packaged and finally distributed to Starbucks stores globally for brewing.

To achieve an efficient and responsible supply chain Starbucks has implemented certain strategies such as modern information technology systems to facilitate an effective movement of information at each level of the supply chain system (Ross & Ross, 2016). The IT systems facilitate the effective tracking of the movement of products and management of inventory. Starbucks also has strategically located distribution centers which enable the easy shipment of the roasted beans to the coffee stores. To maintain the efficiency of its inbound logistics, Starbucks endeavors to develop and sustain a good relationship with their suppliers, partners, and distributors.

Challenges One of the main challenges Starbucks encounters is the deterioration of coffee crop quality and quantity due to climate change. Over the years, there has been a drastic change in

STARBUCKS’ SUPPLY CHAIN MANAGEMENT 4 rainfall patterns and temperatures that have affected coffee farmers around the world, leading to lower crop yields and an increase in pests and diseases. The reduction in coffee yield leads to higher demand for coffee and as a result, causing a fluctuation in coffee prices. The price increase causes Starbucks to transfer the cost to its customers, leading to a hike in the price of Starbucks’ products. The continuous rise in Starbucks’ coffee prices may eventually cause it to lose a significant proportion of its market share to its competitors.

Conclusion Starbucks’ winning strategy with regard to its supply chain has been to deliver highquality products to its customers across the globe promptly. This approach has been enabled by the effective integration of the series of steps involved in the supply chain process. One of the most significant contributors to Starbucks continued growth is its effective supply chain.

To achieve a successful supply chain, Starbucks reorganized its processes, reduced its supply chain costs, improved its services and incorporated advanced IT systems into its supply chain.

As a result of these changes, Starbucks has attained market leadership and innovation.

STARBUCKS’ SUPPLY CHAIN MANAGEMENT 5 References Munson, C. (2013). Ethical Product Sourcing In The Starbucks Coffee Supply Chain. FT Press.

Golinska-Dawson, P. and Kolinski, A. (2016). Efficiency in sustainable supply chain.

Springer.

Munson, C. (2013). The supply chain management casebook. Upper Saddle River, N.J: Pearson.

Oliveira, A., & Gimeno, A. (2014). Supply Chain Management Strategy: Using SCM to Create Greater Corporate Efficiency and Profits. Pearson FT Press.

Ross, D. and Ross, D. (2016). Introduction to supply chain management technologies. CRC Press.

Sarkar, S. (2017). The supply chain revolution. AMACOM.

STARBUCKS’ SUPPLY CHAIN MANAGEMENT 6