Supply Chain Management of Starbucks Corporate: Strategies and Objectives

Supply chain management within a multinational company

Starbucks corporate is a United States based chain of coffee houses as well as roaster reserve, whose headquarter is based in Seattle, Washington. The organisation is one the largest coffee store chain in the world and has been one of the major representation of the second wave of the coffee culture in the country. Till the year 2020, the company has more than 32,660 stores in around eighty-three countries, which consist of company-based stores at 16,637 locations and 16,000+ licensed stored. The company mostly operated in the geographical location of Canada, the United States, Latin America and 83 more countries. (Copacino 2019) The public company was founded in the year 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. The company started in the retail market through selling whole beans and tea, powdered coffee in different outlets within their United States market. Today the company served around hundred million customers in a week their coffee beverages, tea, smoothies and baked goods through licensed outlets and nationwide food service organisations. (Hugos 2018)

Mission statement: “to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.”

Vision statement: “to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”

Supply chain management within a multinational company.

Supply chain management is a process of managing the flow of goods and services which includes processes which transforms the raw materials into the final products. It also involves the active streamlining of the supply oriented activities of the business to optimise their customer value and to also increase the competitive advantage within the marketplace. The role of supply chain management within an international business is high and vital, however, there are also several challenges relating to cost, profit and personal attention are associated with it. (Monczka et al. 2015)

• Increasing the customer service: For international businesses meeting the expectation for right product with expected quality needs to be fulfilled. For the availability of the right product at right location and providing after sales services falls under the role of Supply Chain Management. (Lambert and Enz 2017)
• Increase in economic position: Supply chain management helps in increasing the profit influence because they can control the costs and result in an affected increase in the profit. It also reduces the immobile assets such as factory, machinery, carriage and storerooms. The designing of the supply chain network can minimise the additional cost of these assets. Lastly, it results in increase in cash flow because firm recognise1s the managers which manages the fast services of products. (Langley et al. 2020)
• Decrease in operational expenses: Fall in buying cost which depends on the quick delivery of expensive items and reduces the cost of keeping stock. It also decreases the making cost and whole source chain expenses. (Waters 2019)
  
  

The objectives set by Starbucks for their future are;

1. To maintain their upright as one of the highly familiar as well as esteemed products.
2. To provide continuous offers to the customers relating to their new style of coffee in different manner for all of their new sets and through various resources. (Christopher 2016)
3. To plan an aim to increase the share in market through profe1ssional style, through nomination of opening additional provision within the current market and increasing sales of the existing products which will support their long term plan of aims and goals. (Sanders 2020)
   
   

Ten Points plan for the supply chain function along with strategies.

Request planning agreed upon - Starbucks opts for corrected and repeating projecting proves which helps in decreasing the stock and increasing the making efficiency, delivery, buying and trusting the organisation’s forecast. For a market requirement plan in different locations, creation of separate individual plan is necessary by a business prediction expert. They will understand the importance of the agreed demand plan, which will further inspire the Starbucks’s head development department to put out products with new supported technology. (Ben-Daya, Hassini and Bahroun 2019)

Ten Point plan for the supply chain function along with strategies

Provider and logistic centres – Logistic management – Starbucks operates on a procedure for creating both functional and tactical plan that links purchase, production and logistical needs of the company. (Durach, Kembro and Wieland 2017) In order to develop an efficient logistics system, they can adopt approaches such as efficient information system that will keep the information flow of the organisation, where the Informational Technology Manager can control the database of the company’s stock in real time. They can make the delivery centres to confirm their output management and associate with trustable logistics partners. (Wieland 2021)

Advanced stock management – Stock is one of the crucial aspect of Starbuck’s supply chain and directly impact their financial statements. Factors such as stock requisite at different outlets is necessary for standards of customer service, maintaining the supply chain management, and adopting stock strategy. However, factors such as demand erraticism, lead time and customer service goals must also be considered. Advanced scheduling of stock provides automatic power to look for the factors of stock control for every area and unit which result in low stock levels. (Mohammed 2020)

Three phase re-fill scheduling – Starbucks continuously controls their stocks at the outlets and makes sure there is a system of automatic refilling. Planning on advanced refilling can help in can help in the improvement of the supply chain plan’s cost operations where standards of customer service can be maintained at the minimal cost. In order to solve the issue beforehand, the refilling preparation must be properly set in order to meet the project requirement and maintain the record level in the future for the generation of requirement of goods and products. (Rajeev et al. 2017)

Demand driven production scheduling – In the Starbucks organisation, there are different product have developed services working autonomously for the entire supply chain. One of the top goal of any organisation in to improve their efficiency of the exclusive resources. By focusing on the production efficiency, they can have big batch sizes which are not meeting the consumer’s demand. Therefore, low output process can help the supply chain to be efficient in other department and to also provide a low supply chain cost. (Frazzon et al. 2019)

Master Data Management of supply chain – Starbuck has trend of constantly increase their complications and quickness, through the Enterprise Resource Planning along with the trade solution that do not provide details on the data proficiencies for supporting the innovation aspect in terms of optimisation and scheduling of the supply chain. Master Data Administration through their supply chain management a high quality data can be generated from outside sources and can be implemented within the implementation and scheduling processes. (Green et al. 2019)

Operations and sales planning – In Starbucks, scheduling can help in the stabilising the demand and supply in the short run, where the operations and sales planning supports the matching of demand and supple over a time period to make sure the economic goals are achieved. Planning for this can help in gaining various information relating sales, economies, manufacturing, advertisement and purchase into a source of analysis and decision making process. For this procedure, days and weeks can be reduced from the entire scheduling method, scheduling cycle and restructuring. (Mangan and Lalwani 2016)

Reducing the operational cost – Operation is for making sure that the stock chain is meeting the planned objectives. It is for the company’s requirements along with minimising the prices by controlling and monitoring the stocks through prediction, strategizing, scheduling and transporting their delivery to every outlet. (Holmström et al. 2019) To achieve these objectives, it is required to possess RFID regarding dark distribution, Integrated Supply Chain Process Systems, Distribution Resource Planning (DRP), Enterprise Requirement Planning (ERP) system and Transportation Requirement Planning (TRP). By restructuring the unit, the gaps in the process can be identified and be improved accordingly. (Khan and Yu 2019)

Improvement in the economic position – Retaining and manufacturing coffee related products are beneficial for the community which increase employment, income, education, enhancement of local sub-structure and community facilities. For it to be bearable, it must be feasible to the resource chain. Long term association is also required for the growth of long term transaction related to the chosen providers. Inducement is for valuing and buying strategies which is for backing their coffee grower and delivery methods. In addition to that it also provides commercial transparency within the entire supply chain management. (Russell and Taylor 2019)

Logistics provider – Starbucks Company is flexible when it comes to their logistics network when compared to other companies and it is divided into two parts Com-functioned stores and Non-Com-functioned stores. The outlets which are not directly under the company has lesser percentage of sales and are mostly through partnership, however, serves consumers more through these expanded outlets. They operate through company managed outlets, non-company orientation on the networks and on-line demand as well as trade and mail demands. (Kshetri 2018)

Goals and objectives set by Starbucks 

The goals and objectives which Starbucks have set for themselves is s “to motivate and cultivate the human essence- one individual, one mug and one vicinity at a time”. The aim of the company is to expand their believes which they hold recognition for and to also help in the individual development which occurs over the development of the company. For this a well-managed supply chain is necessary for outlet dispenses of coffee in their outlets Coffee is one such product which must be obtained from different parts of the world and deliver them to the customers to hundred million consumers in eighty nations every week. For resolute delivery chain to be maintained under control and enhance the delivery chain to attain their future goals. (Meredith and Shafer 2019)

Strategy 1: 

The first strategy is embedded sustainability as well as planning for reorganisation within the supply chain. The triple bottom line consist of people, profit and planet which is important for Starbucks to adopt because it will benefit in ecological sustainability for their manufacturing, delivery administration and staff attraction aspects. For this Starbucks’ leader need to implement a long run main strategy within their supply chain management approach. This strategy will include their obligation towards the ethical implementation of supply chain practices such as supply materials, packaging and delivering the items that can be recycled. After that the company can assign specialist and professionals who will help them concentrate based on attaining win over the actual time prominence as well as to examine the dynamics and intake of resources. This will ensure that there is a fall in the carbon ineffectiveness, reduction in the power intake and give rise to efficient, recycling and renovation. Lastly, the company can safeguard their continuous development through a universal inspection, quality and information administration through audits, latest style of working and delivery at yardstick basis for the delivery chain operations which are variable. (Wu et al. 2016)

Strategy 2:

The second strategy that Starbucks can adopt is adoption of model for commercial working on the basis of actual time requested for vision and request which influences, cut costs and improved the services. The accuracy of the forecast as well as eventuality of the scheduling tool will ensure entire opinion and a response to the jeopardies which provides commercial and political disturbances along with natural disaster. The important aspect is the prudence towards influencing lessening the stimulating the actions towards commercial success for Starbucks. With the help of appearance as well as maturing the cloud delivery chain skills, along with business which possess capabilities towards perceiving actual time from stockpile toward the outlets. The company can adopt the strategy through which they can lower their prices and to increase their outputs. Here, the source company recognises the price controller who are increasing the prices in the market. The production team can implement a well-organised model for coffee transportation towards treating the plan, with the objective of production within the area from where they can directly sold. Starbucks already have factories in the United States and Kent, York, Minder, Columbia, Amsterdam and South Carolina and so on along with that they are also dependent on twenty four manufacturer in Europe, Asia, Latin America and so on. (Zekhnini et al. 2020)

Strategy 3: 

The third strategy which Starbucks can adopt is creation of innovative as well as responsive supply chain with the quick scheduling and combined achievement along with logistics scheduling. Starbucks needs to follow the supply chain towards the changing marketplace scenario, along with meeting the other threats and opportunities. The company needs to organisation active schedule for building competence and consistent fine tuning of the processes towards making receptive response towards the changing requirements. Time requirement is constant and dynamic supply chain constantly changes towards quick response to the market variation. This can be reduced or eliminated over the entire supply chain which will result in better prominence, enhanced alliance through the value chain, containment of the dependable and expected delivery and finding, storage and supply, carriage and increase in the choice of better backing and checking. (Koberg and Longoni 2019)

Supplier relationship management strategies and IT for their suppliers 

Through the interactive model of Starbucks, the grows meets their associated, however, one of the major difference between true associated and commercial deals is trust and the creation of energy which emerges in order to make ways for institutionalise the trust gaining process. The top quality suppliers and company make key emphasis on the narrowing computer total connection and extend the durability to the supply associates. Starbucks mostly aims for creation of long term supply associated who will remain their provider rather than opting for those suppliers who are offering their goods at lowest cost possible. By strengthening the customer and suppliers, the Starbucks can gain their loyalty. For this trust an moral in the durable form with the suppliers is needed for principles such as impartial conduct, high quality, empowering the suppliers, training and teaching the suppliers and making direct contact with the suppliers. (Kozlenkova et al. 2015)

Starbucks associated with four parties’ partners, consumers, providers and societies. By maintaining impartiality among these parties which help in the company to track their resource chain and supply chain management. The company is highly dependent on the preference and favouritism from the customers and the company is also connected to the national and global societies for financial growth and creation of a societal bond. Lastly with providers, the company maintains friendly relationship through their delivery provider program where they work to increase their commercial associated with the women and small suppliers. Starbucks is also highly linked to the achievement made by the several coffee growers Conservation International and Called Coffee and Farmer Equity (CAFÉ) help these growers in several ways such as product class such the minimum criteria for coffee beans Starbucks is looking for, commercial accountability and commercial transparency by showing proof of payments in different parts of supply gain and lastly, community accountability. (Shakerian, Dehnavi and Shateri 2016)

Information technology used by Starbucks for their suppliers 

Starbucks is one of the successful businesses which has portrayed innovation throughout the years, such by spending on their supplier system. Technology has helped the business with price control and alertness to be at a high level in this industrial sector. They have adopted several new technological aspects in order to remain ahead of their competitors. Starbucks have been using iBeacons System which ensures that the customer is undergo through an application within their smartphone that sends a notification when completion of order is done. The technology is mostly necessary to the business, to receive real time information and to maintain an information database. The company is also using more of Artificial intelligence for controlling the consumers’ vision towards progression of tactical scheduling by driving the artificial intelligence usage for exploring, directly contacting and tech to help more communication and association with the customer. (Farooque et al. 2019)

Starbucks has made introduction of several long and short term investment into advanced technology to minimise the wastage and increase the efficiency of the supply chain. Internet of Things, Artificial Intelligence and Big Data are some of the technologies which has helped Starbucks revolutionise their initial trades and increase the connection with consumers which ultimately serves them to achieve their goals. Starbucks has also opted for mobile phone technology at this base operations with the majority of their farmers through the smartphones. For growth and roasting purpose, the data collection and sharing of the third wave of coffee information about the position of roots, growers’ attitude, precise harvest time, moisture content and several other aspects is known to the company which helps to take better and informed decisions. The company has an auto information style connected to their central logistics and scheduling system that helps them with the actual movement in the stores and outlets regarding the total stock level, transportation plan and store size. With such information, they can operate different stages of production and processing of delivery programs with the raw material and arrange the supply chain accordingly. (Wieland, Handfield and Durach 2016)

Recommendations

On the basis of the analysis and evaluation of the supply chain that Starbucks have recommendation can be on their procurement strategy which they can do from multiple sources. With the increase in the global growth, the Starbucks’ outlets can become more productive and enhanced their licensed allies. For the growth and development purpose, the developing market with inhabitant of the emerging middle class sector remain for bidding their substantial chances to add on a new outlet that will serve more customers. They can also increase their franchisees, especially with their intricate business licenses to expand their outlets. For the international expansion usually the management are complicated and with increasing product cost they can adopt franchising through unsystematic sub-contracting and for a faster growth. (Saragih et al. 2020)

With the global tactic of Starbucks, they must assign their major abilities and proficiencies within different countries and to progressively build their revenue oriented structure in those nation to increase their international market in a gradual manner. The products made by the Starbucks need to be based on the feedbacks which they receive because it is considered to be a luxury product. In addition to that they can expand and customise their product line for the coffee, juices and tea. (Sri 2020) Coffee is often considered as unhealthy and addictive, therefore, as an alternative they can offer healthy products which will suit the taste and standard of living as it shifts more towards healthier side. The company while internationally expanding their operations, must consideration the local taste and preferences. Through market research or experimentation, they can either expand their product range or limit them to match the taste of the customers. (del Rosario Pérez-Salazar et al. 2017)

The required shipping document needed for the clearance of the cargo at the port for the purpose of trading usually for good types. For the export clearance as well as import clearance documents such as PO from the buyer, bill during sale, and list of packing, bill during shipping, landing and during entry and certificate of origin are necessary during the phase. (Craighead, Ketchen Jr and Darby 2020) At the port while loading the Bill of Landing for the carriage, commercial invoices, packing list and other customs documents will be required. For the customs clearance requirement, documents such as packing list, commercial invoice and other documents such as product licenses, product certificate, import certificate, insurance documents and manufacturing certificate are also required. (Fernandes et al. 2017)

There are four types of payment instruments which the client can opt for namely, letter of credit, other methods, payment collection and clean payment. Letter of credit is a type of certificate from importer’s bank to pay the exporter. It can be used globally which is usually prepared by the bank of the importer on their request. The advantage of this to the exporter is that it is an assured form of payment, although the cost of finalising and dealing for the letter of credit is expensive. (Stadtler et al. 2015) For importer, it will safeguard the buyer and decreases the time as bank transacts on behalf of the importer, although, it is activate based on paper and not based on confirmation of consignment for it superiority. Clean payment is another type of payment which is of upfront payment and open account. There is also payment of collection through two options’ submission of paper when payment is received and paper against acceptance. There are several other methods of payment as well such as shipment purchase, direct deduction through debit or credit card, through cheque and through online payment methods. Collection of documents is one of the easier method to work for with lesser expenses from the exporter and the importer, although it has high level of risk as compared to that of letter of credit and there is no guarantee to be made under such a method. (Brandenburg and Rebs 2015)

References

Ben-Daya, M., Hassini, E. and Bahroun, Z., 2019. Internet of things and supply chain management: a literature review. International Journal of Production Research, 57(15-16), pp.4719-4742.

Blanchard, D., 2021. Supply chain management best practices. John Wiley & Sons.

Brandenburg, M. and Rebs, T., 2015. Sustainable supply chain management: A modeling perspective. Annals of Operations Research, 229(1), pp.213-252.

Christopher, M., 2016. Logistics & supply chain management. Pearson Uk.

Copacino, W.C., 2019. Supply chain management: The basics and beyond. Routledge.

Craighead, C.W., Ketchen Jr, D.J. and Darby, J.L., 2020. Pandemics and supply chain management research: toward a theoretical toolbox. Decision Sciences, 51(4), pp.838-866.

del Rosario Pérez-Salazar, M., Aguilar Lasserre, A.A., Cedillo-Campos, M.G. and Hernández González, J.C., 2017. The role of knowledge management in supply chain management: A literature review. Journal of industrial Engineering and Management (JIEM), 10(4), pp.711-788.

Durach, C.F., Kembro, J. and Wieland, A., 2017. A new paradigm for systematic literature reviews in supply chain management. Journal of Supply Chain Management, 53(4), pp.67-85.

Farooque, M., Zhang, A., Thürer, M., Qu, T. and Huisingh, D., 2019. Circular supply chain management: A definition and structured literature review. Journal of Cleaner Production, 228, pp.882-900.

Fernandes, A.C., Sampaio, P., Sameiro, M. and Truong, H.Q., 2017. Supply chain management and quality management integration: A conceptual model proposal. International Journal of quality & reliability management.

Frazzon, E.M., Rodriguez, C.M.T., Pereira, M.M., Pires, M.C. and Uhlmann, I., 2019. Towards supply chain management 4.0. Brazilian Journal of Operations & Production Management, 16(2), pp.180-191.

Green, K.W., Inman, R.A., Sower, V.E. and Zelbst, P.J., 2019. Comprehensive supply chain management model. Supply Chain Management: An International Journal.

Holmström, J., Holweg, M., Lawson, B., Pil, F.K. and Wagner, S.M., 2019. The digitalization of operations and supply chain management: Theoretical and methodological implications.

Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.

Khan, S.A.R. and Yu, Z., 2019. Strategic supply chain management. AG: Springer International Publishing.

Koberg, E. and Longoni, A., 2019. A systematic review of sustainable supply chain management in global supply chains. Journal of cleaner production, 207, pp.1084-1098.

Kozlenkova, I.V., Hult, G.T.M., Lund, D.J., Mena, J.A. and Kekec, P., 2015. The role of marketing channels in supply chain management. Journal of Retailing, 91(4), pp.586-609.

Kshetri, N., 2018. 1 Blockchain’s roles in meeting key supply chain management objectives. International Journal of Information Management, 39, pp.80-89.

Lambert, D.M. and Enz, M.G., 2017. Issues in supply chain management: Progress and potential. Industrial Marketing Management, 62, pp.1-16.

Langley, C.J., Novack, R.A., Gibson, B. and Coyle, J.J., 2020. Supply chain management: a logistics perspective. Cengage Learning.

Mangan, J. and Lalwani, C., 2016. Global logistics and supply chain management. John Wiley & Sons.

Meredith, J.R. and Shafer, S.M., 2019. Operations and supply chain management for MBAs. John Wiley & Sons.

Mohammed, A., 2020. Towards ‘gresilient’supply chain management: A quantitative study. Resources, Conservation and Recycling, 155, p.104641.

Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and supply chain management. Cengage Learning.

Rajeev, A., Pati, R.K., Padhi, S.S. and Govindan, K., 2017. Evolution of sustainability in supply chain management: A literature review. Journal of Cleaner Production, 162, pp.299-314.

Russell, R.S. and Taylor, B.W., 2019. Operations and supply chain management. John Wiley & Sons.

Sanders, N.R., 2020. Supply chain management: A global perspective. John Wiley & Sons.

Saragih, J., Tarigan, A., Silalahi, E.F., Wardati, J. and Pratama, I., 2020. Supply Chain Operational Capability and Supply Chain Operational Performance: Does the Supply Chain Management and Supply Chain Integration Matters. Int. J Sup. Chain. Mgt Vol, 9(4), p.1222.

Shakerian, H., Dehnavi, H.D. and Shateri, F., 2016. A framework for the implementation of knowledge management in supply chain management. Procedia-Social and Behavioral Sciences, 230, pp.176-183.

Sri, H., 2020. Analysis supply chain management factors of lecturer’s turnover phenomenon. International Journal of Supply Chain Management, 9(1), pp.582-591.

Stadtler, H., Stadtler, H., Kilger, C., Kilger, C., Meyr, H. and Meyr, H., 2015. Supply chain management and advanced planning: concepts, models, software, and case studies. springer.

Waters, C.D.J., 2019. Logistics: an introduction to supply chain management. Red Globe Press.

Wieland, A., 2021. Dancing the supply chain: Toward transformative supply chain management. Journal of Supply Chain Management, 57(1), pp.58-73.

Wieland, A., Handfield, R.B. and Durach, C.F., 2016. Mapping the landscape of future research themes in supply chain management. Journal of Business Logistics, 37(3), pp.205-212.

Wu, L., Yue, X., Jin, A. and Yen, D.C., 2016. Smart supply chain management: a review and implications for future research. The International Journal of Logistics Management.

Zekhnini, K., Cherrafi, A., Bouhaddou, I., Benghabrit, Y. and Garza-Reyes, J.A., 2020. Supply chain management 4.0: a literature review and research framework. Benchmarking: An International Journal.