Supply Chain Management of Starbucks

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Overview of Starbucks

* History
    Three Seattle friends started the company- Gordon Bowker, Jerry Baldwin, and Zev Siegl. The original name of the first store was opened its first store in Seattle’s Pike Place Market on March 29, 1971. Later, the name was changed to the Starbucks coffee company. Starbucks’ original logo was a chocolate brown, bare-breasted mermaid siren with long hair, encircled by the company name. Today’s contemporary green logo sports a more updated and modest mermaid (Bussing-Burks, 2009).

* Product Line
       Starbucks stores purchases and roasts high-quality whole bean coffees and sells them along with fresh, rich-brewed, Italian style espresso beverages, and a choice of regular or decaffeinated coffee beverages; moreover, a variety of fresh pastries and other food items, sodas, juices, teas, and coffee-related accessories and equipment (“Starbucks Corporation①”, 2012). Starbucks also introduce new flavors drinks every year; for instance, Starbucks introduces New Frappuccino Blended Beverage Flavors, which are Mocha Cookie Crumble and Chocolate cookie Crumble Crème on May, 2012.

* Current Status
 Starbucks Corporation is the leading retailer and roaster for brand specialty coffee in the world, with 17,224 stores in more than 50 countries. Starbucks reported that it earned $382.1 million, or 50 cents per share, for the quarter that ended Jan.1, 2012. (“Starbucks Corporation②”, 2012)

Starbucks’s process cycles

< Process flow diagram >

There are critical four steps. First step is receiving raw material, second step is quality testing, third step is final product testing and last step is delivering to customers. Each steps also are classified specific process.

Starbuck’s Supply chain strategy

Nowadays, the biggest challenge for the multinational corporation is that the cost of supply chain expenses extremely increases while the sales decrease. For the Starbucks Corporation, supply chain expenses are a main cost which has a big impact on its financed statement. For example, during 2007-2008, Starbucks Corporation`s supply chain expense in U.S.A was increasing from $750 Million to more than $825 Million; however, in the same time the sales dropped 10 percent compared to last year (James A. Cooke, Quarter 4 2010). "We had been growing so fast that we had not done a good enough job of getting the supply chain fundamentals in place," says Peter D. Gibbons, executive vice president of global supply chain operations. As a result, he says, "the costs of running the supply chain—the operating expenses—were rising very steeply" (as cited in James A. Cooke, 2010). After figured out that difficult situation, Peter D. Gibbons and his leadership team decided to make significant changes to its operations. According to The Gartner Supply Chain Top 25 for 2011 (Hofman, D., O'Marah, k., & Elvy, C, 2011), Starbucks just ranked 22Th out of 25 companies around the world. So, it`s good to know that what strategy does Starbucks use which helps it to be such successful corporation. First of all, The security team has built what it calls "Enterprise Security Platform," a central security facility that "converges enterprise and physical security," by monitoring critical facilities, retail stores, as well as monitoring conditions around the globe (Michael Goldberg, 2007). Secondly, “one world one logistics” system, Gibbons found out that transportation, third-party logistics, and contract manufacturing had weight 65 to 70 percent of the cost of supply chain operations. Gibbons made some changes in order to reduce the cost. He decided to simplify the structure of supply chain that used to very complex. After that, Gibbons and his leadership team focused on reducing cost and improving efficiencies, especially for the manufacturing process, Starbucks Corporation added more coffee plants which can reduce its transportation costs and lead time in the U.S.A. "Whether coffee...
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