Starbucks Supply Chain

ANY QUESTIONS?

References

Supply Chain

Berman, J. (2015, October 2). Starbucks' Schultz stresses the need for supply chain to have a seat at the table. Retrieved from Logistics Management: http://www.logisticsmgmt.com/article/starbucks_schultz_stresses_the_need_for_supply_chain_to_have_a_seat_at_the

Boyer, K. (2013, September 20). Behind the scenes at Starbucks Supply Chain 247. Retrieved from supplychain247.com: http://www.supplychain247.com/article/behind_the_scenes_at_starbucks_supply_chain_operations

Doing Business with Starbucks. (n.d.). Retrieved from Starbucks.com: http://www.starbucks.com/business/suppliers

Hawley, J. (2015, October 13). Who are Starbucks' main competitors? Retrieved June 5, 2016, from Investopedia: http://www.investopedia.com/articles/markets/101315/who-are-starbucks-main-competitors.asp

Hoban, M. (2016, January 7). What Can We Learn From Starbucks' Supply Chain Management? Retrieved from Blur Blog: https://www.blurgroup.com/blogs/supplier-diversity/starbucks-supply-chain-management/

Lolaromanoff. (2016, May 16). Coffee travels fast - Starbucks' supply chain. Retrieved from Deakin Business School: https://mpk732t12016clusterb.wordpress.com/2016/05/16/coffee-travels- fast-starbucks-supply-chain

Starbucks Company. (n.d.). Retrieved from Starbucks: http://www.starbucks.com/about-us/company-information/starbucks-company-profile

Starbucks' Suppliers Performance. (n.d.). Retrieved from CSIMarket.com: http://csimarket.com/stocks/suppliers_glance.php?code=SBUX

Walsh, T. (2016, January 21). 3 Predictions for Starbucks Stock in 2016. Retrieved June 5, 2016, from The Motley Fool: http://www.fool.com/investing/general/2016/01/21/3-predictions-for-starbucks-stock-in-2016.aspx

Who is Starbucks' Target Audience? (n.d.). Retrieved from smallbusiness.chron.com: http://smallbusiness.chron.com/starbucks-target-audience-10553.html

Key Management Metrics

Summary of Opportunities

• Five Key Metrics:
• Puts the customer first
• Works well with others
• Leads courageously
• Develops continuously
• Achieves results

• Focus on Millennials

• Line management (Drive through)

• Re-Evaluate supply chain due to rapid growth

• Sustainable supply chain

Starbucks Product Sourcing

Competition

• Main competitor: Costa Coffee

• Costa aimed to redesign their supply chain.

Suppliers

Customers

• Must be dedicated to dedicated to brand, and commitment “one person, one cup and one neighborhood at a time.”

• Over 18,000 suppliers

• More than 70,000 deliveries per week supplying 22,000+ stores.

Background

Future factors affecting their supply chain.

Link between costs and performance

• Primary target market
• Age 25 to 40
• 49% of business

• Young Adults
• Age 18-24
• 40% of business

• Kids and Teens
• Age 13-17
• 2% of business

• Opened in Seattle in 1971

• In 1981, Howard Schultz became Starbucks chairman, president and chief executive officer.

• More than 22,000 locations in 70 countries.

• Porter (1980): two basic competitive approaches are cost advantage and differentiation.

• (Parasuraman et al, 2004) strong relation between increased levels of service

and customer maintenance.

• Decrease in inventory positively impacts on the cash-to-cash cycle.

• Therefore more liquidity (Christopher and Ryals, 1999; Farris and Hutchison, 2002).

• Severe climate change.

• Price unpredictability.

• Win long-term contracts; decreasing the market risk.

• Economies of scale.

• Technical systems failure.

• Employees

• Recession

Company Scope

Why did Starbucks need a new global logistics system?

Suppliers

Challenges faced implementing new SC

• Products ranging from simple coffee to hand crafted specialty drinks, pastries and light lunch offerings

• Offer products for sale in their stores, various retail establishments, and online, including coffee, drink ware and other merchandise

• Starbucks is taking a proactive approach to corporate responsibility and chooses responsible growers and suppliers for its supply chain.

• Biggest competitors: McDonald's, Chipotle, Dunkin Donuts and Panera
• Starbucks has the most products available in retail outlets than any of its competitors, but Panera's selection is probably the most diverse.
• Starbucks' competitors all share similar philosophies about social and environmental responsibilities.

Outline

The Supply Chain Process:

• Brings coffee beans from Latin America, Africa, and Asia to the United States and Europe in ocean containers.

• Unroasted beans trucked to six storage sites.

• Finished product is trucked to regional distribution centres (including 3PL’s).

• Main product held at warehouses.

• Depending on their location, the stores are supplied by either the large, regional DCs or by smaller warehouses called central distribution centres.

• Frequent deliveries via dedicated truck fleets to Starbucks.

• Services rely mainly on bulk operating expenses.

• Gathering all supply chain costs by region and by customer was extremely time-consuming and costly.

• Delivery costs and execution are intertwined.

• Coffee is obtained from eight coffee plantations around the world.
• Costa Rica - main

• Six Roasting Centers

• Dairy and paper products

Competitors

- Company Scope

-Assessment of Marketplace

-Summary of Opportunities

-Customers

-Suppliers

-Competitors

-Key Management Metrics

-Conclusion

-References

• Dunkin Donuts and McDonalds
• Dunkin is the oldest rival

• McDonald's has higher revenue due to food sales and the push for the McCafe drinks

• Expanding international market

• Number of metrics for evaluating supply chain performance.

• Four high-level categories to create consistency and balance across the global supply chain team:

1. safety in operations

2. service measured by on-time delivery and order fill rates.

3. total end-to-end supply chain costs.

4. enterprise savings.

Redesign objective 3

• Foundation for future supply chain capabilities by reducing operating costs and improving efficiency.

• Previous supply chain was too broad.

• Creation of single, global logistics system.

• Delivery costs and execution intertwined.

• Scorecard assessments for 3PL’S performance.

• "The scorecard ensured transparency in how we were improving the cost base while maintaining a focus on looking after our people and servicing our customers," Gibbons says.

Anthony Accordino, Kathryn Dreher, Rachel Greer, Angelo Palomba, Sage Tomaszewski, JenWhite