Supply chain Management in Starbucks

Coffee and Farmer Equity Practices

Information system in Starbucks

Supply chain Management in Starbucks

Coffee and Farmer Equity (C.A.F.E.) is a Starbucks initiative that has created a set of industry-leading, comprehensive coffee-buying guidelines. These guidelines address the quality of coffee, financial transparency, and social and environmental responsibility.

• Farmer support

The primarily objective of farmer support is to increase farmers’ loan guarantees to $20 million by 2015 and to provide farmers with incentives to reduce the environmental impact of coffee production

• Loan Programs

During the growing and harvest cycles, many coffee farmers must use their modest reserves to cover expenses until they can sell their crops. Some farmers may experience a cash shortage, prompting them to sell their crops early (and for less) to local buyers. Starbucks provides funding to organizations that make loans to coffee growers, to help them sell their crops at the best time to get the right price. These loans also help farmers to invest in their farms and make capital improvements.

Starbucks use modernized Information Systems ensure that the information flow is efficient but Starbucks can revert to manual processes if required. The IT manager in each store controls the allocation of the goods through the database which enhances the efficiency of Starbucks’ inventory. Starbucks combines this with manual processes so that staff knows how to make alternative arrangements in an emergency.

Material Flow

Starbucks’ Products

1- Coffee

2- Handcrafted Beverages

3- Merchandise

4- Fresh food

6- Brand Portfolio

Purchasing coffee beans form the point of origin

1. Starbucks is required to have the submitted material tested for contamination before it is disposed of, after receiving shipping containers of coffee beans at the roasting plant with the customer seals in place.

2. Starbucks implemented GPS tracking devices on some coffee shipment to monitor their progress from farm regions to shipping ports, ensuring that coffee has not been stolen or tampered with en route.

3. Starbucks implements rigorous quality control procedures, the coffee is inspected at various points, sampled at several points, and tested numerous times to ensure that what arrives in stores is the same coffee that buyers found at the point of origin.

4. Starbucks coffee buyers have to travel the world in search of the best coffees available, even in regions where economic or political instability create hazards for travellers.

5. After the coffee is roasted, it will be placed in the warehouse until required by the production schedule. The coffee is sampled, roasted and cupped to make sure it is the same coffee that was purchased. 10% of the bags will be sampled and compared to the flavour profile that was established from the point of origin. Once it has passed the taste test, the coffee will be loaded into roasting system

Company Overview

Starbucks Supply Chain Management

It’s Plan, Source, Make & Deliver!

The original Starbucks was formed in 1971 by three academics– English teacher Jerry Baldwin, history teacher Zev Siegel and writer Gordon Bowker who opened the first store in Seattle that they called “Starbucks Coffee, Tea, and Spice”. These partners named the brand Starbucks after the coffee-loving first mate in Melville’s Classic Novel “Moby Dick”. The name resonated with the romance of the high seas and seafaring coffee traders. The logo of Starbucks Company was based on an old 16th century Norse woodcut: a two tailed mermaid siren encircled by the Store’s original name The Company grew slowly and by the early 1980s had a roasting plant and 4 retail stores that sold whole-bean coffee in the Seattle area. Starbucks has been profitable every year since it commenced trading and By 2005, Starbucks had more than 10,200 company operated and licensed stores in more than 35 countries. The stores offered coffee drinks, and food items, as well as beans, coffee accessories, teas, and music. Starbucks Corporation operated more than 5,200 stores in 10 countries

Roasting Plants

Starbucks Coffee has become a giant global company, but what exactly goes into the process from coco beans in a field to a steaming cup of delicious coffee? Starbucks has acquired an amazing supply chain that spans across almost nineteen countries. Coco beans can come from one country while milk could come from an entirely different country hundreds of miles away! This global resource span is a great way for Starbucks to expand the company and reach more countries than ever before. Not only that, but Starbucks Coffee is able to supply the best ingredients to their customers for a lower price. All raw materials are then sent to a roasting, manufacturing, and packaging plant.

Once the container of coffee finishes its journey from the point of origin, Starbucks receive it at one of their three U.S. roasting plants or at their European roasting plant in Amsterdam. Today’s coffee roasters use computerised controls to help identify any hot spots and internal quenching systems to cool the coffee beans down if the temperature gets too high.

Starbucks Supply Chain

Purchasing System

Starbucks in Bahrain

Although most coffee is purchased in the commodity market, coffee of the quality sought by Starbucks is usually purchased on a negotiated basis at a substantial premium above commodity coffees, dependent on supply and demand at the time of purchase.

After a new coffee has been purchased and sold for a period, Starbucks will implement quality control to produce high-quality green beans that can be sold to speciality coffee companies. Starbucks is always concerns about the supply chain management for its coffee beans as a priority and creates many programs to ensure this process is both effective and efficient for all stakeholders

In Bahrain Starbucks runs by Alshaya group, there are 25 stores of Starbucks in Bahrain from Muharraq to Manama to Riffa, including driving through store in Saar Area, Starbucks in Bahrain supplied through the international supply chain of Starbucks, except some kind of services and material they buy it from local supplier including the fresh food such as the cakes and the sandwiches which they have a contract agreement with Lilou Artisan Patisserie to supply it daily early morning.

Hamad Mubarak Alfadhel

201330001