Starbucks and its supply chain management

Hello everyone,

I am Sreelakshmi,second year MBA student from Amrita School of Business.In this blog I would like to share some insights on an article which I read on the supply chain management in Starbucks.

Starbucks began to serve customers in 1971 with a single storefront in Seattle's Pike Place market and today it has the world's largest coffeehouse chain serving over 30,000 locations in more than 70 countries.Focusing on mastering how the affordable movement of ingredients,materials,products and services can take place to make the customers more satisfied and a great customer experience.

To run a business efficiently it is important to have the right supply chain in place and Starbucks is a very good example to understand that.Starbucks' supply chain struggled to cope up with the rapid expansion that it had in  2000s and the costs of running were out of hand.At that time, the charge of Starbucks were put to Peter D.Gibbons. What he wanted to know first was how well is the company servicing its stores and wanted to better understand the cost.After his observation, he found out that less than half of the orders were arriving on time and also 65-75% of the supply chain expenses were  resulted from the outsourcing of transportation, logistics and contract manufacturing.

After analyzing Gibbons and his team came up with a three step transformation plan for Starbucks' supply chain :

• Reorganizing and simplifying its supply chain with clearly defined functional roles ,i.e., plan,source,make and deliver.
• Cut cost and improve service : Each functional group focused on their functional area, identified the cost incurring factors and determined ways to reduce the cost.
• Creating a sustainable and enhancing supply chain for the future : recruited the best talent available and made a leadership group. Also it trained its existing employees

So, we can see that it is very important for a business to eliminate unnecessary complexities,to know the cost first and then to act on reducing it ,to commit to sustainability and to make the facilities innovative for efficient supply chain management and it in turn improves the efficiency of the business.