Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 63 countries. In 2007 the company was in a need of transformation. Peter Gibbons was hired to manage the supply chain of Starbucks. The company was reorganized and the supply chain has changed dramatically since then (Starbucks, 2012). Here is a diagram showing the supply chain network of Starbucks in 2014:
Components of the supply chain
Starbucks has commitment to sell only the finest coffees and coffee beverages. To ensure compliance with their coffee standards, they control coffee purchasing, roasting and packaging, and the global distribution of coffee used ...view middle of the document...
Starbucks Supply Chain Objectives
Although Starbucks has a raft of metrics for evaluating supply chain performance, it focuses on four high-level categories to create consistency and balance across the global supply chain team: safety in operations, service measured by on-time delivery and order fill rates, total end-to-end supply chain costs, and enterprise savings. This last refers to cost savings that come from areas outside logistics, such as procurement, marketing, or research and development (Supply Chain Quarterly, 2010).
Supply Chain Conflicting Objectives
Suppliers typically want manufacturers to commit themselves to purchasing large quantities in stable volumes with flexible delivery dates. Unfortunately, although most manufacturers would like to implement long production runs, they need to be flexible to their customers’ needs and changing demands. Thus, the suppliers’ goals are in direct conflict with the manufacturers’ desire for flexibility. Similarly, the manufacturers’ objective of making large production batches typically conflicts with the objectives of both warehouses and distribution centres to reduce inventory. To make matters worse, this latter objective of reducing inventory levels typically implies an increase in transportation costs. (Slack 2011, chapter1)
Supply chain risks
With complexity driven by globalization, high transportation costs, poor infrastructure, weather-related disasters, and terrorist threats, managing the supply chain has become even more challenging. Uncertainty and risk are inherent in every supply chain. Delivery lead times, manufacturing yields, transportation times, and component availability also can have significant supply chain impact. Recent trends such as lean manufacturing, outsourcing, and offshoring that focus on cost reduction increase risks significantly. Similarly, outsourcing and offshoring imply that the supply chains are more geographically diverse and, as a result, natural and man-made disasters can have a tremendous impact (Slack 2011, chapter1). If any of the risks and uncertainties described actually occurs, Starbucks’ business, financial condition and results of operations, and the trading price of the company’s common stock could be materially and adversely affected. Moreover, Starbucks operates in a very...