Process Map Of Operations Management For Starbucks Coffee

Company Details and Background

Operations management (OM) includes the activity of management of resources that are used for the purpose of production and delivering of products or services (Spring & Araujo, 2014). Developing a competitive operations management can create competitive advantage for the Company, and it includes the firm’s infrastructure, technology, human resource management and procurement. In the current discussion operations management for Starbucks Coffee for a standard coffee is undertaken. A detailed operations management process includes all transformation that is incorporated for making the input products into the output (Oltra & Luisa Flor, 2010). It encompasses equipment, fittings, and staff for converting raw materials into finished products. A process map is used to depict various parts of the process of an organisation for creating a product or service. A process map allows the process view of OM activities. The scope of OM includes organisation and coordination of activities within the organisation’s scope such that it can meet its customer’s needs (Brown, Squire & Lewis, 2010). Organisation’s need to match with the growing trends of digitalisation, globalisation, servitisation and sustainable operations, there is needed a resilient and dynamic approach for system design and operations.  

Starbucks Corporation is an American coffee chain company with headquarters in Seattle, Washington, U.S. The company founders include Jerry Baldwin, Zev Siege and Gordon Bowkar. The Company has various products which include coffee-beverage, tea, smoothies, baked goods and sandwiches, and it serves worldwide areas. The Company’s revenue is US$22.387 billion and net income of US$2.885 billion. It employs 238,000 employees world over. The coffee chain store is well-known for its taste and high quality of roasted coffee. The Company makes us of automated coffee machine for safety and efficiency of coffee manufacturing.

Starbucks Corporation mission is to; “Establish the Company as a premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.” The company’s goals are;

• Building a Company with Soul
• Opposing Franchising because of Quality control and Culture
• Only selling coffee beans without artificial flavors
• Employees’’ contribution and involvement in making Starbucks a better company
• Satisfy customers by all means

The operations strategy of the Company is devised in alliance with the mission statement of the Company. The operations strategy includes actions and decisions which shape the long-term vision, objectives and capabilities of operations to contribute to the overall strategy (Jacobs, Chase & Lummus, 2014). The operations management of the Company needs to be effective, efficient and innovative such that it is able to create advantage for the Company. A strategic operation determines competitive position of the Company within the industry. In order to compete with today’s global environment, the companies need to establish sustainable operations processes. The environmental mission statement of the Company is; “Starbucks is committed to a role of environmental leadership in all facets of our business.”  According to Burton’s 5 sources of collaborative advantages can arise from either previously unrelated industries, suppliers, industry collaborators, buyers or substitutes and complements (Nahmias & Cheng, 2009). For Starbucks, the operations strategy is devised such that it can lead to creation of a strategic advantage for the Company. Starbucks Corporation worldwide adopts similar operations process throughout its global retail chains. A process map for its operations is depicted as below for the company’s coffee operations processes.  

Operations Problem

Figure 1: Starbucks Coffee Operations Management Process Map

Every operations management process can be a source of competitive advantage when it undertakes performance through objectives of quality, speed, dependability, flexibility, costs and innovativeness. The above process depicts the Company initially procures raw materials from different suppliers, stores them in an inventory and then sends it across worldwide suppliers. The individual coffee outlets around the world assembles all the raw materials (includes coffee, sugar or sweetener, milk, flavoring, crème and so on) to arrive at the final coffee product. Once the outlet receives order from customers then they sell the specific type of coffee ordered by them. The customers then go on to make the payment for the product.

Starbucks Coffee business operations earlier had manual operations for its coffee manufacturing process, which has been transformed into automated manufacturing process. The OM of the Company is focused on 10 key decision areas which encompasses, including a rank of problems in order of importance, as given below;

1. Designing Goods and Services: The Company designs various types of coffee with different flavoring. It aims at providing its customers premium coffee quality which can be differentiated from rest of the products found in the market. The Company undertakes broad differentiation generic strategy and premium pricing strategy for its products (Sousa & Voss, 2008). It manufactures various kinds of mugs for serving its coffee, which is designed at the Company. At all stages of product preparation the Company ensures that the high brand image of the Company is reflected to its end customers. The major operational problem that the company faces in designing of its goods and services is matching it to specific target customers groups. As customer group in Asian countries might like smaller cups and stronger tea flavors, whereas customers in America might prefer long slender mugs and different flavor of coffee.       

Figure 2: Global Map Showing Centralized Innovation

Source: Author

1. Quality Management: Starbucks focuses on quality management to maintain premium character (Corbett, 2008). The Company focuses on sourcing its raw materials to comply with Starbucks quality standards. It certifies farmers under the Starbucks Coffee and Farmer Equity (CAFÉ) program from, where they purchase the coffee beans. Starbucks Coffee adopts servant leadership program for its premium quality service. The Company adopts premium brand image for delivering highest possible quality management in its product (Glukhov & Balashova, 2015). The Company does not face any OM problem in its quality management for its products and services. The figure below depicts sustainability effort by the organisation.

Figure 3: Starbucks Sustainability

Source: environmentalleader.com (2017)

1. Process and Capacity Design:Starbucks’ success is dependent upon its process and capacity efficiency. The Company adopts highly efficient processes in its cafes by optimizing maximum possible capacity utilization through designing for meeting demand fluctuations. The Company further adopts cost effective strategies for efficient processes and workflows (Kim, Sting & Loch, 2014). Its capacity design can meet sudden and unexpected increase in demand.     
2. Location Strategy: Starbucks focuses on urban locations with upper-middle and upper class population. The locations of the cafes are in high density areas where it makes use of strategic clustering to take advantage of market share. Starbucks makes use of affluent areas for its operations management so that it can focus its premium priced products (Nahmias & Olsen, 2015). This is a major drawback in the strategy of Starbucks as it focuses on premium customers, the narrow focus of the Company often creates a challenge for the business to generate high revenues.

Figure 4: Starbucks Global Stores

Source: knoema.com (2016)

1. Layout Design and Strategy: The layout design and strategy adopted by Starbucks coffee shops aims at maximizing efficiency. The stores main aim is at providing a warm and friendly ambience which can match the organisation culture of the Company. In order to provide its customers with premium experience, the Company focuses on more leg spaces and better arrangement for spaces in its café’s (Kumar & Suresh, 2009). The Company prioritizes customer experience over its space utilization; this key decision area in its OM affects customers in times of rush hours. Due to lesser space availability within its stores, the Company is not able to provide siting space to its waiting customers. This often creates customers dissatisfaction, as customers often has to return without getting adequately serviced at the stores.     
2. Job Design and Human Resources:Starbucks’ organisational culture is well integrated within its human resources, which in turn affects all areas of its business. The Company has employee-first attitude and Starbucks cares for its customers. The Company makes use of work teams for their various operations. Less emphasis is given to work teams in inventory management position and HRM positions. The job allocation at Starbucks takes into consideration that all technical aspects of a job are woven into the job for their satisfaction.
3. Supply Chain Management: Starbucks integrates a global supply chain by sourcing its coffee beans from farmers in developing countries (Russell & Taylor-Iii, 2008). The Company integrates diversification strategy for its suppliers for ensuring stability in supply. Moreover, the Company’s procedure to select and prioritization of suppliers allow having the best possible farmers for their products. The Company makes use of ethical practices to promote sustainability of its products, through ethics and corporate social responsibility along with supply chain efficiency. However, the Company does not yet have a sustainable eco-system for guiding its international operations. Though the Company has devised a centralized logistics and distribution system, yet the focus of such systems is not yet on efficiency rather on conducting the business process at a set location.   

Figure 5: Starbucks Supply Chain Distribution Network

1. Inventory Management: The inventory management at Starbucks is linked across the firm’s supply chain and facilities (Parry, Mills & Turner, 2010). Within the stores, inventory management includes office automation and manual monitoring only at most locations. Starbucks has adopted a supply hub model of automation at most of its café location; however in some developing countries the model has not yet been fully automated. Starbucks minimizes stock-outs by ensuring continuous supply of coffee beans to all its cafes, which often leads to wastages at its various locations.   
2. Scheduling: Starbucks makes use of manual as well as automated scheduling approaches for its business activities. The Company integrates flexible schedules for the purpose of managing its personnel. It aims at streamlining its supply chain processes with application of some degree of flexibility in various management positions. Often automated scheduling hampers capability of the organisation in terms of scheduling its raw materials or staff personnel which leads to challenge in managing of operations.    
3. Maintenance: Starbucks aims at maintaining their physical asset by trained and dedicated employees for maintaining of facilities and equipment (Walker, Seuring, Sarkis & Klassen, 2014). Often the Company employee’s third party for its maintenance services, these third parties include local businesses, which provide equipment tune-ups for its cafés’. All these personnel ensure appropriate maintenance of the facilities at Starbucks.   

Starbucks in order to increase efficiency in its operations need to accommodate aspects of Operational techniques. There has been identified a number of operational areas, where Starbucks lacks in its operational efficiency, hence the recommendations for improving those aspects are included as below;

• Designing Goods & Services: Starbucks need to integrate innovativeness in its operational processes. The innovativeness in its operational processes needs to be widespread all over the globe such that innovativeness is accommodated in a local manner. Accommodating local innovativeness will imply that its operational processes are coordinated in a cost effective manner. Resources will need to be sourced and sent across to majority localities such that they can integrate innovation. Local based innovation will provide the organisation with an edge to compete with local competitors and serve best possible products.     
• Locational strategy: The Company’s focus in high-density areas is appropriate for its success. However, the Company will need increase its targeted customer focus to include more customer base. As the company is based in posh locations only and its products are priced at premium, it attracts middle-upper and upper class for its products. It can include some low costs menu through integration of cost efficiency in its operations to service retail customers.        
• Layout Design and Strategy: The Company needs to have a broad based focus strategy for its customers. Narrow based focus strategy of the Company might lead to losing out on retail customer focus in developing countries. The Company needs to redesign its store plan layout to accommodate more customers and reduce returning customers.
• Supply chain Management: Starbucks need to extend its supply chain operational model in fewer developing countries. The automated supply chain model has to integrated continuous flow of supply to locations that are currently not covered within the automated model. There are some locations in Asia, which receives hindered flow of raw materials and then need to place orders manually. These outlets can adopt Just-in-time (JIT) strategy for their outlets to ensure appropriate flow of right quantity of stock. JIT will ensure ready availability of stock always. Moreover, the supply chain of the Company will need to accommodate economic designing of logistics to reduce carbon footprints. A logistic which is used to pick raw material from supplier can be used to deliver returned materials also, in this way efficient management of supply chain can be enhanced.  

Figure 6: Starbucks Supply Chain

Source: Author

• Inventory Management: Adoption of JIT strategy to maintain stock of raw materials will ensure that wastages are minimized. As the inventory management at the moment is facing challenges in relation to maintaining stock and removing wastage, JIT will act as an appropriate strategy for the situation.    
• Scheduling: The automated scheduling of the Company which creates challenges needs to be re-checked manually. Manual checking of the processes of the scheduling will ensure that staffs and personnel are present always at the location of its café’s.   

Conclusion

Starbucks coffee is a leading coffee chain which is liked by customers worldwide. The high-quality product of the Company is ensured through its OM processes. Currently, organisations are focusing on building their Operations Management model in a sustainable manner for increasing overall efficiency and effectiveness in all processes and to future proof their businesses. Global organisations such as Starbucks are identifying the importance of Triple Bottom Line in their businesses. The rising importance of the Planet, Profit and People has made businesses to redesign and re-align their business models towards sustainability. Sustainability aims at accommodating strategic, transparent and integrated achievement in the organisation’s economic, social and environmental business processes such that the long-term economic performance along with the supply chain performance of the Company can be enhanced. Through farmer equity program, the Company is aiming at contributing back to the society and also optimizing products of its customers. The Company integrates farmers from developing countries for its equity programs, to contribute to a greater communal cause. Starbucks has adopted environmental programs to discard usage of plastic and use environmentally friendly material for serving their customers. The Company has also adopted various ways to discard its waste to reduce carbon footprints and reduce impact on the environment. Thus, the Company can aim at becoming a highly effective and efficient organisation by adopting a highly flexible Operations Management model.

References

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Glukhov, V.V. and Balashova, E., 2015, August. Operations strategies in info-communication companies. In Conference on Smart Spaces (pp. 554-558). Springer, Cham. Accessed from https://link.springer.com/chapter/10.1007/978-3-319-23126-6_48

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Nahmias, S. and Cheng, Y., 2009. Production and operations analysis (Vol. 6). New York: McGraw-hill. Accessed from https://s3.amazonaws.com/academia.edu.documents/40414673/574716238.pdf?AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1544278689&Signature=af8moq2DvvrmiYqFaM%2Bo6p9KYGQ%3D&response-content-disposition=inline%3B%20filename%3D574716238.pdf

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Russell, R.S. and Taylor-Iii, B.W., 2008. Operations management along the supply chain. John Wiley & Sons. Accessed from https://books.google.co.in/books?hl=en&lr=&id=m92f103i63wC&oi=fnd&pg=PA1&dq=operations+management&ots=hAJij1kGt5&sig=QB8X25SDz2MIi_MjMYKmASfrD1o

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Spring, M. and Araujo, L., 2014. Indirect capabilities and complex performance: implications for procurement and operations strategy. International journal of operations & production management, 34(2), pp.150-173. Accessed from https://www.emeraldinsight.com/doi/abs/10.1108/IJOPM-01-2011-0034

Walker, P.H., Seuring, P.S., Sarkis, P.J. and Klassen, P.R., 2014. Sustainable operations management: recent trends and future directions. International Journal of Operations & Production Management, 34(5). Accessed from https://www.emeraldinsight.com/doi/full/10.1108/IJOPM-12-2013-0557