Customer Knowledge Management In Starbucks – Operations Management Report

Company Background

Describe about the Customer Knowledge Management?

The report provides a deep insight into the operations management of Starbucks in the United Kingdom. The major component activities of the Company have been identified along with evaluation of performance objectives used by each of the components. The report also highlights upon the critical analysis of the performance management along with recommendations about ways to enhance organizational performances by Starbucks.

Starbucks Corporation is a global brand and is considered to be one of the leaders in coffee creamer industry in the United Kingdom. It has been focusing on the upper class customer group who value high quality coffee. It maintains a market segment within the specific industry which involves students, adults of middle ages, also loyal customers in all age groups (Starbucks puts a degree on the menu for 135,000 employees, 2014). The Company has been established on the idea that consuming a cup of coffee must be a matter of social experience. With time, besides brewed coffee as well as espresso drinks, Starbucks has added ready-made breakfast sandwiches, coffee merchandise, lunch items, branded beverages, music, films, books, etc  (Snyder, 2006). The Company had adopted some key effective strategies in order to five a tough competition to its rivals such as McDonald’s, Dunkin’ Donuts, etc. It has focused upon social responsibility ad campaigns which remind customers of humanitarian as well as outreach programs that lead customers to consider not just the premium price of its products but also global costs as well as impacts (Baker, 2004). It also stresses upon the fact that it uses the best beans in the world.

There are some key component activities of the Company that establish individual performance objectives to operate sustainably in the competitive environment. These activities of Starbucks have been discussed in detail along with the performance objectives and progress.

With the aim of transforming its supply chain and considering rise in operational costs along with declining sales, Starbucks has implemented a three-step strategy for improving performance of supply chain, reducing costs, and preparing for future (Ritson, 2007). The first step was reorganizing its supply chain by separating four functions of planning, sourcing, making and delivering. All manufacturing activities, if in-house activity or contract basis, were assigned to the unit of making functional unit. Activities of transportation, customer service, and distribution are assigned to deliver category. Then the step of cost reduction as well as improvement of efficiencies was practiced (Paryani, 2012). The manufacturing team had developed an efficient model to deliver coffee beans to the processing plants. For sustaining the equivalent momentum to improve as well as to ensure future effective flow of organizational talent, the Company has begun the policy of recruiting top talented people. It also planned to provide them with adequate training for enabling their further developments and growth.

The five performance objectives that have been identified here are –

Quality
Speed
Dependability
Flexibility
Cost

Starbucks is said to place greater importance to safety as well as wellbeing of its customers as well as partners. The quality assurance procedure of the Company is utterly rigorous and that it extends towards the whole supply chain right from coffee, products of dairy, and various other agricultural items to manufactured products like mugs, brewers, and gift items (Taylor, 2008). The Company’s commitment towards product safety refers to not only complying with legal legislations as well as operating with complete transparency, but also seeks to conduct the right things for its customers (Chua and Banerjee, 2013). Business partners, shareholders, and environment. The quality experts, coffee buyers and agronomists of Starbucks often travel distances to reach the perfect farm. With every individual product that Starbucks is said to brand, market and sell, or even used in its operations, the Company maintains its commitment towards product quality as well as strives to source all its products in manner that is socially as well as environmentally responsible (Birge and Linetsky, 2006).

Transforming its Supply Chain

The commitment towards excellent governance, social responsibility and that of ethical practices are the core strategies of the Company to conduct business as well as stay strongly aligned with its drive for creating as well as increasing value of shareholders. It aims at maintaining effective relationship with the stakeholders to gain their feedback upon cases of mutual importance. Starbucks aims at practicing corporate social responsibilities to gain benefits like attracting as well as retaining its partners, achieving customer loyalty, reducing costs of operations, strengthening its supply chain, and also licensing its operations (Keenan and Evans, 2013). The manner by which the corporate social responsibility is managed at the company has been emerging continuously for ensuring all issues have been identified and addressed systematically as well as integrated manner. Starbucks depends upon a dedicated group of CSR whereby daily activities are reported to the senior vice president of the group. Apart from this, it has established a team of three cross functions with responsibilities regarding corporate governance (Marques, 2008).

The stakeholders of the Company include partners like employees, clients, suppliers, governments, shareholders, environmental groups, community, activists, etc. It aims to engage its stakeholders proactively and all others who may directly impact upon the business decisions (Halper, 2006). By this Starbucks effectively understands various concerns. The Company has been quite effective in delivering its performance in this respect. A meeting was held in 2005 for exploring health as well as wellness issues within the industry of food. It aimed at better understanding the expectations of the stakeholders about nutrition issues, learning how efforts are perceived and forming the basic platform for various undertakings (Halachmi, 2002). The company had even discussed upon playing role of both user of water resources by means of its supply chain as well as operations, and also supporting accessibility of clean water across the world. The Company had held a feedback session for gaining initial input upon the creation of sustainable buying guidelines for cocoa piloted in finance year 2007 (Beamon and Kotleba, 2006).

After several years of travel to various coffee-producing regions across the globe, the Company has been deeply appreciating the care it involved in acquiring the best quality of coffee. The quality experts, coffee buyers and agronomists of Starbucks often travel distances to reach the perfect farm (GAUDIO, 2003). With every individual product that Starbucks is said to brand, market and sell, or even used in its operations, the Company maintains its commitment towards product quality as well as strives to source all its products in manner that is socially as well as environmentally responsible. It is known as sustainable trade. On walking in of every customer, Starbucks considers it to be an opportunity for sharing its knowledge as well as passion of coffee, serving the customers with the best possible quality of beverage, and imparting them with an experience so that a mere customer becomes its loyal customer  (Freeburg, 2012). The Company even aims at creating the ultimate experience for the customers every time. The Company better understands the customer expectations and what makes them pay at premium. The Company achieves its objective by focusing upon the most essential requisite of quality products and excellent relaxing experience (Beamon and Kotleba, 2006).   

Performance Objectives

            

For assuring that farmers receive an equivalent share of price that is paid by Starbucks, an economic transparency is required to be included in the coffee contracts including that of with its suppliers who participate in the practices of C.A.F.E. Starbucks aims at achieving such economic transparency (Forgues, 2008). It therefore stipulates that its suppliers should provide authentic payment evidence basically in the form of receipts that indicate payments undertaken at different levels in the coffee supply chain. While the firm is encouraged by recent progress, such institutionalizing of new requirement includes some challenges, like coffee industry lacks standardized approach which permits every party across coffee supply chain to submit payment evidence easily and consistently (Cole, 2008). Starbucks provides various forms of documentation right from the basic receipt of coffee cherries delivered by farmers to the mill for purchasing agreements including several levels in the supply chain of coffee industry. Starbucks share common goals with that of Fair Trade movement. It aims at ensuring that farmers get fair and just process for the coffee they generate and also to have an enhanced access to the global markets.

The World Health Organization had introduced a plan in 2004 that calls for attention towards growing epidemic diseases attributed to poor unhealthy diet, lack of obesity and exercise. As per the organization, obesity has been a considerable threat in almost all countries across the globe. With concern over this aspect, Starbucks has made several efforts in implementing numerous measures relating to health as well as wellness of its customers (Billy, 2001). Such measures include expanding its menu offerings for including various options to promote customization, generating nutrition information on food and beverage items, lessening trans-fats within the products, and adopting sustainable holistic approach for promoting health and wellness. Starbucks understands the expectations and demands of its customers. It also understands that fact that customers of the present generation are more absorbed into maintaining health and fitness. They basically prefer fresh and quality products when it comes to food and nutrition (Argenti, 2004). Besides, Starbucks aims at driving efforts meant to provide a wider selection of product preferences to its customers both companywide as well as regional basis. The Company has included several special food items to enhance customer health and wellness such as yoghurt parfaits as well as fresh salads, prepackaged nuts with dried fruits, Frappuccino juice blends, etc. The Company is committed to support its customers to make informed-choices regarding the Company products (Cole, 2008). The Company provides nutritional information along with the products so that its customers are well-informed about the products they are using.

From the above study of operations of Starbucks, it may be interpreted that although the Company strives to achieve excellence in its operations, there are areas that it needs to focus upon. The first aspect is lowering of its process (Ritson, 2007). For reaching out to increased number of customers who often avoids attending Starbucks shop for its high-priced products, the Company must think of slightly lowering its prices. This would attract more customers towards its brand with increased market share. On the other hand, if the organizational management does not wish to lower its process, it must initiate offers like buy one get one free or deals that of hourly or weekly discounts. This would gain the Company more customers and increased brand reputation and recognition (PAGELL, 2004).

Another aspect that the Company needs to focus is that of international expansion. With a slight reduction in the rate of expansion in the United States, the Company can easily redirect capital saved into efforts of international expansion (Wurgaft, 2003). There are several countries that long for such a brand to be opened. Starbucks must think of strategies to penetrate new markets and capture increased market shares.

Another recommendation fact is that the Company must continue with right-sized strategies like that of reducing company support-staff, implementing cost-effective technological approaches, and focusing on sharing best practices throughout every store. With context to involuntary turnover, importantly Schultz must continue to emphasize upon motivating employees and enhancing their morale (Paryani, 2012). The strategy of maintaining effective commitment to its partners has proved to be one of the key success factors and that Starbucks must continue to follow it in the years to come.

Conclusion:

Thus, from the report suitable conclusion can now be drawn. The manner by which the corporate social responsibility is managed at the company has been emerging continuously for ensuring all issues have been identified and addressed systematically as well as integrated manner. It aims to engage its stakeholders proactively and all others who may directly impact upon the business decisions. By this Starbucks effectively understands various concerns. The Company has been quite effective in delivering its performance in this respect (Sanchezâ€ÂRodrigues, 2010). With every individual product that Starbucks is said to brand, market and sell, or even used in its operations, the Company maintains its commitment towards product quality as well as strives to source all its products in manner that is socially as well as environmentally responsible. For reaching out to increased number of customers who often avoids attending Starbucks shop for its high-priced products, the Company must think of slightly lowering its prices. This would attract more customers towards its brand with increased market share.

References

Argenti, P. (2004). Collaborating with Activists: How Starbucks Works With NGOs. California Management Review, 47(1), pp.91-116.

Billy, R. (2001). I Love New York, or Starbucks out of Hell’s Kitchen. Theater, 31(3), pp.169-177.

Chua, A. and Banerjee, S. (2013). Customer knowledge management via social media: the case of Starbucks. Journal of Knowledge Management, 17(2), pp.237-249.

Cole, G. (2008). Grande Expectations: a Year in the Life of Starbucks’ Stock20081Karen Blumenthal. Grande Expectations: a Year in the Life of Starbucks’ Stock . Loughton: Piatkus 2007.Management Decision, 46(4), pp.673-675.

Forgues, B. (2008). Clin d’?il Starbucks et la nouvelle économie géographique. Entreprises et histoire, 53(4), p.115.

Freeburg, C. (2012). Teaching Literature and the Bitter Truth about Starbucks. Profession, 2012(1), pp.25-30.

GAUDIO, R. (2003). Coffeetalk: Starbucks™ and the commercialization of casual conversation. Lang. Soc., 32(05).

Halachmi, A. (2002). Performance Measurement, Accountability, and Improved Performance. Public Performance & Management Review, 25(4), p.370.

Halper, A. (2006). Starbucks Wars: Chinese Courts Say “No Hitch-Hiking Allowed”. The China Quarterly, 188(01), p.1155.

Keenan, J. and Evans, A. (2013). ‘I am a Starbucks worker … my life no longer belongs to me’: the performance of estrangement as a learning tool. Teaching in Higher Education, 19(2), pp.101-112.

Marques, J. (2008). Spiritual performance from an organizational perspective: the Starbucks way.Corporate Governance: The international journal of business in society, 8(3), pp.248-257.

Paryani, K. (2012). Product quality, service reliability and management of operations at Starbucks.International Journal of Engineering, Science and Technology, 3(7).

Ritson, M. (2007). Speedy Starbucks has grown too fast. Strategic Direction, 23(8).

Snyder, M. (2006). State of the Profession: The Starbucks Effect. Academe, 92(1), p.70.

Starbucks puts a degree on the menu for 135,000 employees. (2014). Hum Res Mgt Intl Digest, 22(6), pp.21-23.

Taylor, S. (2008). Starbucks Spreads the Spirit of Giving with CARE. Advertising & Society Review, 9(1).

Wurgaft, B. (2003). Starbucks and Rootless Cosmopolitanism. Gastronomica, 3(4), pp.71-75.

Baker, P. (2004). Aligning Distribution Center Operations to Supply Chain Strategy. The International Journal of Logistics Management, 15(1), pp.111-123.

Beamon, B. and Kotleba, S. (2006). Inventory management support systems for emergency humanitarian relief operations in South Sudan. The International Journal of Logistics Management, 17(2), pp.187-212.

Birge, J. and Linetsky, V. (2006). Introduction to the special issue on applications of financial engineering in operations, production, services, logistics, and management. Naval Research Logistics, 53(7), pp.601-602.

Cole, G. (2008). Grande Expectations: a Year in the Life of Starbucks’ Stock20081Karen Blumenthal. Grande Expectations: a Year in the Life of Starbucks’ Stock . Loughton: Piatkus 2007.Management Decision, 46(4), pp.673-675.

PAGELL, M. (2004). Understanding the factors that enable and inhibit the integration of operations, purchasing and logistics. Journal of Operations Management, 22(5), pp.459-487.

Paryani, K. (2012). Product quality, service reliability and management of operations at Starbucks.International Journal of Engineering, Science and Technology, 3(7).

Sanchezâ€ÂRodrigues, V. (2010). Evaluating the causes of uncertainty in logistics operations. The International Journal of Logistics Management, 21(1), pp.45-64.