|Type of paper:||Essay|
|Categories:||Starbucks Supply chain management Organizational culture Leadership style|
Starbucks is a leading coffee company that uses its organizational setting to its advantage in the competitive business world. The coffee industry in the world is significantly growing, and Starbucks must maintain its position in the market through an appropriate corporate setting (Glowik, 2017). The organizational setting of any firm significantly affects other major parts of the business including leadership and management, and other elements that are vital in the success of any business. Starbucks works towards ensuring that the different concepts of its organizational setting correspond to the firm's business needs, therefore, increasing the chances of success.
Starbucks' mission is to inspire and nurture the human spirit through the provision of its coffee to its customers. The company offers a range of products, the main being coffee which has over thirty blends. Handcrafted beverages and fresh foods are also offered. Finally, Starbucks produces merchandise like tea and coffee-brewing equipment. The company's target market ranges from the middle to high-income office employees who have a taste for premium products. The company's environment and outlets make it possible for people to gather, relax, and interact with each other while drinking coffee. Starbucks' primary competitors are Costa Coffee, McDonald's, and Dunkin Donuts, among others. However, Starbucks stays ahead of its competitors since it has a global network, the coffee is of premium quality, and the image bran is strong. Value is added to the organization by working towards achieving its mission by offering exemplary customer service. The primary goal of this paper is to critically assess Starbuck's organizational setting and discuss the key concepts of the company's structure and how they apply to the setting.
Integration of Concepts to Starbuck's Organizational Setting
Supply Chain Management. Centralized Supply Chain System
The type of supply chain that Starbucks uses is vertically integrated to enable the firm to participate exclusively in the processes. The company is directly involved from the coffee bean production until its processing and being served to its customers. Since the firm is primarily focused on sustainability and efficiency, it is essential to employ all the best practices in the supply chain that will lead to success. One of the strategies that Starbucks uses to manage its supply chain is through having a centralized system to manage all its functionalities across the eight continents where its branches are based. The centralized system of supply chain management enables the firm to effectively manage and coordinate global distribution centers in an organized manner (Lee & Vachon, 2016). The distribution centers are based in the United States, Europe, and Asia. The company's supply chain efficiency is measured using scorecards. Starbucks assesses four primary high categories. The categories include safety in all the operations, savings, the total supply chain costs, and on-time delivery of goods and products.
Apart from the centralized system integrated into supply chain management, Starbucks also uses leveraging digital technologies in its operations. The primary reason for integrating digital technology in its supply chain management is to ensure that the system is efficient and that the firm adjusts to keep up with the high demand of coffee globally (Ivanov, Tsipoulanidis, & Schonberger, 2017). Therefore, there is a need for an automated information system to assist in monitoring the demand in real-time (Lee & Vachon, 2016). The centralized system allows the firm to develop proper schedules and distribution plans at any time. Thus, the system allows for the flexibility of the supply chain enabling the firm to be agile when there is a high demand for coffee.
The digital technology also facilitates on-demand access, and information is continuously updated into the system. Some of the information that is controlled using digital technologies include storage capacity, stock inventory, and transportation means (Lee & Vachon, 2016). The two factors significantly contribute to the maximum efficiency of the company's supply chain and the smooth flow of activities in the entire process. Starbucks has also integrated cloud technology into its systems and has been using Enterprise Resource Planning.
Innovation is a primary part of Starbuck's supply chain management. In the past, the company experienced problems when its primary blend of coffee was attacked by a fungus. Therefore, the firm managed the problem by purchasing a farm in Costa Rica. Although the purchased farm is not currently used for coffee production, the company aims at creating the unique coffee blends that will enable it to have full-production of quality coffee throughout the year. Starbucks will move a great step by owning a farm and producing its blends of coffee. The strategy will lead the company to have a competitive advantage over its competitors because it will better control of increased demands in the line of coffee production.
There is a possibility of the occurrence of a coffee crisis but consumers must use high-quality coffee. Therefore, there is a threat to coffee shortage due to the coffee crisis that is suspected of hitting Europe in a few years (Lee & Vachon, 2016). However, Starbucks is committed to deal with the challenge by committing itself to innovation and technology. According to reports, the firm invests one-fifth of its total income in innovative strategies.
Regarding supply chain management, Starbucks is also committed to reducing wastes and other inefficiencies throughout all its processes. For instance, during some years, the company experienced significant losses. However, the firm has developed various strategies to assist in the careful management of costs, improving customer services, and engaging more with the employees.
Supplier Relationship Management
The company also has a supplier relationship management for future growth and to enhance sustainability. For instance, Starbucks established Coffee and Farmer Equity (CAFE) in 2004 for all its third-party suppliers to benefit both the firm and its other suppliers (Lee & Vachon, 2016). The move helped Starbucks by ensuring the growth of high-quality coffee. The CAFE standards also assist in the promotion of efficient relationships with the company's coffee suppliers.
Starbucks also introduced a stick supplier vetting procedure and Coffee Sourcing Guidelines. The guidelines are aligned with the firm's sustainable approach to all its business operations. The company sets the standards to ensure that all its suppliers meet the strict guidelines that a sustainable buyer-seller relationship is formed and maintained. One of the rules that are contained in the guidelines is that all the suppliers must adhere to Starbuck's corporate social responsibility standards contained in the Coffee Sourcing Guidelines. Secondly, the company has a zero-tolerance policy regarding suppliers who are involved in child labor by working with children under the age of fourteen years. The combination of the social responsibility guidelines and other company rules enable Starbucks to have a sustainable and green supply chain.
Regarding sustainable supply chain management, there are various biblical concepts that can be applied from a Christian perspective. For instance, several Bible verses discuss corporate social responsibility. According to the Christian perspective, the primary function of a business is to build its customers who set the foundation and keep it in existence. Therefore, the business has an obligation to do what is right for society and must give back since it is a noble thing to do. According to Romans 12:12-13 (The New King James Version), God wants the rich and wealthy in society to take care of the poor (Lee & Vachon, 2016). Some of the ways that Starbucks gives back to the community is through the payment of taxes and providing jobs to the locals. In that way, the company reduces the poverty levels and acts ethically too as required by the law. In Leviticus 19:18 (The New King James Version), the Bible says that people should love their neighbors (Lee & Vachon, 2016). Since Starbucks has many resources, it can do greater good than depending on a single person.
Starbucks' Six Sigma
The development of the lean six-sigma was initially meant to be implemented and used by manufacturing and production and hospitality companies, among others. However, other firms like Starbucks found different diverse ways to use the strategy to improve their service delivery and customer satisfaction simultaneously (Tennant, 2017). Starbucks is one of the most compelling case studies that can be used to show how the six-sigma can be used to retain a firm's individuality.
Being one of the largest coffee houses in the world, Starbucks implemented the six-sigma process to improve the delivery of its services and customers' experience. The six elements of the process that were implemented are definition, measurement, analysis, design, and verification (Tennant, 2017). The primary reason why Starbucks implemented the six-sigma process is that the firm wanted to have the efficiency of other fast-food firms. Customers often need a human element that is significant and a must-have for all businesses (Tennant, 2017). Therefore, the firm made two primary changes to its system. First, Starbucks provides efficient training to all its workers, especially the new hires. However, most attention is given to the baristas since the company deals with coffee selling. Although the cash register rings up orders, the baristas attend to the customers even before they make the required payments. Therefore, there is decreased waiting time from when the customers order to when they pay.
The second strategy that Starbucks adopted to increase customer satisfaction is through the development of an ordering app. The main reason for having an app is to speed up the delivery process since customers can still order when they are far from the coffee houses. The app enables customers to pre-order, pay, and pick their coffee later after arriving at the restaurant. Other fast-food restaurants like McDonald's have also developed ordering apps which are extremely convenient for customers.
However, the primary focus is on the human element. Even with the efficiencies in the ordering and delivery systems, Starbucks has ensured that customer service and satisfaction are excellent. Human interactions are highly encouraged in all the stores (Tennant, 2017). When customers enter the store, baristas talk with them in a friendly manner by asking questions regarding how their day was or if the order is the client's usual. The primary goal of engaging with customers is to make all transactions as personal as possible.
Starbucks has also implemented a loyalty program through the app. The app enables customers to collect stars or loyalty points, which, when accumulated for a certain amount of time, allow one to collect free coffee from the firm's stores. However, the number of stars given to customers depends on the number of transactions made. The giving of loyalty points is one of the essential strategies that Starbucks uses to attract and retain its customers.
Customer experience is a primary consideration for Starbucks. In 2007, there were complaints regarding the quality of coffee, and the firm decided to close all its stores to engage their employees in training. During that time, the firm halted its expansion process and focused on improving the quality of the coffee.
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