Eric S Nelson
Professor Oliver Schwabe
BUS3022
Fundamentals of Supply Chain Management February 14, 2015
“With operational cost rising and sales declining, the global coffee purveyor implemented a three-step plan to improve supply chain performance, cut costs, and prepare for the future” (Cooke, 2014). There is a big journey from the bean to the cup. Coffee and other merchandise must be sourced from around the globe to 16,700 retail stores, which serve about 50 million customers in 51 counties (Cooke, 2014). But luckily for customers; Starbucks is all about their sustainability. They have some very well put together practices and great polices that are in place to help them live up to their mission. The mission for Starbucks is “to inspire and nurture the human spirit-one person, one cup and one neighborhood at a time” (Starbucks, 2015). Starbucks also believes in working cooperatively with the growers and manufactures in the area, to not only assist them with techniques but as well as keeping a hand on things at all time. They keep long lasting relationships with the people who supply for their products and create manufactured goods to produce high-quality goods to build a stable, resilient supply chain (Starbucks, 2015).
Peter Gibbons, executive vice president of global supply chains operations announced that the cost of running the supply chain was rising very steeply. He suggested two things; how well the supply chain was serving the stores, and where the main source of cost is coming from (Cooke, 2014). Starbucks wants to ensure that all their customers get the equal amount of great service, and they are dedicated to running their business with high standards and those that hold their supply chain accountable for all occurrences. Starbucks was named the World’s Most Ethical Company of 2014 because of their strong ethical sourcing policies that make sure suppliers sign to a Supplier Code of Conduct that outlines sustainability guidelines for any new client or partner. In 2004, Starbucks created the Coffee and Farmer Equity (C.A.F.E.). This group was developed to ensure coffee quality, timely turnaround and while still enforcing their social, economic, and environmental practices. Because of this program, they are able to monitor processing of coffee, productions and ways to continuously improve processes for a clearer and sustainable procedure (Baer, 2013).
Challenges come with all companies, especially fast growing ones but with Starbucks they are coming from some of the poorest countries in the world when being faced by their global challenges. But as long as they can stay strong in communication with their suppliers they can most certainly make an impact on the wealth of these areas. This must also be managed carefully because increased wealth could lead to the production of new development of the area and replace free land with buildings. Challenges also arise when they are consistently transporting the beans from plantations in nearly 20 countries to its six roasting, manufacturing, and packaging (Boyer, 2013). Starbucks does careful planning when generating an aggregate plan to properly generate the sales forecasts, production and inventory levels, and customer backlogs. This type of planning keeps an important balance between capacity and demand. Adding this type of information into a supply chain management process will better plan for future purchases and popularity of each product. Without aggregate plans in Starbuck’s supply chain it will have a major impact on their production scheduling, causing even bigger problems in the global supply chain. My belief is that Starbuck uses an aggregate strategy called: Level Strategy. “A level strategy seeks to produce an aggregate plan that maintains a steady production rate and a steady employment level” (Inman, 2015). This will allow the firm to have a higher
