Operations Management From Robbins, Coulter, and DeCenzo (2017)
Case Study: "Stirring Things Up" [Chapter 15, Case Application 3, p. 474]
1. Read the assigned case analysis.
2. Discuss how operations, production, and technology affect the way goods and services are produced at Starbucks.
3. Go to the Company's website "starbuck", locate the "For Business" section, and access the "Suppliers" link. Evaluate how the requirements and standards to become a Starbucks' supplier align with the concept of value chain.
4. Describe the role of monitoring and control in cases like those described in the case study.
5. Recommend changes to the organizational design.
6. Research in the electronic library a minimum of two additional references from journals on any of the topics discussed in the case study.
7. Submit the paper following APA standards.
8. Use the traditional introduction, body, and conclusion outline.
Stirring Things Up
The steaming cup of coffee placed in a customer's hand at any Starbucks store location starts as coffee beans (berries) plucked from fields of coffee plants.62 From harvest to storage to roasting to retail to cup, Starbucks understands the important role each value chain participant plays.
Starbucks offers a selection of coffees from around the world, and its coffee buyers personally travel to the coffee-growing regions of Latin America, Africa/Arabia, and Asia/Pacific to select and purchase the highest-quality arabica beans. Once the beans arrive at any one of its six roasting facilities (in Washington, Pennsylvania, Nevada, South Carolina, Georgia, or Amsterdam), Starbucks' master professional roasters do their "magic" in creating the company's rich signature roast coffees.
There are many potential challenges in "transforming" the raw material into the quality product and experience that customers expect at Starbucks-weather, shipping and logistics, technology, political instability, and so forth. All could potentially affect the company. Although those operations management challenges are significant, the most challenging issue facing Starbucks today is balancing its vision of the uniquely Starbucks' coffee experience with the realities of selling a $4 latte in today's world.
Starbucks products have become an unaffordable luxury for many. As revenues and profits declined during the economic downturn, CEO Howard Schultz realized that Starbucks had to evaluate everything about how the company operated and to make changes where needed. Although it built its business as "the anti-fast-food joint," the recession and growing competition forced Starbucks to become more streamlined.
Under one new initiative put into effect at its U.S. stores, employee time wasters such as bending over to scoop coffee from below the counter, idly standing by waiting for expired coffee to drain, or dawdling at the pastry case were discouraged. Instead, employees were to keep busy doing something, such as helping customers or cleaning.
At one of the first stores to implement the "lean" techniques, the store manager looked for ways for her employees to be more efficient with simple things like keeping items in the same place, moving drink toppings closer to where drinks are handed to customers, and altering the order of assembly. After two months under the new methods, her store experienced a 10 percent increase in transactions.
Starbucks Value Chain: From Bean to Cup to You
Another thing that Schultz did that was quite unprecedented was to close every one of its stores for three hours on one Tuesday evening to train ALL of their over 135,000 baristas (a barista is a person who prepares and serves espresso-based coffee drinks).
During that training, baristas were reminded that they played an important role in creating not only a fabulous product but a fabulous customer experience. Despite warnings that closing the stores would be a public relations nightmare and a financial mistake, the decision seemed to be a sound one. In the weeks following the retraining, quality scores for the company's beverages went up and stayed there.