Starbucks

Geoffrey Ho
Rujuta Narweker
Mamta Patel
Christina Ratusznik
 Introduction & Agenda
• About Starbucks
• The Supply Chain
• Procurement
• Overall Strategy
• Assessment
• Outlook
 Quick Facts
• Number one specialty coffee retailer in the
world
• Broad product offering
• Astounding world presence
• Unique and always changing variety of
coffee blends
• Strong procurement and SC relationship
management
 Product Offerings
• Product offering: coffee beverages,
complementary type breakfast foods,
sandwiches, salads, coffee accessories,
music and games.
• Alliances:
– Dreyer’s Ice Cream
– Jim Beam Brands
– PepsiCo
 Consumers
• Age range: 18-24 years
• Higher than average incomes.
• Highest usage of coffeehouse brands: self-
employed or work full-time.

Distribution of Starbucks Coffee by Race/Ethnicity

Race/Ethnicity All White Black Asian Hispanic
Starbucks Coffee 18% 18% 13% 27% 24%
 Markets
• Strong global presence.
• Locations: North America, Latin America,
Europe, the Middle East and the Pacific Rim.
• Prospective expansion into Brazil, India and
Russia.

Number of Stores in Main Regions

Country # Stores
United States 7,353
Japan 572
China 209
FromSupplier
StorageCountries
Arabica
Roasting to Latte
Facilities
Plants
(Amsterdam x 1, U.S. x 3)
 FromPlants
Roasting
Individual
Warehouses
Distribution Arabica
Retail
are
Centers Stores
near to Latte plants
roasting
(DC)
Washington, Nevada, Pennsylvania

Everywhere in the US!

Approx. 9000 stores

Company Owned & licensed
 Supply Chain Revisited

Storage Facilities Roasting Plants

Warehouses

Vendors
Coffee Growers Distribution Center

Retailers Retailers Retailers

 Coffee Growers
• Operations:
– Equatorial Belt Growers

– High quality and service

– Send dried beans by ship
• Inventory: Storage Facilities

– Storage facilities
• Information Technology:
– GPS tracking devices Ship
 Vendors
• Operations:
– 40,000 suppliers Vendors

– Commodities products
• Inventory:
– Sends to Distribution Distribution Center

Center by truck

Truck
 Roasting Plants & Warehouses
• Operations
– 3 in US, 1 in Amsterdam
Roasting Plants
– Roast, de-stone, taste profile
– Packaging:
•Automated boxing
Warehouses
•Palletizing systems
• Inventory:
Truck
– Store palletized café in warehouse
 Distribution Centers
• Operations:
Distribution Center
– Located regionally
– 24 hours / 5.5 days a week
– Outsources distribution to 3PL
• Inventory:
– Push/Pull boundary Warehouses
– Order supplies from vendors
– Hold packaged products and merchandise
• Information Technology
Retailers
– HighJump Software's Supply Chain Execution
Solution to
• Streamline Product Distribution
• Prepare for Future Growth Truck
 Retailers
• Operations
– 10,500 Stores located globally
– Company owned and licensed Retailers

– Standardized regulations
– Relationship Management
• Inventory Truck

– Periodic Review
• Coffee, milk and paper products: Once per week
• Food products: Four times a week
• Information Technology
– Computers information systems
 Responsive or Efficient?

• Predictable demand Efficient

with seasonality
• Long term fixed and Efficient
future contracts
• Periodic review Efficient
inventory system
• High inventory level Responsive

Efficient!
 Procurement: Quality
• Focus on high quality and service
• Pays premium prices
• Preferred customer
 Procurement: Relationships
• Long-term relationships
• Mutually beneficial
• Relationship management

“Losing a vendor is like losing

an employee — you lose the
money and time you put into
training them,” -John Yamin,
Starbuck’s Vice President of
food.
 Corporate Social Responsibility
• Fair Trade Movement
– Price setting
– Focus on value of entire supply chain
• “Coffee for Conservation” Project
– Improves quality while focusing on environmental
sustainability
– Current Regions:
• Tanzania
• Rwanda
• Kenya
• Ethiopia
 Overall SC Strategy
• Maintains
“relational capital”
• Focuses on quality
and purity
• Education
• Strategic retail
locations
 Future Outlook
Starbucks can…
• leverage their unique skill set
• develop relationships with and procure from
other countries
• expand into other markets.
• continue assisting African coffee growers
• improve demand forecasting at the retail levels
• expand product offerings
Development Opportunities
 Fun Facts (Optional Slide)
• Starbucks only purchases 2% of the
world’s coffee
• Coffee beans are originally green
• Coffee is the 2nd most valuable commodity
after oil
• Coffee trees can grow up to 30 ~ 40 feet