Starbucks Corporation Case

Starbucks:

Starbucks Corporation is a global coffee company which is based and founded in Seattle, Washington in 1971. From 1981 Howard Schultz, the current chairman, president and chief executive officer got involved with Starbucks. After visiting Italy, Schultz decided to bring back the Italian coffeehouse style with him. He wanted it to be a place with charm and romance and a special atmosphere. They decided to become not just a company that celebrated coffee and its rich tradition but also to make a connection between every customer and their cup of coffee (Our Heritage). Today Starbucks has over 20000 stores worldwide and is the premier roaster and retailer of speciality coffee in the world.

Starbucks for the past few years has consistently appeared in Gartner's top 25 supply chains. I will look at certain areas of their supply chain network and discuss the role they play and the importance to the successful running of the company that they play.

The supply chain of Starbucks is complex; it involves sourcing coffee and other raw materials from countries across the globe and delivering a high quality product on time to its thousands of shops around the world. Starbucks supply chain however has not always been successful. In 2008 they noticed that even though their sales had begun cool off their operational costs were continuing to increase. Peter Gibbons said that the company had been growing at such a rapid pace that they hadn't been able to put the fundamentals in place for their supply chain and had instead been concentrating solely on keeping up with the expansion of the company. They discovered that less than half of deliveries were not arriving on time to stores. Gibbons also found that they were incurring increased costs from outsourcing so many of their supply chain activities such as transportation and third party logistics (Cooke, J, 2010).

Sourcing

Up until recently Starbucks wasn't producing its own coffee beans; they instead were buying them from farmers. The majority of the coffee beans that Starbucks are buying come from Africa and South America. However they have recently signed a deal with the Chinese government to open a coffee farm in Pu'er. With the Chinese market growing at a huge rate it is expected become the second largest market for Starbucks in the world, with only the United States ahead of them (Burkitt, 2010).Starbucks have, with the acquisition and set up of this farm land in China ensured that they now have a global supply of coffee (Brien, 2012). Along with expanding their global supply network, Starbucks are also protecting themselves against any negative impacts that could occur in the growth of coffee beans. If a bad harvest was to occur with one of their suppliers they now have more alternatives to deal with the problem than before.

Sourcing is one of the