SUPPLY CHAIN MANAGEMENT

Harder, Khids V
What are the problems encountered in the existing Supply Chain
Management of the Starbucks
 Increasing Prices Of Its Products
o Starbucks has been leveraging its consumer loyalty and lack of elasticity
among its consumers by continuously passing on increases in costs, due to
wages and coffee prices, to its customers. As a result, in the period
between 2014-2016 we have seen four price hikes on its products, two of
which were in 2016 alone. The rise in prices has been mainly aimed at
protecting the company’s operating margins.
 Higher Wage Payment
o The increase in prices of end product is propelled due to higher cost of raw
material and labor. It is argued that an increase in the federal minimum
wage will adversely impact the company and its already thin margins,
especially at licensed stores. However, the argument fails to consider that
labor costs are the smallest portion of the company’s operating expenses.
 Rising Prices Of Coffee Beans
o Coffee prices, after being on a slump for a while, have started rising again.
The primary contributor towards the rise in prices of coffee beans is the
drought in Brazil and Vietnam, the largest producers of coffee beans.
Further, the increased demand for coffee has led to a reduction in the
inventory levels of coffee beans for the past twelve consecutive quarters.

Strategies implemented by Starbucks in order to improve their

productivity and efficiency.in order to improve their productivity and
efficiency.