Starbucks Coffee’s Operations Management, 10

Decision Areas
1. Design of Goods and Services. Starbucks emphasizes premium design for its
goods and services. The premium character is linked to the company’s broad
differentiation generic strategy, along with its premium pricing strategy. Other firms,
such as manufacturers, are also involved in the design of some goods like Starbucks
mugs. In this decision area of operations management, Starbucks ensures that its
goods and services reflect the firm’s high-end brand image.

2. Quality Management. Starbucks also uses the premium character in quality

management. For instance, the company carefully sources its coffee beans from coffee
farmers who comply with Starbucks quality standards. The firm also prefers to buy
coffee from farmers certified under the Starbucks Coffee and Farmer Equity (CAFE)
program. Premium quality service is ensured through servant leadership and a warm
friendly culture. In this decision area of operations management, Starbucks implements
high quality to align with the firm’s premium brand image.

3. Process and Capacity Design. Process and capacity efficiency is one of the
contributors to Starbucks’ success. The company’s processes are highly efficient, as
observable in its cafés. Also, Starbucks optimizes capacity and capacity utilization by
designing processes to meet fluctuations in demand. For example, processes at the
firm’s cafés are flexible to adjust personnel to a sudden increase in demand during peak
hours. In this decision area of operations management, Starbucks aims to maximize
cost-effectiveness though efficiency of workflows and processes.

4. Location Strategy. Starbucks’ location strategy focuses on urban centers, especially

those with large middle and upper class populations. Most of its cafés are in densely
populated areas. Also, Starbucks occasionally uses strategic clustering of cafés in the
same geographic area to gain market share and drive competitors away. This decision
area of operations management shows that Starbucks emphasizes areas with affluent
consumers who could afford its premium priced products.

5. Layout Design and Strategy. The layout design of Starbucks cafés maximizes
workflow efficiency. It also supports a warm and friendly ambiance to match the
company’s organizational culture. This layout strategy does not maximize space
utilization for tables and seats because Starbucks’ focus is on premium customer
experience, which involves higher prices for more leg space in the cafés. In this
decision area of operations management, Starbucks prioritizes customer experience
over space utilization.

6. Job Design and Human Resources. Starbucks’ human resource management

integrates organizational culture in all areas of the business. This organizational culture
involves the employees-first attitude that cares for Starbucks workers. Also, at the
 cafés, the company uses work teams of baristas. In other parts of the organization,
Starbucks uses functional positions, such as HRM positions and inventory management
positions, with less emphasis on work teams. In this decision area of operations
management, the focus is on ensuring that the Starbucks culture is woven into every
job, while satisfying basics on technical specifics of tasks.

7. Supply Chain Management. Starbucks Coffee’s supply chain is global, although

majority of the company’s coffee beans come from farmers in developing countries. The
company’s strategy for its supply chain involves diversification of suppliers to ensure
stability of supply. Starbucks also uses its Coffee and Farmer Equity (CAFE) program to
select and prioritize suppliers. This program uses criteria for ethical practices, including
emphasis on sustainability. Thus, in this decision area of operations management,
Starbucks integrates ethics and corporate social responsibility with supply chain
efficiency.

8. Inventory Management. Inventory management at Starbucks is linked with the firm’s

supply chain and various facilities. At the cafés, inventory management involves office
automation and manual monitoring. In Starbucks’ supply hubs, automation is more
comprehensively used. The company aims to minimize stockout and ensure continuous
supply of coffee beans to its cafés. Starbucks addresses this decision area of
operations management by focusing on supply adequacy and automation.

9. Scheduling. Starbucks uses automated and manual scheduling approaches for its
various business activities. The company also applies flexible schedules for
management personnel. This decision area of operations management relates with
Starbucks in terms of the firm’s objective of streamlining processes, while allowing
some degree of flexibility among management positions in the organization.

10. Maintenance. Starbucks maintains its physical assets through dedicated teams of
employees trained for maintaining facilities and equipment, as well as third parties that
offer maintenance services. These third parties include local businesses that provide
equipment tune-ups for Starbucks cafés. In addition, the company maintains its human
resource capacity through training and retention strategies that include relatively high
compensation. Thus, Starbucks addresses this decision area of operations
management through the involvement of café personnel, dedicated maintenance teams,
and third-party service providers.

Productivity of Starbucks Coffee

Starbucks’ operations management use various productivity criteria based on the area
of operations. Some notable productivity measures in the company are as follows:

1. Average order filling duration (Starbucks café productivity)

2. Weight of coffee beans processed per time (roasting plant productivity)
3. Equipment repair duration (maintenance productivity)

References

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