Operations Management 1

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Programme MSc Management

Operations Management and Service Excellence
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 Operations Management 2

Operations Management and Service Excellence

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Table of Contents
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Operations Management and Service Excellence

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1.0 Introduction

Markedly, Starbucks is one of the leading coffee, making shops, and fast food stores in

the world. Ideally, Starbucks is a worldwide corporation as it is present in several overseas

markets, and it competes globally. As such, Starbucks is a company with global operations, and

it serves millions and millions of customers in its stores and cafes daily. To this end, Starbucks is

an international company that comprises of presence in more than 80 countries and more than

30,000 retail stores. Notably, the global operations of Starbucks rely on the services that

Starbucks offers through collaboration with several international partners. Some of the business

forms or arrangements that Starbucks focuses on in the global market include licensing and

franchising. As a result, Starbucks operates a worldwide network of licensed cafes and

franchises. This working arrangement enhances a decision-making approach that is decentralized

and also local responsiveness.

Again, these working arrangements offer Starbucks with the benefit of operational

efficiencies through the leveraging of core competencies and global standards. Arguably, a

franchise means a license that a business gives to another party thereby enabling the other

business to have access to the processes of this business, proprietary knowledge, and trademarks

thus allowing this business to sell a service or a product under the name of the parent company

(Russell and Taylor, 2003). Conversely, licensing is the granting of official permission by a

business to a third party allowing this party to operate under the name of the parent company

(Stevenson, 2002). Operations management, on the other hand, means the management of

business practices to establish the highest level of efficiency that can be reached in an

organization. To this end, operations management is concerned with the utilization of efficiency

as much as possible to convert labor and materials into services and goods as possible to enable
 Operations Management 5

an organization to maximize its profits (Hill, 2005). The analysis of Starbucks’ operations

management and excellence reveals how Starbucks’ utilizes efficiency to convert labor and

materials into goods and services to enable it to optimize profits.

2.0 Part A- Comparing the Operations of Starbucks to that of Greggs

In this section, we compare the operations of Starbucks to that of Greggs. Ideally, Greggs

is a large plc operating in the bakery industry. As such, in the United Kingdom, Greggs is the

largest bakery firm. To this end, Greggs specializes in sweet items such as vanilla slices and

doughnuts and savory products such as sandwiches, sausage rolls, and bakes. The headquarters

of Greggs is in Newcastle and specifically in North Tyneside. Starbucks, on the other hand, is a

US-based company with several subsidiaries in several locations, including the United Kingdom.

The headquarters of Starbucks is in Seattle, Washington. Starbucks operates in the coffee making

industry and the fast-food industry and has several stores all over the world. The specialty

Starbucks is coffee making. In this section, we compare the operation of Starbucks and Greggs

using Comparative Vs. Four analysis, performance objectives analysis, and design analysis.

2.1 Comparative Four Vs. analysis

Arguably, comparative analysis involves comparing the item-by-item of two or more

products, processes, alternatives, and sets of data, qualifications, systems, and other similar

elements. The comparative analysis enables analysts to understand the similarities and

differences existing between two or more products, processes, alternatives, and sets of data,

qualifications, systems, and other similar elements (Jacobs, Chase, and Aquilano, 2004).In this

section, we will be comparing four main sections, aspects, or elements of Starbucks and Gregg

and then analyzing them thoroughly. The following is a comparative four diagram for Starbucks

and Greggs.
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Comparative Factor or Starbucks Greggs

element
Industry Coffee making industry or
fast food industry
Headquarters Seattle Washington, United
States
Products Coffee, fresh juices, snacks
including chips and crackers,
pastries, ice cream,
sandwiches and several more
Corporate strategy Starbucks adopts a
differentiation strategy with
more innovation to remain at
the top of the industry and to
achieve a competitive
advantage.
Corporate governance Headed by Kevin Johnson
who is the current CEO and
President of Starbucks
Number of locations Starbucks is present in about
30,000 places in the whole
world
Size and scope It is a large worldwide
company
Baking or bakery industry
Newcastle, North Tyneside,
United Kingdom
Sweet items such as vanilla
slices and doughnuts and
savory products such as
sandwiches, sausage rolls,
and bakes
Greggs adopts a focus and
low-cost strategy as the
primary source of competitive
advantage.
Headed by Roger Whiteside,
the current CEO of Greggs.
Greggs is present in about
2,009 locations in the entire
world and most specifically
in the United Kingdom
It is a moderate global
company

Notably, the above comparative analysis focuses on several comparative factors both for

Starbucks and for Greggs. These factors include size and scope, number of locations, corporate

governance, corporate strategy, industry, products, and headquarters. Nonetheless, the focus will

be given to four comparative elements that include products, industry, corporate strategy, and

corporate governance. As such, Starbucks is a worldwide corporation operating in the coffee

 Operations Management 7

making and fast-food sector. Conversely, Greggs is also a global corporation, but it operates in

the baking or bakery industry. The main products offered by Starbucks to its customers include

coffee, fresh juices, snacks including chips and crackers, pastries, ice cream, sandwiches, and

several more. Conversely, the main products offered by Greggs include Sweet items such as

vanilla slices and doughnuts and savory products such as sandwiches, sausage rolls, and bakes.

Concerning corporate strategy, Starbucks adopts a differentiation strategy with more innovation

to remain at the top of the industry and to achieve a competitive advantage. Greggs, on the other

hand, utilizes a focus and low-cost strategy as the primary source of competitive advantage.

The corporate governance of Starbucks is headed by Kevin Johnson, who is the current

CEO and the President of Starbucks. Conversely, the corporate governance of Greggs is headed

by Roger Whiteside, the current CEO of Greggs. Nonetheless, a closer look at the comparative

analysis of these two companies reveals that Starbucks surpasses Greggs by far, even though

these two companies are not operating in the same industry. For instance, concerning size and

the number of locations, Starbucks is a large company with more than 30,000 locations, while

Gregg is a small company with about 2,009 locations. Also, according to global listings,

Starbucks has been identified as one of the companies with great fortune and the best to work for

in the year 2019. Conversely, Greggs cannot achieve the global annual listings and rankings of

Starbucks. As such, from this comparative analysis, Starbucks is ahead of Greggs, and the

strategy and the performance of these two companies cannot be compared. This analysis reveals

that Starbucks is the best amongst the two, and it will continue being the best if at all things at

Starbucks is either improved or they remain constant.

2.2 Comparative Performance Objectives Analysis

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This section utilizes the comparative performance objectives performance to compare the

performance of Starbucks and Greggs. Arguably, performance objectives refer to the targets that

are set by individuals or organizations on either a yearly, semi-annually, or quarterly basis. As

such, performance objectives must be smart, meaning that they must be specific, measurable,

achievable, relevant, and time-bound (Slack, Chambers, and Johnston, 2010). Considerably, the

measurement of performance objective is the most rigorous criteria, as many of the outcomes of

performance objective are challenging to measure. Therefore, performance objectives analysis

involves evaluating the targets that are set by individuals or organizations on either a yearly,

semi-annually, or quarterly basis. The evaluation of the performance objectives follows the smart

rule, which means specific, measurable, achievable, relevant, and time-bound (Kleindorfer et al.,

2005). Some examples of performance objectives include strategy, sales, customer service,

project management, human resources, and marketing. The following is the performance

objectives analysis for Starbucks.

Comparative Performance Starbucks Greggs

objectives
Corporate strategy Starbucks adopts a
differentiation strategy with
more innovation to remain at
the top of the industry and to
achieve a competitive
advantage.
Sales Sales revenue was the US $
24.71 billion in 2018.
Greggs adopts a focus and
low-cost strategy as the
primary source of competitive
advantage.
Sales revenue was £1,029.3
million in 2018.

Customer service Efficient and top-notch Excellent customer service in

customer service that is all its outlets. Enhances
excellent and offers customer customer satisfaction.
support. Leads to customer
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satisfaction and loyalty

Project management
Human resources
Marketing
Number of locations
Consults all stakeholders
when executing projects
leading to stakeholder
acceptance and completion of
projects within the scheduled
time and budget. Utilizes
both waterfall and agile
project management
techniques ending up forming
a hybrid project management
approach.
Had 291 000 employees in
2018
Uses an integrated marketing
communication matrix
consisting of personal selling,
public relations, advertising,
sales promotions, use of
discounts, and direct
marketing.
30,000 locations worldwide
Consults stakeholders, when
implementing projects. Uses
project management
techniques of both agile and
waterfall.
Had 22,000 employees in
2018
Uses a marketing
communication mix that is
integrated and mostly focuses
on outdoor advertising, sales
promotions, and the use of
discounts.
2,009 locations worldwide

Arguably, the markets for Starbucks and Greggs are different. The target market for

Greggs is mostly teenagers and youths who are the group of people who mostly like their items.

The target market for Starbucks is mixed; it comprises of teenagers, youth, and health-conscious

adults. The extent of the difference between the target markets for these two companies affects

how these firms utilize the performance objectives listed above. Notably, from this performance

objective analysis, Starbucks is the best company amongst the two in terms of performance and

how best it fulfills customers' needs. The operations of Starbucks are superb as compared to the
 Operations Management 10

operations of Greggs. Therefore, operations management excellence is mostly achieved at

Starbucks more than it is delivered at Greggs.

2.3 Design Analysis

Typically, the comparative four vs. analysis and the performance objectives analysis have

influenced the design of the customer service process in that it has enabled both Starbucks and

Greggs to adopt excellent customer service that leads to the fulfillment of customers' needs,

thereby satisfying customers fully. Besides, the comparative four vs. analysis and the

performance objectives analysis have influenced the layout of stores for both companies. Ideally,

these companies have adopted the layout of typical stores that comprises of sound ambiance and

design, thereby attracting all types of customers. Arguably, process and layout decisions allow

these firms to cope with the characteristics of core operations identified in the four vs. analysis.

The process and layout decisions enable Starbucks and Greggs to adopt and make layout

decisions that lead to the designing of the stores in a way that attracts customers. Notably, layout

decisions are affected by performance and performance trade-offs. This influence is in the sense

that the design or the layout of the stores for Starbucks and Greggs is made in such a way that it

enhances good ambiance to make customers comfortable while being served at various stores

and to attract more customers.

3.0 Part B- Report on Planning and Control

3.1 Overview of Planning and Control

The chosen area for analysis for operations management is planning and control. Ideally,

planning is the practice of thinking about and executing the activities needed by an organization

for it to achieve the desired goal. As such, planning is the prerequisite of the achievement of

desired results. To this end, with planning, organizations create and maintain a plan such as the
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aspects that require the utilization of conceptual skills (Olhager, 2013). Typically, planning has

become a fundamental function of the management, and it involves making decisions before,

identifying the things to be done, when these things are to be done, how these things are to be

done, and selecting the people who are going to do these things (Junior and Filho, 2012).To this

end, planning incorporates an intellectual process that leads to the laying down of organizational

objectives and the development of several courses of action, which, when implemented, will

enable an organization to achieve its objectives (Anderson, Karumanchi, and Iagnemma, 2012).

As such, planning is the way to accomplish a particular goal exactly.

Another name for planning and control is production planning and control, and this

entails the management functions that determine the market demands and identify ways through

which an organization is to utilize operations management to fill those demands through the

application of planning and monitoring approach (Chen, and Monahan, 2010). The scope of

planning at Starbucks is distinct. Notably, through planning, Starbucks has been able to set out

the mission, goals, and the steps that will enable Starbucks to achieve market demands. Also,

through planning and control, Starbucks has been able to put controls into place that allow it to

contend and deal with changes when they occur inevitably (Starbucks, 2017). As a result, the

role of control at Starbucks is to ensure that Starbucks adapts and changes its processes and plans

swiftly. As such, the role of planning and control in Starbucks is to make sure that there is proper

scheduling of staff, maintenance of inventory, ensuring that demand and production are matching

and that all the production lines are running swiftly as envisaged. Planning and control contribute

to high organizational performance more so when Starbucks maintains and manages its

operations or processes effectively to ensure that they run efficiently.

3.2 Starbucks Global Operations Strategy and Surrounding Macro-Environment

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The operations of Starbucks are affected by the wider business macro environment.

Ideally, the macro or the remote business environment includes factors such as political factors,

economic factors, social factors, technological factors, environmental factors, and legal factors

(Krenczyk and Skołud, 2014). These factors influence the operations management processes of

Starbucks and, therefore, Starbucks requires a global operations strategy to respond to these

happenings in the external business environment. Arguably, the global operations strategy

adopted by Starbucks is innovation combined with a product differentiation strategy. Notably,

with innovation, Starbucks has been able to utilize several technological components in its

production lines. For instance, the Espresso Mastrena Machine that is used by Starbucks to

ensure that orders of customers are serviced, fulfilled and delivered in real-time. On the other

hand, the global operations strategy of product differentiation has ensured that Starbucks

provides or offers distinctive and unique products. For example, Starbucks coffee comprises of a

distinctive taste that makes customers crave for more. This idea best explains why customer

loyalty attached to Starbucks products is high, and customers keep coming back for more

products.

Moreover, the global operations strategies of innovation and product differentiation have

made it simple for Starbucks to operate in a leading-edge after gaining a sustainable competitive

advantage. One of the factors in the macro business environment associated with Starbucks is the

social factor of the growing need of the middle class to utilize or to use Starbucks products. To

this end, Starbucks has taken advantage of this factor of the macro environment and utilized

product innovation and product differentiation as the leading global strategies. Also, these global

strategies have made it sure that Starbucks applies real-time operations approach so that to

reduce the customers' waiting time for their respective orders.

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3.3 Key Requirements, Capabilities and Challenges

This section discusses the key requirements, capabilities, and challenges for production

planning and control. To this end, the key requirements for production planning and control

include; good production lines, production managers who possess high expertise, experienced

employees, suitable scheduling for production planning and control, and sound technologies for

enhancing production planning and control (Wang and Liu, 2013). Other requirements include

excellent supply chain management to include a reliable source of raw materials and the

establishment of strategic alliances with the suppliers. The key capabilities include the

competencies of the production team, real-time production, efficiency in the production process,

and reliable technology. The key challenges associated with production planning and control

include faulty production lines, high cost of production planning and control, lack of sufficient

expertise by the team in charge of production planning and control, competition, unfavorable

government policy such as high taxation. Again, another challenge of production planning and

control that Starbucks faces include lack of proper scheduling, low quality coffee beans, high

needs of health-conscious individuals, and the inability of Starbucks to achieve these needs

meaning that such customers are unsatisfied. Arguably, the challenges of production planning

and control affect or influence the way through which Starbucks achieves a sustainable

competitive advantage. Ideally, due to the persistence of these challenges, production planning

and control at Starbucks are affected, meaning that this company will be incapacitated and

sometimes unable to achieve sustainable competitive advantage.

3.4 Analysis and Evaluation of Chosen Operational Area

The chosen operational area for analysis is planning and control, commonly known as

production planning and control. Considerably, production planning and control are needed for
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day-to-day processes like management of the supplied equipment, inventory control, quality

assessment, dispatch inspection, and scheduling (Duffie, Chehade, and Athavale, 2014). Control,

on the other hand, makes sure that there is optimal execution of those items both in terms of

efficiency and cost savings. Arguably, it is essential to integrate the production planning and the

control system in an organization for effective, economical, and efficient operation in the

manufacturing unit of an organization. Production control and production planning follow the

finalization of a production process and the adaption of product design. As a result, production

planning and control will address the fundamental problem of resource utilization, inventory

management, and low productivity (Keller et al., 2016). As a result of efficiency in production

planning and control, Starbucks has experienced several benefits in its management of resources.

The first benefit of production planning and control that Starbucks has achieved is proper

scheduling and optimal utilization of production capacity, thereby reducing idle time for

machines such as the Mastrena Espresso machine. Besides, through production planning and

control, Starbucks has been able to maintain optimal levels of inventory. As such, things such as

under-stocking and over-stocking are passed in Starbucks. Again, through production planning

and control, Starbucks has optimized production time through the increment of turnover time.

Also, Starbucks has benefited from production planning and control in that it maintains the

quality of ultimate products such as coffee and pastries.

The objectives of production planning and control at Starbucks are to ensure the right

quality and quantity of raw material and equipment during production times. Also, production

planning ensures capacity utilization in association with the forecasted demand at all times.

Typically, Starbucks has a well-thought production planning and control that streamlines the

entire production process, thereby providing Starbucks with enormous benefits. These benefits
 Operations Management 15

include reduction of investment in inventory, reduction in the overall cost of production as a

result of efficiency, and it enables Starbucks to deliver products in a regular and timely manner.

Considerably, Starbucks enjoys several benefits from its well-thought production planning.

Again, due to its efficiency in production planning and control, Starbucks has achieved a

sustainable competitive advantage, thereby operating in a leading-edge and becoming a global

leader in making and selling coffee and other products such as sandwiches and pastries and fast

foods like chips. Nonetheless, Starbucks receives cut-throat competition from its main

competitors, such as McDonald's, Tim Hortons, and KFC. Moreover, through production

planning and control, Starbucks has enhanced activities related to sequencing, loading, and

scheduling. These activities are the key resources and capabilities of Starbucks’ operations

processes. Noticeably, from the evaluation of Starbucks' mode of servicing customers' orders, it

is evident that it takes a little time possible for the customer to place orders and to receive these

orders. This approach is enhanced by the real-time technique of order handling that is enhanced

by proper scheduling methods to see to it that customers are happy with the service they receive

at Starbucks, and with no doubt, they will often come to Starbucks' cafes, stores, or outlets.

3.5 Recommendations

The following are some of the recommendations that will enhance Starbucks'

performance concerning its operational processes.

 Starbucks needs to rebrand its operational processes to enhance more production planning

and control. When production planning and control are improved, it means that Starbucks

will witness improvements in its production lines, which will then adopt more efficiency to

gain the ability to produce in real-time.

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 Starbucks needs to include more innovative practices and product differentiation in its

strategy for production planning and control. This approach will make sure that these

practices become sources of sustainable competitive advantage for Starbucks.

 Starbucks needs to pay its attention to the external factors present in its macro environment.

The focusing of these factors will ensure that Starbucks takes advantage of the opportunities

present in the macro business environment and form strategies for avoiding threats present in

the macro-environment.

4.0 Conclusion

The analysis of Starbucks’ operations management and excellence reveals how

Starbucks’ utilizes efficiency to convert labor and materials into goods and services to enable it

to optimize profits.Operations management means the management of business practices

intending to establish the highest level of efficiency that can be reached in an organization. To

this end, operations management is concerned with the utilization of efficiency as much as

possible to convert labor and materials into services and goods as possible to enable an

organization to maximize its profits. Starbucks needs to adopt more innovation, rebrand its

operational processes, and pay attention to factors present in the macro-environment. This

approach will allow Starbucks to turnaround its operational processes and to adopt appropriate

production planning and control. These will be resources that Starbucks can rely on to achieve

sustainable competitive advantage.

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References List

Anderson, S.J., Karumanchi, S.B., and Iagnemma, K., 2012, June. Constraint-based planning and

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vehicles symposium (pp. 383-388). IEEE.

Chen, C., and Monahan, G.E., 2010. Environmental safety stock: The impacts of regulatory and

voluntary control policies on production planning, inventory control, and environmental

performance. European Journal of Operational Research, 207(3), pp.1280-1292.

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Duffie, N., Chehade, A., and Athavale, A., 2014. Control theoretical modeling of the transient

behavior of production planning and control: a review. Procedia Cirp, 17, pp.20-25.

Hill, T., 2005. Operations management.

Jacobs, F.R., Chase, R.B., and Aquilano, N., 2004. Operations management for competitive

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Junior, M.L., and Filho, M.G., 2012. Production planning and control for remanufacturing:

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Keller, F., Schultz, C., Braunreuther, S., and Reinhart, G., 2016. Enabling the energy-flexibility

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Kleindorfer, P.R., Singhal, K., and Van Wassenhove, L.N., 2005. Sustainable operations

management. Production and operations management, 14(4), pp.482-492.

Krenczyk, D., and Skołud, B., 2014. Transient states of cyclic production planning and control.

In Applied Mechanics and Materials (Vol. 657, pp. 961-965). Trans Tech Publications.

Olhager, J., 2013. Evolution of operations planning and control: from production to supply

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Russell, R.S., and Taylor, B.W., 2003. Operations management (Vol. 3). ^ eNew Jersey New

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Wang, C., and Liu, X.B., 2013. Integrated production planning and control: A multi-objective

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pp.815-830.