Operations Management and Service Excellence at Starbucks and Greggs

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Table of Contents
Part A...............................................................................................................................................2

1. Four V’s Profile of Starbucks and Greggs...............................................................................2

2. Comparing the Operation’s Performance of Starbucks and Greggs........................................3

3. Design Analysis of Customer Service Process and Layout Design.........................................6

Part2.................................................................................................................................................7

1. Overview..................................................................................................................................7

2. Starbucks global operations strategy and surrounding macro-environment............................7

3. Key requirements, capabilities, and challenges........................................................................8

4. Analysis and evaluation of the chosen operational area...........................................................9

5. Recommendations..................................................................................................................10

6. Conclusions............................................................................................................................11

References......................................................................................................................................12
Part A

1. Four V’s Profile of Starbucks and Greggs

Operations management of an organization is associated with various characteristics. It is
associated with the four process characteristics including the volume, variety, variation, and
visibility[ CITATION Ron16 \l 1033 ] . The Four V’s profiles of Starbucks and Greggs are compared
in these four characteristics.

Volume: This refers to the number of items produced regularly to deliver food products to the
customers. Starbucks has properly established processes for producing coffee and other food
products. Sustainability experts and agronomists to the establishment of good practices for coffee
production to increase the quality of the coffee. Whereas in the case of Greggs, it has excellent
manufacturing lines to produce high-quality products. Recently it automated the cake production
to overcome the problems. It centralized the pizza, doughnut, and bread production to produce
customer demand products. When Starbucks and Greggs are compared in terms of production
volume, Starbucks is at a high level.

Variety: A variety of operations management characteristics is referred to like the flexibility

presented in producing the food items[ CITATION Dav10 \l 1033 ]. The variety dimension is high for
the Starbucks as it has stores in many locations and home delivery facility to the customers
ordered through online. It sells coffee along with other food products such as beverages, hot
drinks, and cool drinks etc. It can reach the customers in an easier manner. But, in the case of
Greggs, variety of locations are choosing for the establishment of the shops to sell different
products such as breakfast by adding additional features and new flavors are adding to coffee to
compete with other firms

Variation: Variation is called as the changes in the patterns of the demand from the customers
for the food products and services. For Starbucks, the demand for the Arabia coffee influenced
by the commodity and premium price. In this case, the demand will be decreased if the workers
and supply chain partners failed to meet the quality of the product and when new nutritious and
healthy products are released into the market[ CITATION Mic17 \l 1033 ]. For Greggs, changes in
the weather conditions will have an impact on trading. In the summer season, there will be less
demand for bakery items and hot drinks and more demand for cold drinks. Concerns towards
health are changing the dietary options for customers.

Visibility: Visibility is the term related to the description of business available throughout the
world. The business of Starbucks is held by the online as well as offline. Customers can order
using their mobiles to collect food at their doorstep. Starbucks is running throughout the world
by establishing its stores in all continents by adopting the local culture of different countries.
But, Greggs is oriented to only local areas and strict to local culture. It has an ambition of
increasing the shops nationwide to improve its access to customers and it extending the hours of
operation to attract more customers.

Volume

High Low

Variety
High Low

Variation
Low High

Visibility
High Low

Greggs
Starbucks

The four V’s profile diagram developed for the food companies Greggs and Starbucks are shown
as mentioned in the below screenshot. It helps in understanding clearly how these companies are
performing their operations and best-performing companies among these two options.

2. Comparing the Operation’s Performance of Starbucks and Greggs

To measure the performance of operations of a company, there are mainly five measures used.
Those include speed, cost, quality, dependability, and flexibility. The performance of Starbucks
and Greggs companies is compared in terms of these aspects as described below.
Speed: This performance objective is about the delivering of the products and services on time.
It is directly related to the profitability of a firm. Starbucks doesn’t involve in waiting for a
customer in the queue. It is following the various strategies such as enhancement of the internal
communication, proper organization of the works in the kitchen, coordination of the production
activities, and maintaining the sufficient levels of inventory[ CITATION Sta18 \l 1033 ]. In the
Greggs, accurate planning is developed for the production of various items by anticipating the
customer demand by forecasting and developing the timeline.

Cost: Cost is an important factor in determining the efficiency of operations. It is associated with
the objective of profit maximization. For Starbucks, different types of expenses such as operating
expenses, administrative expenses, amortization and depreciation costs, raw material costs, and
cooking and serving staff expenses. It establishes the price for Coffee based on the demand and
supply while purchasing. It depends on technology to the management of the inputs effectively
to minimize the production costs. Greggs includes various costs such as administrative expenses,
supply chain costs, selling and distribution costs, employee costs, and marketing costs in
determining the price of food products[ CITATION Gre18 \l 1033 ].

Quality: Quality is the major performance objective considered to show differentiation with the
competitors. To improve the quality, Starbucks has been adopted and implemented the Total
Quality Management (TQM) approach to enhance the satisfaction of the customers. Quality is
maintaining in various aspects including time management, collection of raw materials from the
suppliers and resource management. In Greggs, high-quality bakery products are produced by
themselves that will add value to customers. It had ownership of delivery fleet and distribution
centers and takes care of the ingredients to reduce the impact of operations on the
environment[ CITATION Ham173 \l 1033 ] . Supply chain centralization is the platform used for
improving quality.

Dependability: Dependability is the major aspect of operation management in providing reliable

food services and delivery. As Starbucks and Greggs are located in nearby areas to each other,
customers will easily shift to other company, if quality food service is not provided on time. The
performance of Starbucks is high in terms of delivering the food on time to the customers
ordered online. Loss of production will be the problem to Greggs as it decreases product
availability to the customers, spends its own expenditure on advertising, and does not much
depend on the store locations.

Flexibility: Flexibility is the number of abilities of a company in updating and aligning with the
requirements of the customers changing regularly[ CITATION Dav184 \l 1033 ]. To achieve this
objective, the R and D department of Starbucks needs to focus on the identification of new
approaches and the development of customized food products to attract customers. Greggs also
has a strong pipeline for upgrading with new product offers and developing new products to
enhance the position of the company in the market. It has high flexibility in customizing products
like breakfast, porridge, and hot drinks like potato wedges and soups. Whereas Starbucks is not
succeeded in taking the initiatives for developing new food products.

Starbucks

Total quality
management

Quality

Own distribution
centers and delivery
fleet Dependabilit Delivery
y service
R and D
Loss of
research and
production
new Flexiblity Strong
production pipeline for
approaches production
Greggs

Staff, Accurate
operating, and production
material costs planning

Organization
work and
Speed internal
Cost communicatin
Cost of
inputs

The above figure clearly shows the polar diagram developed to understand the variations
presented in meeting the operation's objectives by Starbucks and Greggs. It is developed by
comparing the performance objectives
 3. Design Analysis of Customer Service Process and Layout Design
Designing the customer service process and store layout are the two important aspects of the
enhancement of business performance.

Customer service process design: When any deviation is observed with the process
characteristics and performance objectives, it needs to make improvements to the customer
service processes to have an increased growth rate. Starbucks always has a good plan to improve
the practices towards the management of customers and designing new services for them. It
developed upon the digital experience and proper maintenance of the stores to achieve a high
level of customer loyalty [ CITATION Sta194 \l 1033 ]. It facilitating the flexible payment methods,
rewards programs, and gifting to customers using the Starbucks Card. Store value cards are
offering to the customers to enhance the frequency of visits to stores. It is also engaging the
customers through email and social media sites. Along with these, Starbucks offering high-
quality products at minimum costs with increased convenience and customer service. Whereas,
Greggs offers healthier food offers to make balanced choices to customers and gifting channels
to enhance shopping with the company. It producing information about food choices through
mobile apps and websites to reach the customers. It has been simplifying the production
processes and enhancing the productivity of operations. Greggs is also focusing on rewarding
programs to increase customer loyalty and providing a better experience to them.

Layout Design: The process characteristics and performance objectives are influenced by the
store's layout design of the Starbucks and Greggs Company in adopting the new concepts. The
concepts considered by Starbucks include heritage, regional modern, artisan, and concept stores.
Heritage coffee houses are established to create a last century feeling to the visitors by adding the
wooden blinds, club chairs, and community tables. Artisan stores are established to represent the
urban market using simple materials. Regional modern stores developed with trendsetting styles
to welcome the customers. In concept stores, designs are developed by designers to increase the
innovation levels. Greggs also focused on the enhancement of the design of the store layout by
providing fresh food, facilitating a dress code for staff, and easily approachable staff, and placing
items in the counter to enhance visibility to customers to know the type of food
available[ CITATION Ric173 \l 1033 ].
Part2

1. Overview
Supply chain management (SCM) is chosen from the list of key areas of operations management
in the success of Starbucks Corporation. SCM represents the process of managing the movement
of raw materials into an organization and the movement of finished goods towards the
customers. Starbucks has acquired a vertically integrated supply chain. It enabled the company to
be involved in every activity of its supply chain process. This is greatly influenced the operations
of Starbucks such as the flow of materials and purchasing systems. The use of a vertically
integrated supply chain allows the company to consistently crop beans to a greater standard of
flavor and sustainability. It also minimizes the company's exposure to primary supply
disruptions[ CITATION Jam17 \l 16393 ]. Furthermore, effective supply chain management
contributes to organizational performance through various factors including shorter lead time,
reducing operational costs, meeting customers’ expectations, inventory turnover, increasing sales
level and product return.

2. Starbucks global operations strategy and surrounding macro-environment

Starbucks evolving its global operations strategy for accelerating long-term growth and success.
The purpose of global strategy is leveraging home-based core competencies and selling similar
goods or services in local and overseas markets. This strategy is well suited for premium
products and makes the supply chain easy to divide. It helps the company to leverage their
cornerstone product differentiation strategies by providing high-quality beverages and snacks,
establish strong internal & external relationships with suppliers, and offer unique Starbucks
experience to each customer[ CITATION Pup16 \l 16393 ]. Besides, this strategy enables the
company to ensure low-cost implementation through exporting, franchising, licensing for
trademarks, and economies of scale.

Supply chain management can play an essential role in implementing and achieving the global
operations strategy of Starbucks. In general, SCM seeks to accomplish the goal of offering high
customer value by using resources properly and to build competitiveness in the global
market[ CITATION Azi14 \l 16393 ]. From the research, it is found that Starbucks has changed its
supply chain and acquired a vertically integrated supply chain system that greatly influencing
global strategies. The company aims to market its high-quality products to the niche and upper-
class with unique style and reliability. The supply chain transformation has support Starbucks
from the very top[CITATION Placeholder1 \l 16393 ] . It enabled the organization to satisfy their
customer needs and requirements effectively.

Based on the research, it is clear that the supply chain management practices may improve the
company's flexibility. It defines the ability of a company to adapt to the changes in its business
environment. The transformation of Starbuck's supply chain strategy forces the organization to
build culture and new business relationships which in turn influence the entire business
environment. However, studying macro and business environments is essential since it takes the
environment in which the supply chain operations are taking place [CITATION Env12 \l 16393 ] . By
doing so, the organization will obtain useful information that helps to increase their sustainability
performance.

3. Key requirements, capabilities, and challenges

Starbucks has faced many issues concerning managing the supply chain thereby affecting the
day-to-day operations. By considering this, it has transformed the supply chain strategy. But the
company still struggling and unable to get excellence in SCM. So, Starbucks needs to consider
some of the key requirements to achieve excellence in supply chain operations around the world.
Those are including increasing the supply chain visibility, protect gross margins, improve
logistics agility as well as the management processes. The company should deploy commercial
global supply chain technology and use it across the supply chain [CITATION Kio14 \l 16393 ].
Besides, Starbucks must differentiate service over segmented supply chains, drive end-to-end
synchronization, and leverage advanced optimization. Starbucks uses the centralized system and
digital technology for managing its supply chain and copes with the demand. It also established
CAFE (Coffee and Farmer Equity) sustainability standards that enable the company to promote
long-term equitable relationships with their suppliers[ CITATION Gia18 \l 16393 ].

The company faced various challenges in the past few years in operating the business in different
countries throughout the world. Based on the research, it is found that climate change is one of
the key challenges faced by the organization in accomplishing excellence in their supply chain
management. Coffee is one of the agricultural products that also considered a victim of the
impacts of climate change. Due to extreme temperatures, high rainfalls, severe hurricanes, and
diseases onslaught, the coffee farms, as well as coffee crops, will be affected [ CITATION DrE15 \l
16393 ]. This is worrying for the producers of coffee products like Starbucks. Raising prices of
the coffee beans is another challenge facing Starbucks in its supply chain. This has been partly
resulted due to the growing demand for coffee beans. As the company's margins are likely to be
influenced by the rising prices of coffee beans and the shortage in its supply. Another challenge
that faces the company is logistics. Especially when working with various suppliers across the
world, logistics related issues are infinite. Thus, the company has to implement a plan to handle
these challenges or uncertainties.

4. Analysis and evaluation of the chosen operational area

Assessment of the resources management and capabilities in the supply chain:

The supply chain is considered as one of the most complex systems that all resources involved in
the company must have knowledge about it.  It comprises the entire firm, people associated with
business operations, information, and other resources that play a vital role in the process of
delivering products from producers to suppliers and finally to the customers [ CITATION Pro12 \l
16393 ]. Starbucks is known to have the strong and best management of human resources and
capabilities as the company’s mission is to deliver high-quality products to customers and treat
everyone with huge respect as well as dignity. The company uses its human resources practices
and policies as a key strategy for obtaining the materials required, driving success as a whole and
its globalization efforts [CITATION Shi18 \l 16393 ]. Starbucks believes that employees are one of
key resources for their growth and success, and they could help the firm to reach demand and
thrive in the current competitive business environment. 

Starbucks implementing the planning and control strategy for managing the supply chain
resources and capabilities. Aggregate planning is one of the techniques used in identifying the
requirements of the supply chain. It is followed by Starbucks to make orders for the items that
have seasonal demand. It is supporting the order of raw materials of limited quantities and
reducing the wastage of inventory and destroyed materials. This plan is further helpful in
minimization of the costs incurred in managing the inventory. The supply chain planning in real-
time involves in planning the resources to meet the demand from the target customers. Planning
and control in the supply chain are based on the past demand for the coffee and other food
products. It is required to the facilitation of the effective and efficient utilization of the assets and
resources to produce food and delivers as per the customer needs and demand. It includes various
key activities such as operations and sales management, resource planning, supplier and demand
management, event management, and performance management and measurement. Currently,
Starbucks following traditional supply chain practices [ CITATION Dre08 \l 1033 ]. It needs to
enhance the supply chain operations by adopting the technologies to manage the operations from
material collections to delivery to customers.

Impact of planning and control on supply chain: The strategy of planning and control will
have a lot of impact on the supply chain operations in various ways. It is possible to create the
systematic planning for purchasing the coffee beans from the farmers, enhancement of the
relationships presented with the customers, on-time delivering of the products, gaining the
competitive advantage in the supply chain area, and reducing the costs of the inventory required
for food production, enhancement of the design of production, minimizing the life cycle of
production, and meeting the expectations of customers [ CITATION Nei15 \l 1033 ] . Planning and
control strategy further supports a firm in managing the customer requirements effectively and
building the loyalty of customers.

Action plan to address the challenges in the supply chain: Starbucks has few challenges with
supply chain management. It needs to provide some immediate response to these challenges to
avoid their negative impact on business operations. The action plan includes key activities such
as establishment of the new concept stores, adoption of RFID technology to manage the supply
chain activities in real-time, offering appropriate wages to employees, adoption of right tools for
forecasting the demand for products in future, and replacing the poorly performing supply chain
management people with an effective one. Establishing new stores help in adding delightfulness
and satisfaction of customers and attracting wealthy customers. RFID technology integration into
the supply chain helps in promoting the integrity of transactions and increasing the quality of raw
materials and products[ CITATION Ste141 \l 1033 ]. Increasing the wages to employees is helpful in
enhancing their satisfaction levels and increasing the commitment towards work. Adoption of
quality standards is required to increase quality of production.

5. Recommendations
An effective supply chain management helps the coffee producers like Starbucks save a lot of
money, increase the speed of deliveries, better management of inventory, and minimize the
processing time of products. This, in turn, decreases the decomposition and falling-off. To obtain
improvements in the supply chain management operations of Starbucks, the company must pay
attention to the following key recommendations.

The organization must integrate RFID (Radio Frequency Identification) technology into the
supply chain. This is the new technology has opened the door to a new age in supply chain
management by utilizing barcode technology. It improves the Starbuck's supply chain in many
ways. The scanners integrated into this technology can communicate to tags within a short
period. These can have the capability to scan multiple products simultaneously which in turn
results in the automation of various supply chain management activities at Starbucks inventory.
Labor reduction is another significant benefit of integrating RFID technology in the supply
chain. It helps the organization to automate supply chain to unprecedented levels thereby
minimizing the need for labor throughout the process [ CITATION Abd13 \l 1033 ] . The successful
integration of RFID technology provides the benefit of enhanced visibility. As it has the
pervasive always-on nature that offers greater visibility to all stakeholders involved in Starbuck’s
supply chain activities.

Starbucks should create an adaptive and agile supply chain with rapid planning and integrated
execution. This will contribute to the organization in improving supply chain operations. Once
the managers can better understand outline demand, they have to adapt their supply chains to
alter current opportunities in the market as well as events[ CITATION Dmi19 \l 1033 ]. The company
needs to deploy dynamic planning capabilities and constantly fine-tune operations as it provides
the responsive agility for accomplishing changing demand in the coffee industry.

Apart from the above, it is recommended to devise a distribution strategy of Starbucks [ CITATION
San14 \l 1033 ]. Many business experts said that formulating an effective distribution blueprint is
essential for Starbucks as it helps to accomplish profitable growth especially when the managers
intended or thinking about cost, revenue, and usage of assets.

6. Conclusions
The main purpose of this report is to critically analyze and evaluate the supply chain
management role in Starbucks operations. In this report, the first section provided an overview of
the operational area, its scope in operations of the company, and the impact of SCM on the
business performance. The second section gave a clear explanation of global operations strategy,
the role of SCM on that strategy, analyzed how it is affecting the macro and business
environment. The third section explained the key requirements, capabilities, and challenges faced
by Starbucks in achieving excellence in supply chain management. In the fourth section, the
analysis and evaluation of SCM have been conducted. Based on analysis and research
undertaken, key important recommendations were provided that could help to improve the
supply chain practices of Starbucks. The company must integrate RFID into supply chain to
increase quality and promote integrity of transactions.
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