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STARBUCKS

INTRODUCTION & AGENDA
 About Starbucks
 The Supply Chain
 Procurement
 Overall Strategy
 Assessment
 Outlook

QUICK FACTS
 Number one specialty coffee retailer in the world
 Broad product offering
 Astounding world presence
 Unique and always changing variety of coffee
blends
 Strong procurement and SC relationship
management
PRODUCT OFFERINGS
 Product offering: coffee beverages, complementary
type breakfast foods, sandwiches, salads, coffee
accessories, music and games.
 Alliances:
 Dreyer’s Ice Cream
 Jim Beam Brands
 PepsiCo

CONSUMERS
Age range: 18-24 years
Higher than average incomes.
Highest usage of coffeehouse brands: self-
employed or work full-time.
Race/Ethnicity All White Black Asian Hispanic
Starbucks Coffee 18% 18% 13% 27% 24%
Distribution of Starbucks Coffee by Race/Ethnicity
MARKETS
Strong global presence.
Locations: North America, Latin America,
Europe, the Middle East and the Pacific Rim.
Prospective expansion into Brazil, India and
Russia.

Country # Stores
United States 7,353
Japan 572
China 209
Number of Stores in Main Regions
Supplier Countries
Storage Facilities Roasting Plants
(Amsterdam x 1, U.S. x 3)
FROM ARABICA TO LATTE
FROM ARABICA TO LATTE
Roasting Plants
Washington, Nevada, Pennsylvania
Distribution Centers (DC)

Approx. 9000 stores
Company Owned & licensed
Warehouses are near roasting plants
Everywhere in the US!
Individual Retail Stores
SUPPLY CHAIN REVISITED
Coffee Growers
Roasting Plants Storage Facilities
Warehouses
Distribution Center
Retailers
Vendors
Retailers Retailers
COFFEE GROWERS
 Operations:
 Equatorial Belt
 High quality and service
 Send dried beans by ship
 Inventory:
 Storage facilities
 Information Technology:
 GPS tracking devices

Growers
Storage Facilities
Ship
VENDORS
 Operations:
 40,000 suppliers
 Commodities products
 Inventory:
 Sends to Distribution
Center by truck

Vendors
Distribution Center
Truck
ROASTING PLANTS & WAREHOUSES
 Operations
 3 in US, 1 in Amsterdam
 Roast, de-stone, taste profile
 Packaging:
Automated boxing
Palletizing systems
 Inventory:
 Store palletized café in warehouse
Roasting Plants
Warehouses
Truck
DISTRIBUTION CENTERS
 Operations:
 Located regionally
 24 hours / 5.5 days a week
 Outsources distribution to 3PL
 Inventory:
 Push/Pull boundary
 Order supplies from vendors
 Hold packaged products and merchandise
 Information Technology
 HighJump Software's Supply Chain Execution
Solution to
 Streamline Product Distribution
 Prepare for Future Growth



Distribution Center
Truck
Retailers
Warehouses
RETAILERS
 Operations
 10,500 Stores located globally
 Company owned and licensed
 Standardized regulations
 Relationship Management
 Inventory
 Periodic Review
 Coffee, milk and paper products: Once per week
 Food products: Four times a week
 Information Technology
 Computers information systems
Truck
Retailers
RESPONSIVE OR EFFICIENT?

 Predictable demand
with seasonality
 Long term fixed and
future contracts
 Periodic review
inventory system
 High inventory level
Efficient
Responsive
Efficient
Efficient
Efficient!
PROCUREMENT: QUALITY
 Focus on high quality and service
 Pays premium prices
 Preferred customer
PROCUREMENT: RELATIONSHIPS
 Long-term relationships
 Mutually beneficial
 Relationship management

“Losing a vendor is like losing
an employee — you lose the
money and time you put into
training them,” -John Yamin,
Starbuck’s Vice President of
food.
CORPORATE SOCIAL RESPONSIBILITY
Fair Trade Movement
 Price setting
 Focus on value of entire supply chain
“Coffee for Conservation” Project
 Improves quality while focusing on
environmental sustainability
 Current Regions:
 Tanzania
 Rwanda
 Kenya
 Ethiopia
OVERALL SC STRATEGY
 Maintains “relational
capital”
 Focuses on quality and
purity
 Education
 Strategic retail locations

FUTURE OUTLOOK
Starbucks can…
leverage their unique skill set
develop relationships with and procure
from other countries
expand into other markets.
continue assisting African coffee growers
improve demand forecasting at the retail
levels
expand product offerings
DEVELOPMENT OPPORTUNITIES
FUN FACTS (OPTIONAL SLIDE)
 Starbucks only purchases 2% of the world’s coffee
 Coffee beans are originally green
 Coffee is the 2
nd
most valuable commodity after oil
 Coffee trees can grow up to 30 ~ 40 feet