Operations Strategy and Process

Design in Starbucks Coffee

The element of operations management is extremely significant in any initiative. The corporation will
encounter a management disaster in case the suitable structures are not present (Chaston 2009).
The stages of success depend on the hard work of administration. The management has to figure
out all the vital necessities for the production procedure (Doole & Lowe 2008). This research shall
look at the undertakings of Starbucks Coffee, and the effectiveness of their production methods.
More closely, the research shall discuss means in which administration can enhance the numerous
procedures in the corporation. The elements of operation tactic as well as procedure design function
as the corporations pillar (Ference & Thurman 2009). All corporations have to come up with facets
of operations management, because this will help them accomplish their objectives.

As presented in figure 1 numerous activities take place at Starbucks Coffee. The coffee beans come
from the farmer, and then the intermediaries, the mill proprietors, and then corporative societies
distribute them (Hess 2010). Hence, the marketing organizations and exporters get the coffee
beans. The importers as well as brokers own to the duty of supplying the coffee beans to particular
locations. Starbucks have their private roasters, and they acquire coffee beans straight from the
importers (Hohpe & Woolf 2004). They then roast coffee beans, and then supply them to numerous
distributors, cafes, restaurants and retails shops. The clients are capable of getting their preferred
coffee after the procedure. Figure 1 shows the procedure the coffee undertakes from the small-scale
farmer to various clients. From the roaster phase, that is where the internal undertakings of
Starbucks Coffee begin (Michelli 2007). As figure 1 shows the coffee goes through a number of
phase prior to being accessible to a client. The Starbucks operations management group makes
sure that the procedure works as expected.

Figure 2 shows the structural mechanism of the corporation. So as for the undertakings of the
corporation to succeed, the numerous departments have to match up with each other (Noe 2010).
As figure 2 portrays the vast level of administration is made up of the CEO, the financial director, as
well as the corporation secretary. In addition, it includes the presidents of diverse retail areas as well
as the vice presidents responsible for supply management (Pham-Gia 2009). The numerous
departments incorporate HR, legal affairs, CSR, international affairs, marketing and the department
in charge of quality of coffee. The head of departments in the corporation work together with each
other to make sure that the facets of place and time utility are present in the end product. Figure 2
displays the map for internal operations at Starbucks. The operational tactic as well as procedure
design vastly relies on the organizational structure (Schultz & Gordon 2011). All the internal
departments of the company have to work together to make sure that the goals of the corporation
are fruitful.

The facets of a suitable operational management system are apparent at Starbucks. The procedure
of coffee brewing is helpful and the cup of coffee reaches the clients at the stipulated time (Schultz &
Yang 2007). However, Starbucks has to restore their allocation mechanisms. The function of
administration is to find out the efficiency of all shareholders. The number of coffee providers has to
be suitable, and the cafes and restaurants ought to be easy to reach (Schultz & Gordon 2011). The
production criterions are part of the operational management system. Starbucks coffee brewing
processes ought to be able to sustain suitable level of quality. The roasting practice ought to be
suitable, over roasting of coffee beans makes them to have a sour taste (Schultz & Yang 2007). It is
vital for Starbucks Coffee to have a quality assurance branch, as this will enhance the operational
efficiency.

The Starbucks workers ought to be acquiescent with the numerous operational practices. Starbucks
coffee is classified under the group of the food and beverage sector. The sector standards give a
directive that there are certain stages of hygiene essential in the retails stores as well as restaurants
(Pham-Gia 2009). The personnel of the corporation have to make sure that the hygiene levels of
Starbucks retail stores are suitable. On top of this, the coffee grinders are required to be cleaned
and well-kept always. Ground coffee ought not to lie around in numerous stores, and the moment it
is used, it ought to be thrown away instantly (Noe 2010). All this facets are categorized under the
scope of operations management, and the Starbucks administration ought to make sure that high
competence levels are present always. The workers in the corporation have to take part in the
creation of a new operations plan (Michelli 2007). More clearly, Starbucks workers ought to stick to
the regulations of the company. All the staffs have to be responsible for their undertakings. It is
essential for all the department of the corporation to be responsible, and this will enhance the levels
of operational competence (Hohpe & Woolf 2004). With exceptional levels of cleanliness, high
worker competence, and responsibility at all stages of Starbucks Coffee will be undertake
successfully.

Starbucks Coffee is able to enjoy great profitability levels at the end of the accounting duration. On
top of this, the corporation has robust resources that can make it easy enlarge and expand its
commodities (Hess 2010). Apt use of resources is mandatory in any corporation incorporating
Starbucks Coffee. The corporations staffs ought not to waste time, and they need to focus on
corporation duty always and not personal work (Ference & Thurman 2009). Additionally, there ought
to be great understanding when it comes to distribution of money to numerous corporation projects.
Apt use of the corporations funds will enhance the facets of operational administration. Starbucks
management has to enhance decency and honesty in the use of all its commodities, and this will
guarantee that the corporation has turned out to be operationally established (Doole & Lowe 2008).

The business has to follow the prevalent circumstances in the market. The numerous clients may
choose either medium or light roasts. If Starbucks utilizes dark roasts, the outcome might be harmful
to the corporation (Chaston 2009). The tastes and preferences of the clients are essential in any
market segment. It is the administrations role to figure out the phases of customer gratification. On
top of this, the management ought to find the facets of the competitive setting (Doole & Lowe 2008).
The management ought to be well versed with the rivals strategies. For instance, if Stump town
utilizes light roasts and it is effective, Starbucks ought to focuses on doing the same. Reviewing the
rival is obligatory in ascertaining more on aspects of a market Chaston 2009). So as for Starbucks to
be operationally competent, it has to figure out the aspects of the market always.
Starbucks Coffee has to take care of the bearable needs of the corporation always. Administration
has to make sure that it guarantees that it protects the future of the corporation (Ference & Thurman
2009). The stock management systems ought to at all-time match with high levels of operational
efficacy. Any business with rickety suppliers fails to achieve its set objectives. On top of this,
Starbucks Coffee has to undertake a SWOT analysis always (Hess 2010). The corporation ought to
make sure that the strengths and opportunities act as its merits. The core goal of any corporation is
to get high profitability levels, and this is easy to achieve if Starbucks makes use of its strengths and
opportunities (Hohpe & Woolf 2004). The company has to shun its weak points and all the dangers it
faces. This will guarantee that the corporation safeguards its future and this will aid in the procedure
of finding out the sustainability needs.

The central activity at Starbucks is the production of beverages. This area shall look at the brewing
process of coffee. The numerous kinds of coffee incorporate cappuccino, espresso, caramel
macchiato, and mocha chino (Michelli 2007). As displayed in figure 3 coffee has to undertake a
number of procedures prior to being available to the client. The commodity growth incorporates
creating recipes that will be usable in the coffee brewing procedure. On top of this, this phase finds
out that the commodity is planned for production is practical as well as cost-effective (Noe 2010).
The bean and ingredient picking incorporates getting the coffee beans from the marketing importers
and boards. This procedure has to figure out that the quality of coffee beans is satisfactory. If the
quality of the coffee beans is unsuitable, the effect on the last cup of coffee will be adverse (Pham-
Gia 2009). The distribution systems have to take care of the steady supply of coffee beans to the
retail stores and restaurants. As soon as the retail stores get the coffee beans they undertake the
roasting, brewing and grinding procedures. These retail stores then unleash the last cup to the
customers.

Figure 4 shows the suggested procedures that will link well with the coffee production practice. Along
with the commodity growth, and bean selection there is the facet of international growth. The
purpose of international growth is to ensure that the coffee at Starbucks is acquiescent with the
applicable standards (Schultz & Gordon 2011). Products have to be consistent with the set industrial
rules. This will play the helpful role in the practices of diversification as well as expansion. The other
advancement to the primary process is the unveiling of the facets of cloud computing. The launching
of instant coffee online is important in the production practice (Schultz & Yang 2007). VIA is the latest
trend in the coffee sector, and Starbucks management ought not to hesitate in endorsing it.

The use of mobile applications restores the production procedure. Via mobile applications, the
corporation is can interact with the clients openly (Noe 2010). Administration can utilize mobile
applications to get the clients viewpoints regarding the operational efficiency of the corporation. On
top of this, the quality of the last cup of coffee will enhance if only the clients are contented (Hess
2010). In summary, the operational competence of the corporation has to include falling in line with
the market trends, fruitful utilization of available commodities, and establishment of the facets of
sustainability. In addition, it is essential for Starbucks to include the facets of the latest trends in its
processing undertakings. High echelons of operational efficacy will make sure Starbucks prospers
always.
References
CHASTON, I. (2009). Entrepreneurial management in small firms. Los Angeles, SAGE.
http://public.eblib.com/EBLPublic/PublicView.do?ptiID=635490.
DOOLE, I., & LOWE, R. (2008). International marketing strategy: analysis, development and
implementation. London, Cengage Learning.
FERENCE, T. P., & THURMAN, P. W. (2009). MBA fundamentals: strategy. New York, Kaplan
Pub.
HESS, E. D. (2010). Smart growth: building an enduring business by managing the risks of
growth. New York, Columbia Business School Publishing.
HOHPE, G., & WOOLF, B. (2004). Enterprise integration patterns: designing, building, and
deploying messaging solutions. Boston, Addison-Wesley.
MICHELLI, J. A. (2007). The Starbucks experience: 5 principles for turning ordinary into
extraordinary. Maidenhead, McGraw-Hill.
NOE, R. A. (2010). Employee training and development. New York, McGraw-Hill Irwin.
PHAM-GIA, K. (2009). Marketing strategy of Starbucks Coffe. Munchen, GRIN Verlag GmbH.
http://nbn-resolving.de/urn:nbn:de:101:1-201009102339.
SCHULTZ, H., & GORDON, J. (2011). Onward: how Starbucks fought for its life without losing
its soul. West Sussex [England], Wiley & Sons.
SCHULTZ, H., & YANG, D. J. (2007). Pour your heart into it how Starbucks built a company one
cup at a time. New York, NY, Hyperion.
Appendix
Customer
Figure 1: Different Functions and the Map of their
Relationship in Starbucks Coffee

Retail

Outlet

Cafes & Restaurants

Distributor

Roaster

Importer Broker

Mill Owner
Cooperative
Marketing Board

Private

Exporter

LEGAL &COPERATEAFFAIR

Figure 2: Starbucks Organizational Chart

Figure 3: Starbucks Initial Coffee processing chart

Figure 4: Starbucks Recommended Coffee Processing Chart

Ch. 5 Strategic Capacity Planning for Products
and Services
Edit 0 153

Chapter 5
This chapter examines how important strategic capacity planning is for products and services. The overall
objective of strategic capacity planning is to reach an optimal level where production capabilities meet
demand. Capacity needs include equipment, space, and employee skills. If production capabilities are not
meeting demand, high costs, strains on resources, and customer loss may result. It is important to note
that capacity planning has many long term concerns given the long term commitment of resources.

Managers should recognize the broader effects capacity decisions have on the entire organization.
Common strategies include leading capacity, where capacity is increased to meet expected demand,
and following capacity, where companies wait for demand increases before expanding capabilities. A
third approach is tracking capacity which adds incremental capacity over time to meet demand.

Finally, The two most useful functions of capacity planning are design capacity and effective
capacity. Design capacity refers to the maximum designed service capacity or output rate and
the effective capacity is the design capacity minus personal and other allowances. These two functions
of capacity can be used to find the efficiency and utilization. These are calculated by the formulas below:

Efficiency = Actual Output/ Effective Capacity x 100%

Utilization = Actual Output/ Design Capacity x 100%

--
Chapter 5 Strategic Capacity Planning for Products and Services

Capacity refers to a system's potential for producing goods or delivering services over a specified time
interval. Capacity planning involves long-term and short term considerations. Long-term considerations
relate to the overall level of capacity; short-term considerations relate to variations in capacity
requirements due to seasonal, random, and irregular fluctuations in demand.

Excess capacity arises when actual production is less than what is achievable or optimal for a firm. This
often means that the demand in the market for the product is below what the firm could potentially supply
to the market. Excess capacity is inefficient and will cause manufacturers to incur extra costs or lose
market share. Capacity can be broken down in two categories: Design Capacity and Effective
Capacity: refers to the maximum designed service capacity or output rate. Effective capacity is design
 capacity minus personal and other allowances. Product and service factors effect capacity tremendously.

Chapter 5 focuses on capacity planning for products and services. Capacity is the ability of a systems
potential for producing goods or delivering services over a specific time interval. The capacity decisions
within a company are very important because they help determine the limit of output and provide a major
insight to determining operating costs. Basic decisions about capacity often have long term
consequences and this chapter explains the ramifications of those choices. When considering capacity
planning within a company, three key inputs should be considered. The three inputs are the kind of
capacity to be determined, how much of the products will be needed, and when will the product be
needed.

The most important concept of capacity planning is to find a medium between long term supply and
capabilities of an organization and the predicted level of long term demand. Organizations also have to
plan for actual changes in capacity, changes in consumer wants and demand, technology and even the
environment. When evaluating alternatives in capacity planning, managers have to consider qualitative
and quantitative aspects of the business. These aspects involve economic factors, public opinions,
personal preferences of managers.

This chapter describes capacity planning as a key factor in designing systems. The capacity decision is
strategic and long-term in nature. Capacity planning is described as matching the capabilities of an
organization with the predicted level of future demand. Many organizations become involved with capacity
planning due to changes in demand, technology, the environment, etc. Organizations have capacities or
limits that their system can handle.

Three key inputs to capacity planning:

1. The kind of capacity that will be needed
2. How much capacity will be needed
3. When will it be needed
*Accurate forecasts are critical to the planning process

Defining And Measuring Capacity

When selecting a measure of capacity, it is best to choose one that doesn't need updating. When dealing
with more than one product, it is best to measure capacity in terms of each product. For example, the
capacity of a firm is to either produce 100 microwaves or 75 refrigerators. This is less confusing than just
saying the capacity is 100 or 75. Another method of
measuring capacity is by referring to the availability of inputs. Note that one specific measure of capacity
can't be used in all situations; it needs to tailored to the specific situation at hand.

Determinants of Effective Capacity

Facilities: The size and provision for expansion are key in the design of facilities. Other facility
factors include locational factors (transportation costs, distance to market, labor supply, energy sources).
The layout of the work area can determine how smoothly work can be performed.

Product and Service Factors: The more uniform the output, the more opportunities there are for
standardization of methods and materials. This leads to greater capacity.
 Process Factors: Quantity capability is an important determinant of capacity, but so is output
quality. If the quality does not meet standards, then output rate decreases because of need of inspection
and rework activities. Process improvements that increase quality and productivity can result in increased
capacity. Another process factor to consider is the time it takes to change over equipment settings for
different products or services.

Human Factors: the tasks that are needed in certain jobs, the array of activities involved and the
training, skill, and experience required to perform a job all affect the potential and actual output. Employee
motivation, absenteeism, and labor turnover all affect the output rate as well.

Policy Factors: Management policy can affect capacity by allowing or not allowing capacity
options such as overtime or second or third shifts

Operational Factors: Scheduling problems may occur when an organization has differences in
equipment capabilities among different pieces of equipment or differences in job requirements. Other
areas of impact on effective capacity include inventory stocking decisions, late deliveries, purchasing
requirements, acceptability of purchased materials and parts, and quality inspection and control
procedures.

Supply Chain Factors: Questions include: What impact will the changes have on suppliers,
warehousing, transportation, and distributors? If capacity will be increased, will these elements of the
supply chain be able to handle the increase? If capacity is to be decreased, what impact will the loss of
business have on these elements of the supply chain?

External Factors: Minimum quality and performance standards can restrict management's
options for increasing and using capacity.

Inadequate planning can be a major limiting determining of effective capacity.

The most important parts of effective capacity are process and human factors. Process factors must be
efficient and must operate smoothly, if not the rate of output will dramatically decrease. Human factors
must be trained well and have experience, they must be motivated and have a low absenteeism and labor
turnover. In resolving constraint issues, all possible alternative solutions must be evaluated. This is
possible by using CVP analysis and the Break-Even Point formula.