Article

The article that I chose to write is about the Starbucks, because I’m a heavy coffee drinker and I prefer my coffee from Starbucks. Starbucks have 16,700 retail stores around nation and been served almost 50 million customers in 51 different countries. Starbucks operational costs were increasing while the sales were dropping in 2008. This was the one thing that is flaw toward Starbucks operation, where the service relationship has been lacking something. Starbucks has been a successful company, because of the supply chain has focused on opening stores in different nation.

Starbucks decided to restructure its supply chain by reorganizing, reducing its costs, and laying the foundation for future supply chain. Vice president of Starbucks paid visit to many retail stores to oversee the operation. He learned how they achieves balance and cost performance and the ways to improve it’s operation. Top management decided to reorganize the supply chain of Starbucks. VP realized that outsourcing has been a problem, because it has led to cost inflation while opening stores out of states. He submit the proposal to his leadership team where he wants to simplify its structure and defining it’s functional roles.

Gibbons who is the V.P begin to reorganize company’s supply chain organization. The supply chain function includes plan, make, source and deliver. He assure that each functions are conducted by specific groups.

Then they focused on reducing costs and improving efficiencies, after reorganizing the supply chain. The sourcing group identified the cost drivers are the reason for prices to increase, later they built effective cost models where they able to benchmark the ingredients. They began to break the ingredient rather than pricing and concludes that contracts and shipping prices were too high. They found out that the opening another coffee plant could reduce the timing and transportation cost, eventually they did opened 4th coffee plant in U.S....