Starbucks

Geoffrey Ho
Rujuta Narweker
Mamta Patel
Christina Ratusznik
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:
Dreyers 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 caf 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,
Starbucks 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
worlds 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