The

Operational
Managemen
t
Strategies
and
Proposal for
additional
strategy
and change
of some old
strategy in
the
Production

Submitted to: Professor Germila Tabigne

Submitted by: Renelyn Gonzales

of

STARBUCKS
Corporation

Backgrou
nd Starbucks is

an American global coffee company and coffeehouse

chain based
in
Seattle, Washington.
Starbucks
is
the
largest coffeehouse company in the world ahead of UK rival Costa Coffee,
with 20,737 stores in 63 countries and territories, including 11,910 in
the United States, 1,496 in China, 1,442 in Canada, 1,052 in Japan and 772
in the United Kingdom.
Starbucks locations serve hot and cold beverages, whole-bean coffee, micro
ground instant coffee, full-leaf teas, pastries, and snacks. Most stores also
sell pre-packaged food items, hot and cold sandwiches, and items such as
mugs and tumblers. Starbucks Evenings locations also offer a variety
of beers, wines, and appetizers after 4pm. Through the Starbucks
Entertainment division and Hear Music brand, the company also markets
books, music, and film. Many of the company's products are seasonal or
specific to the locality of the store. Starbucks-brand ice cream and coffee
are also offered at grocery stores.

Log
o
The logo in is a siren who is a storyteller,
carrying the lore of Starbucks ahead, and
remembering our past. In a lot of ways, shes a
muse always there, inspiring us and pushing
us ahead.
And shes a promise too, inviting all of us to
find what were looking for, even if its
something we havent even imagined yet.

Produc
ts
Starbucks Corporation offers coffee products and caf services
throughout the world. It sells high-quality whole bean coffees (from
around the world) along with other types of freshly brewed coffees,
premium teas and espresso beverages, hot and cold. It also offers
various sodas and juices, pastries and confectionery, coffee-related
accessories such as the Starbucks mugs, and other caf related products
such as the Starbucks CD. Starbucks sells its special products through its
company-operated retail stores, warehouse club chains, office coffee
distributors, institutional foodservices such as hotels and airlines, mailorder catalogs, and through its electronic store.

Missi
on

Company Mission Statement:

Establish Starbucks as the premier purveyor of the finest coffee in
the world while maintaining our uncompromising principles while we
grow.

Environmental Mission Statement:

Starbucks is committed to a role of environmental leadership in all
facets of our business.

Goals:

Building a Company with Soul.

Opposing Franchising because of Quality Control and Culture.

Only selling coffee beans without artificial flavors.

Satisfy customers by all means.

Employees contributio-n and involvement in making Starbucks a

better company.

The Operation Strategy of

Starbucks
Modules combined for many output options (many cup types &
same cap type)
Repetitive operations
Just-in-Time inventory
Fixed, well-known costs, due to experience
Specialized equipment (coffee machines, customized blenders,
etc.)
Well-trained staff (Starbucks policy to train coffee specialists)

Repetitive Focused
Strategy for
Frappuccino/Milkshakes
Repetitive Focused Strategy is an intersection between Process
Focused Strategy and Product Focused Strategy; hence it incorporates
advantages of the two. The process maximizes customer value as perceived
by the customer by incorporating House of Quality tool in the design
process.

Just-in-Time Inventory
Management
JIT is an inventory management that means all the goods that are
available to sell in the warehouse is being used.

My Propose Operation Strategy for

Production
Recommendation
The following are recommendations to further improve operations at
Starbucks retail stores:

Offer more types of roasted coffee after noon.

Develop other light roast coffees that will bring in customers that
normally avoid Starbucks because of the bitter taste of the coffee.
Offer more types of healthy pastries or light sandwiches.
Used a MRP strategy for the production of Starbucks.

MRP
Material requirements planning (MRP) is a computer-based inventory
management system designed to assist production managers in scheduling
and placing orders for items of dependent demand. Dependent demand items
are components of finished goodssuch as raw materials, component parts,
and subassembliesfor which the amount of inventory needed depends on
the level of production of the final product.
The information input into MRP systems comes from three main sources: a bill
of materials, a master schedule, and an inventory records file. The bill of

materials is a listing of all the raw materials, component parts, subassemblies,

and assemblies required to produce one unit of a specific finished product.
I suggest that Starbucks can use SAP as their system which is an industry
specific application software from the software vendor SAP AG and is focused
on the global retailing.
Dimension: Objective specifics
Inventory:

Order the right ingradients

Order the right quantity
Order at the right time

Priorities:

Order with the right due date

Keep the due date valid

Forecasting

Since I am suggesting that the Starbucks should use the MRP and SAP as
their system, they will have an easy way to record and compute the daily
demand of their products every day, week, or month. And this could be
helpful as they can use it as intelligent information that they can use in
forecasting future demands.
They can use specific forecasting techniques like use of Exponential
Smoothing.
Ft = Ft-1 + [At-1 Ft-1]
Where:
Ft = the new forecast or forecast for period
Ft-1 = the previous forecast
= smoothing constant
At-1= actual demand or sales for period

For example we will make an exponential smoothing for the previous 10 months
sales or demand in Starbucks with the use of a smoothing factor of 0.10
PERIOD
(month)
1
2
3
4
5
6
7
8
9
10
11

ACTUAL
DEMAND
50
52
48
51
50
54
52
50
55
53

FORECAST

ERRO
R

Exponential Smoothing is the forecasting

method of choice.

50.00
50.20
49.98
50.08
50.07
50.46
50.61
50.55
51
51.20

Provides more accurate results

Easy to use and requires little
computation

2
-2.2
1.02
0.08
3.93
1.54
-0.61
4.45
2

Starbucks should
distribution center

consolidate

to

Uniform Date
Lower Maintenance Cost

56
54
52
Demand

50

Forecast
Error

48
46
44
1

10

11

single

Other
Suggestions

Thank
You