INTRODUCTIONStarbucks Corporation is an American Coffee Company and Coffeehouse Chain, founded in Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowlker, from University of San Francisco. As of 2018, it has 28,218 locations worldwide.The first Starbucks store was located in Seattle at Western Avenue from 1971–1976.
This cafe was later moved to 1912 Pike Place; never to be relocated again. During this time, the company only sold roasted whole coffee beans and did not yet brew coffee to sell. The only brewed coffee served in the store were free samples. During their first year of operation, they purchased green coffee beans from Peet’s, then began buying directly from growers.CHALLENGESOperations management concentrates on managing process.
Operations management will concern about the cost of ingredients, labour requirements and customer satisfaction. Capacity, Quality, Queuing and Variability were the main objects of operations management. Capacity dealt with managing the inventories and identifying the number of customers that may turn-up and is one of the primary challenges. Identifying the supply and demand helps in managing the inventories and the stocks.Quality is subjective and is difficult to define.
The competition in the market became fierce in the recent days. Queuing is another important facet which deals with the Opportunity costs because inefficient Queue management may trouble the customer and make him leave. This will impact the Customer Lifetime Value that he might contribute to StarbucksVariability is the variety produced and the challenge is to identify, which products perform best and worst.SOLUTIONS Capacity management begins with defining products based on forecasting of market demands and customer’s purchase orders.
With the help of computer to calculate the needed amount and time, it can clarify the schedule. It designed thousand dollars consumption algorithm model to calculate the safety material consumption for next week. This is used for the short-term forecast of the material consumption. It calculates the safety material consumption by multiplying the next week forecasted sales by 1.15.
This repeats for every week. This is maintained as a safe storage amount. They expect the sales to be a smooth rising curve. Quality is a combination of customer’s view of perceiving the brand, customer’s taste preferences, quality of service offered etc. Customers care more about the things they experienced in the current hospitality industry. Total Quality management (TQM) concentrates its attention on product and service quality together with the degree of devotion of members.
It concerns about 1 process, 4 stages and 8 sections. As for one of the process of Starbucks, the enterprise is ought to meet the different working tasks during different time periods. Example: Quality of the beverage is evaluated based on 3 important parameters such as look of the beverage, temperature and taste factors. According to Total Quality Management is follows a PDCA cycle – Planning, Doing, Checking and Acting. These four plays an important impact in final results.
Service quality depends on the gap between aspiration level of guests and actual service they experience. Queuing theory is an important part of operations management, it is an effective tool. The most common discipline followed is FIFO (First in First Out) also known as FCFS (First Come First Serve) basis in managerial terms. Queuing cost is one which Starbucks tackled effectively.
It introduced innovative methods in maintaining the costs. In every Starbucks store there will be senior partner whose work will be to manage the queue or ensure the work of the store excluding the sales-person. Their primary task is to make better customer experiences. They would be involved in a chat with customers by asking their customization to their food or drink. Also, they use this time to introduce some of the new offerings that the store provides which are thoughtfully placed beside the queue lines.
The overall job is to distract customer’s attention. Also, the sales-person can introduce the memberships of Starbucks at this point of time. Queuing also incorporates the drink preparation timings such as 1st quality takes 45 seconds; 2nd quality takes 37 seconds; 3rd quality takes 30 seconds and 4th quality takes 26 seconds to prepare on an average. Temperature maintenance and Take-away coffee mugs are quite and impactful ideas, where the temperature of the cold drinks and hot drinks are maintained as they offer different kind of takeaway mugs for different temperature which helps to preserve the temperature for quite a long time than usual.
RECENT HAPPENINGS Seasonality is one important factor that Starbucks consider by offering the customers seasonal flavoured products such as highly popular pumpkin spiced latte, where the raw materials are directly bought from various parts of the world through ships. They also make innovative products like unicorn Frappuccino and recently have introduced clover coffee machines which makes espresso, which connects to cloud to track customer’s preferences which are stored. Starbucks uses advanced technologies to meet customer’s preferences.
SIGNIFICANCE/ LEARNING Starbucks follows various operational strategies and have implemented successful techniques to improve the operational efficiency and customer experiences. All these are because of successful brand image created through marketing and the operational efficiency they maintain their products through quality. I presume that it will very soon create a recommendation engine based on user’s preferences which would improve the quality of operation by a rich prediction model that could forecast the supply and demand for the food and drink offered Year-on-Year and across seasons.