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Case study – Operation Management Transformation

ABSTRACT

US-based coffee company and coffeehouse chain Starbucks Corporation (Starbucks) was popular for giving

its customers a highly enjoyable experience through its hand crafted cold and hot beverages. The coffee

company, spread out globally, sourced its supplies from different corners of the world and offered

customers what was known as the unique Starbucks Experience. Every customer who visited Starbucks

in any of its stores in 76 countries enjoyed a similar experience of great coffee and service, thanks to its

highly agile supply chain.

In 2008, after a wave of rapid expansion, Starbucks witnessed a downturn in its fortunes. On examining the

reasons, Starbucks found out that its existing supply chain was unable to cope with the massive development

and needed an overhaul. Starbucks then went about eliminating the complex procurement, transportation,

warehousing, and distribution systems and substituting it with highly responsive systems, which made

Starbucks a company with the most admired and efficient supply chain in the world.

The operations are described in detail along with different types of coffee and how Starbucks procured the

best coffee in the world and how it was processed and sent to stores across the world to give customers the

Starbucks Experience in each of its more than 20,000 stores.

The case also details the rapid expansion of Starbucks, which came to a halt in 2007. The main reason for

this was said to the economic recession in the US. Howard Schultz, who was instrumental in the expansion

and growth of Starbucks, returned to the company (which he had left in 2000). He started looking at the

main reasons for the problems and found that one of the most important factors was the supply chain, which

was unable to keep pace with the companys growth. The case ends with Schultz looking for massive

changes in the supply chain to support growth Case (B) deals with the supply chain transformation initiated

in the company by Schultz with Peter D. Gibbons, Vice President of global supply chain operations.

Gibbons started the process by studying the existing supply chains, and its ability to serve the stores. He

also found that the supply chain was inadequate, poorly manned, expensive to run, and most of all, unable

to provide customers what they wanted on time.

The huge system that was spread across continents, included coffee, milk, other items like cups, furniture,

machines, distribution centers, and warehouses. He planned to integrate all these into a global logistics

system. The case then describes the steps initiated to bring about changes in the system, the results, and the

impact these changes had on Starbucks.

Questions (2*10= 20 marks)

1. 2. What are the changes initiated by organization in 2008 and how it impacted the others?

What are the transformative nature roles played by managers in making changes and what are its

effect?

Answer should be approximately 1,500 to 2,000 words

(NB: case will be evaluated based on CASE STUDY GRADING RUBRIC