Starbucks Coffee Company’s business success is linked to the proper application of the 10 decisions of operations management (OM). These 10 decisions refer to the different areas of operations where the firm’s management must address specific business objectives. As a global business, Starbucks addresses these 10 decisions of operations management through different approaches and policies. For instance, the company applies its Coffee and Farmer Equity program in supply chain management. Starbucks cafés also exhibit the firm’s organizational culture as a way of optimizing quality of service. Thus, Starbucks has integrated strategies for streamlining the 10 decisions of operations management.
Starbucks Coffee’s business fulfills the 10 decisions of operations management through varying strategic initiatives for productivity and management in all areas of the organization.
Starbucks Coffee’s Operations Management, 10 Decision Areas
1. Design of Goods and Services. Starbucks emphasizes premium design for its goods and services. The premium character is linked to the company’s broad differentiation generic strategy, along with its premium pricing strategy. Other firms, such as manufacturers, are also involved in the design of some goods like Starbucks mugs. In this decision area of operations management, Starbucks ensures that its goods and services reflect the firm’s high-end brand image.
2. Quality Management. Starbucks also uses the premium character in quality management. For instance, the company carefully sources its coffee beans from coffee farmers who comply with Starbucks quality standards. The firm also prefers to buy coffee from farmers certified under the Starbucks Coffee and Farmer Equity (CAFE) program. Premium quality service is ensured through servant leadership and a warm friendly culture. In this decision area of operations management, Starbucks implements high quality to align with the firm’s premium brand image.
3. Process and Capacity Design. Process and capacity efficiency is one of the contributors to Starbucks’ success. The company’s processes are highly efficient, as observable in its cafés. Also, Starbucks optimizes capacity and capacity utilization by designing processes to meet fluctuations in demand. For example, processes at the firm’s cafés are flexible to adjust personnel to a sudden increase in demand during peak hours. In this decision area of operations management, Starbucks aims to maximize cost-effectiveness though efficiency of workflows and processes.
4. Location Strategy. Starbucks’ location strategy focuses on urban centers, especially those with large middle and upper class populations. Most of its cafés are in densely populated areas. Also, Starbucks occasionally uses strategic clustering of cafés in the same geographic area to gain market share and drive competitors away. This decision area of operations management shows that Starbucks emphasizes areas with affluent consumers who could afford its premium priced products.
5. Layout Design and Strategy. The layout design of Starbucks cafés maximizes workflow efficiency. It also supports a warm and friendly ambiance to match the company’s organizational culture. This layout strategy does not maximize space utilization for tables and seats because Starbucks’ focus is on premium customer experience, which involves higher prices for more leg space in the cafés. In this decision area of operations management, Starbucks prioritizes customer experience over space utilization.
6. Job Design and Human Resources. Starbucks’ human resource management integrates organizational culture in all areas of the business. This organizational culture involves the employees-first attitude that cares for Starbucks workers. Also, at the cafés, the company uses work teams of baristas. In other parts of the organization, Starbucks uses functional positions, such as HRM positions and inventory management positions, with less emphasis on work teams. In this decision area of operations management, the focus is on ensuring that the Starbucks culture is woven into every job, while satisfying basics on technical specifics of tasks.
7. Supply Chain Management. Starbucks Coffee’s supply chain is global, although majority of the company’s coffee beans come from farmers in developing countries. The company’s strategy for its supply chain involves diversification of suppliers to ensure stability of supply. Starbucks also uses its Coffee and Farmer Equity (CAFE) program to select and prioritize suppliers. This program uses criteria for ethical practices, including emphasis on sustainability. Thus, in this decision area of operations management, Starbucks integrates ethics and corporate social responsibility with supply chain efficiency.
8. Inventory Management. Inventory management at Starbucks is linked with the firm’s supply chain and various facilities. At the cafés, inventory management involves office automation and manual monitoring. In Starbucks’ supply hubs, automation is more comprehensively used. The company aims to minimize stockout and ensure continuous supply of coffee beans to its cafés. Starbucks addresses this decision area of operations management by focusing on supply adequacy and automation.
9. Scheduling. Starbucks uses automated and manual scheduling approaches for its various business activities. The company also applies flexible schedules for management personnel. This decision area of operations management relates with Starbucks in terms of the firm’s objective of streamlining processes, while allowing some degree of flexibility among management positions in the organization.
10. Maintenance. Starbucks maintains its physical assets through dedicated teams of employees trained for maintaining facilities and equipment, as well as third parties that offer maintenance services. These third parties include local businesses that provide equipment tune-ups for Starbucks cafés. In addition, the company maintains its human resource capacity through training and retention strategies that include relatively high compensation. Thus, Starbucks addresses this decision area of operations management through the involvement of café personnel, dedicated maintenance teams, and third-party service providers.
Productivity of Starbucks Coffee
Starbucks’ operations management use various productivity criteria based on the area of operations. Some notable productivity measures in the company are as follows:
- Average order filling duration (Starbucks café productivity)
- Weight of coffee beans processed per time (roasting plant productivity)
- Equipment repair duration (maintenance productivity)
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