“

To inspire and nurture the human

spirit – one person, one cup and one

”
neighborhood at a time.

A Purchasing approach on
Starbucks
Arvin Takshan
Dyaz Chaimae
Sudharshan
Suhas
Yea All know The Starbuck but how?
Introduction

Your Date Your Footer Here 2

History of Starbuck – 4 segments
Bags of Beans : The Tall Age :

1971 - 1987 1988 - 1995

The Grande Age : The Venti Age :

1996 - 2002 2003 - 2010

Your Date Your Footer Here 3

 It is not uncommon for departments, during this process, to identify potential
efficiencies and cost savings that could be implemented with little or no
investment
Internal Needs
m es
o f cofe
e
l volu r
l i t y l a
Qua s within vera er ye
bean ucks O p
Starb

Technical
Volume
specifications
Forecast
of cofee beans

Locations of Starbucks
Starbucks’s Global Supply
suppliers Chain

Point System

5/25/19 4
Quality of coffee beans in Starbucks
Quality Criteria: Prerequisite Verification : Prerequisite

Chart Title

9
Hard bean /acidity

8 Afordable
Flexible
Only Arabica

7
zero defects

6
Accessible
5
4
3
2 Starbucks Green Cofee
Purchasing Program
1
0
Qualifying Flavor Defect-free
varieties characteristics beans
Column1 Series 2 Series 3

5/25/19 5
Quality of coffee beans in Starbucks
Environmental Impacts: 50 points Social Conditions: 30 points

Wages
Living
Healthconditions
and
and benefits
safety

Waste
Clean
Water
Pest management
water
bufer
management
zone
Forest and biodiversity
Energy
Use use
conservation
of shade

Economic Issues: 20 points

Transparency
from supplier
to farm level
5/25/19 6
Overall volumes of coffee beans per year

*starbucks.com/responsibility/global-report/ethical-sourcing/
5/25/19 coffee-purchasing 7
Locations of coffee beans suppliers
worldwide

*Killeen, T. and Harper, G. (2016). Coffee in the 21st century.

5/25/19 Will climate change and increased demand lead to new 8
deforestation? Conservation International.
Locations of Starbucks’s suppliers

Originally published by
5/25/19 Operations Management: Everyday Challenges and Opportuniti 9
es
.
Volume Forecast
• Between 2012 and 2017, cofee consumption and
production increased by an average of 2% per year.

• Consumption levels are rising outside the traditional EU

and USA markets, especially in Southeast Asia.

• If this pace of growth continues, the cofee sector will need

300 million bags of cofee by 2050, which means doubling
or even tripling the current annual world production.

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Technical specifications of coffee beans

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5/25/19 12
Market analysis:

PESTEL Analysis Day-1: Power balance Market trends and risks

5/25/19 13
PESTEL Analysis

P E

PESTEL
E Analysis S

L T

5/25/19 14
Day-1: Power balance
NUMBER OF SUPPLIERS
MORE THAN ONE

TAILORED GENERIC

CUSTOM PROPRIETARY
ONE

ONE MORE THAN ONE

5/25/19 NUMBER OF CUSTOMERS 15

Market trends

• Today’s cofee trends include:

 Premiumization,
 Convenience,
 Customization,
 Single origin, and wide-ranging roast types.

• Market research has indicated that consumers –

particularly in North America and Western Europe – look
for aspects like ethical sourcing, sustainability and
certification.

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Risks of coffee beans market:
• Climate change and deforestation
• Conversion of primary forest habitat
• Loss of biodiversity and habitat destruction
• Oil erosion and degradation
• Agrochemical use and runof
• Degradation of water quality and supply
• Limited waste water management – eutrophication - cofee
pests and tree diseases – mono-culture sun cropping

5/25/19 17
SOURCING GROUP
POSITIONING MATRIX

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 HEXAGON ANALYSIS
CREATE AN ADVANTAGE
• PRODUCT SPECIFICATION IMPROVEMENT
Change to sustainable grown ARABICA cofee beans
for better taste and quality
• JOINT PROCESS IMPROVEMENT
Develop long-term contracts with farmers and
suppliers who grow their beans under the C.A.F.E
practice guidelines
Working hand in hand with the suppliers to reduce
cost and improve quality
• RELATIONSHIP RESTRUCTURING
Develop strategic alliance with the top suppliers
Sharing benefits, Technology and core ideologies with
the suppliers

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5/25/19 20
 C.A.F.E PRACTICE
Product Quality Economic
(requirement) Accountability
(requirement)

Social
Environmental
Responsibility
Leadership (third-
(third-party
party verifiers)
verifiers)

5/25/19 21
GOALS AND ACHIEVEMENTS UNDER
C.A.F.E PRACTICES

5/25/19 22
 • BUILDING
RELATIONSHI
P WITH
FARMERS

USING FIXED CONTRIBUTIN

PRICE G TO
COMMITMENT SUSTAINBALIT
Y

PROMOTING
COFFE
CULTIVATION
METHOD

5/25/19 23
5/25/19 24
5/25/19 25
5/25/19 26
Supplier Guidance Supplier Guidance
Global Global
Requirements
Expectations
Service orientation
Supplier Code and Conduct
Supplier
Technology Guidance
Supplier’s status & conduct Business stability

Quality Supplier security protocol

General policies
Production location security
Business process and procedures Global
Business continuity planning References
Packing and shipping requirements
Transportation Business courtesies
Shipment documentation
Conflict of interest
Customs and import clearance
Carriers and Shipping modes Business process and procedures

Delivery appointments – Supplier-

Managed freight
Supplier performance – Packing &
Shipping requirements

5/25/19 27