Coffee colossus Starbucks has developed a supply chain that spans 19 countries and funnels everything from cups to coffee beans into nearly 20,000 retail stores worldwide, all while maintaining the corporate commitment to green and sustainable practices.
Tapping resources from around the globe makes it easier for the company to expand and reach more customers. Yet Starbucks maintains only six centers where all raw materials are sent to be roasted and packaged for delivery.
The roasting, manufacturing and packing are done exactly the same in each process center.
The Starbucks supply chain operates on an integrated make-to-stock supply model, focusing on tracking demand in real time to meet the requirements of several different distribution channels. Starbucks uses Oracle’s automated information system for manufacturing, GEMMS, to monitor real-time demand, allowing production plans and schedules to be developed and modified as needed. To coordinate supply levels with multiple distribution channels, the company must have access to constantly updated information detailing demand, inventory, storage capacity, transportation scheduling and more to keep things running smoothly.
The company is streamlined logistically across six continents. Materials are housed in regional distribution centers which range from 200,000 to 300,000 square feet in size.
Starbucks runs five distribution centers in the U.S. Two are company owned while the others are operated by third party logistics companies (3PLs).
Offshore distribution centers, two in Europe and two in Asia, managed by the 3PLs.
Starbucks evaluates its supply chain efficiency with a simple scorecard system at the warehouse level and focuses on four high level categories across the global supply chain:
The company strives to reduce operating costs and improve execution.
Starbucks tries to balance supply chain demands with its green and sustainable corporate practices, which include maintaining quality while buying responsibly grown and ethically traded coffee. The company’s efforts include responsible coffee purchasing practices, providing farmer support centers, farmer loan programs and forest conservation.
The company also sets social responsibility standards for its suppliers and works with suppliers to improve business practices. If problems arise with a supplier, Starbucks will stop doing business with it until problems are resolved.
In 2015, Starbucks achieved a milestone of 99% ethically sourced coffee through its partnership with Conservation International. Conservation International is an American nonprofit environmental organization. It’s a result of Starbucks’ 15-year journey to embed sustainable practices in its sourcing structure.
Starbucks has invested more than $70 million in its quest for ethical sourcing supporting coffee farming communities, reducing climate change impact and continued support of farm sustainability.
Established in 2004, the company’s Coffee and Farmer Equity (C.A.F.E.) is a set of sustainability standards established for the coffee industry and verified by third-party experts. The standards help farmers grow coffee in ways that are better for both people and the planet.
C.A.F.E practices include key guidelines for farmers in four areas:
The company purchased a farm in Costa Rica two years ago for research and development. It is an operational coffee farm to help continue to develop sustainable farming practices.
Starbucks has an open source approach to its research and developments. It shares its discoveries and best practices to help all producers and competitors make long-term sustainable improvements of their farms. They strive to improve the program by working with Conservation International to measure the true impact purchasing programs have on participating farmers and producers.
Developing these standards allows the company to ensure its products are sourced according to company guidelines and provides information to improve the supply chain verification program. Many companies develop supplier certification standards but Starbucks has created a method that can determine if the investment in the program yields results.
The knowledge and skills gained through an advanced supply chain management certificate can benefit anyone involved in supply chain management from professionals handling logistics, procurement and planning to executives responsible for overseeing all aspects of supply chain management.