Starbucks Essay -- Business, Supply Chain, Coffee Company

In a supply chain, distribution means the steps required to move and store a product from supplier stage to customer stage. It is an important driver for overall profitability of a company because it affects both the supply chain cost and the customer experience directly. (Chopra and Meindl, 2010, p68) A typical distribution network of coffee distribution system is like this (Starbucks Coffee Company, p22): In order to enforce its exacting coffee standards, Starbucks tries its best to control the whole supply chain. The company works with growers in various countries to purchase green coffee beans, oversees the custom-roasting process for the company's various blends and single-origin coffees, and controls the distribution to retail stores in the U.S. and around the world. Starbucks engages in a wide range of distribution including partnership, its company-owned stores and licensed products. Since Starbucks is a well-known brand, they use the third party relationships to attract other companies and expand their business. While licensed product part is not a large portion of the company’s revenues (4% in 2008), these items are an integral part of familiarizing customers with the Starbucks name and developing brand loyalty. (Crowe Remle, 2010) Starbucks not only sells coffee and some simple food to consumers, it also sells beans and ground coffee to businesses such as airlines, supermarkets, department stores, and ice-cream makers. In a complex distribution network, information technology helps a lot. Starbucks successfully integrates all sources of demand and matches it with the supply by using Oracle’s automated information system for manufacturing (GEMMS). The GEMMS system handles distribution planning, manufacturing scheduli... ...rbucks locations in 14 markets including Thailand, Korea, Beijing, Shanghai and Hong Kong. (Starbucks entry into China, p12). Starbucks also has a partnership with the Chinese government and local universities to grow coffee in Yunnan province. (Starbucks entry into China, p13) Starbucks also has its first entry into European coffee market. Starbucks has a partnership with Arla Foods as its licensed partner to manufacture, distribute and market the premium ice coffee products for supermarkets, convenience stores as well as Starbucks’ own coffee shops in Europe. Arla Food is one of the largest dairy companies in Europe and provides a highly developed distribution network for ready-to-drink products on key markets for Starbucks in Europe. As we see, Starbucks expands their distribution network by building up partner relationship with other organizations overseas.