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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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Introduction

According to the APICS Dictionary, 14th Edition, “The strategy of an enterprise identifies how a company will function in its environment. The strategy specifies how to satisfy customers, how to grow the business, how to compete in its environment, how to manage the organization and develop capabilities within the business, and how to achieve financial objectives.” (APICS 2015)

 The market is more dynamic than ever and companies have to keep up with this changing environment in order to succeed. Therefore, it is important that buyer, supplier and customer relationships are given importance and should be transparent and well managed. Sustainability is one of the biggest challenges faced by companies in the todays world. Sustainability is referred as the ability of the company to achieve simultaneous performance in environmental, social and economic dimensions in the present time, without compromising the ability to maintain this performance in the future (HuffPost 2016). The Starbucks journey began with a single store in Seattle in the year 1971 to become one of the most recognized brands globally.

Literature Review

Joseph G. Monks defines Operations Management as the process whereby resources, flowing within a defined system, are combined and transformed by a controlled manner to add value in accordance with policies communicated by management. (Kumar and Suresh 2009). The set of interrelated management activities, which are involved in manufacturing certain products, is called as production management. If the same concept is extended to services management, then the corresponding set of management activities is called as operations management. The literature further explains that operations management is involved in product and service design, process selection, facilities planning and quality improvement of the organization's products or services (Kumar and Suresh 2009). In other words, operations management is the that part of management that is responsible for producing goods and/or services. Operations management works around fulfilling two objectives which are customer service and resource utilisation. The literature further clarifies that the nearby mix of the operations administration with the objectives and targets of the association keeping in mind the end goal to empower it to meet its key destinations of accomplishing productivity, adequacy, and adaptability. (Das 2006)

The literature further explains Supply chains. Supply chains incorporate the conclusion to information, items, and cash. Hence, the way they are overseen emphatically influences an association's intensity in such ranges as item cost, working capital prerequisites, speed to market, and administration recognition, among others (Chopra and Meindl 2010). In this context, the best possible arrangement of the supply chain with business policy is to guarantee an excessive state of business execution. A growing stress to guarantee efficiency and viability powers organizations to make developments to their administration frameworks, making them perpetually complex. This pattern is noticeable in the usage of all-encompassing administration models which underscore the need to think on the high functionality of their parts (Chopra and Meindl 2010). Sustainability is defined as a concept of the holistic perspective of development integrated with organizational goals, internal incentives and evaluation systems, and organizational decision support systems. An ever more prominent number of companies have hence started to see that the possibility of manageability is getting to be a characteristic component of their activities and not an issue isolated from a strategy being executed (Radomska 2015).

Also, it is a factor stimulating a reduction in hazard going with the methodology acknowledgment. It comes about not just in an adjustment in context and view of sorting out the system usage process, yet in addition demonstrates the requirement for a coordination of its perspective. Despite several advantages, sustainability is still seldom joined with strategic management. The target of this work is an examination of the connections between sustainable strategy implementation and the adequacy of the strategy execution process. The literature further explains sustainable strategy has been characterized utilizing seven points of view: leadership, strategy, employees, corporate values, resources, tools and processes (Radomska 2015).

Analysis

Supply Network Strategy

A well-run supply network is needed to guarantee that a barista pours a good cup of Starbucks coffee. Coffee and related products is efficiently sourced from around the world and after that successfully conveyed to the Starbucks Corporation's 25,200 retail stores, which serve some 50 million clients in 75 nations every week.

In 2008 Starbucks was facing with a major problem. Their supply chain was failing to meet its goal. The company's operational costs were on an ever high and their sales were slowing down. The supply chain expenses in the United States rose from $750 million to

$825 million between 2007 and 2008 and during this period the sales for Starbucks coffee went down by ten percent. The supply chain of the organisation could not keep up with the rapid expansion of Starbucks stores all around the globe. To overcome these problems, the company decided to make significant changes to its supply chain network. Gibbons, the executive vice president of global supply chain operations, and team came up with a three-step plan to transform the company's supply chain network and presented it to Starbucks' board of directors. Under this plan, the organization would first revamp its supply chain organisation, improving its structure and defining clear roles to its staff and employs. Next, Starbucks would concentrate on reducing the cost to serve its stores while enhancing its everyday supply network execution. Once these supply network fundamentals were immovably under control, the company could then lay the foundation for improved supply chain capability for the future. (A.Cooke 2017)

Starbucks utilizes a vertically incorporated supply network, which implies that the organization is engaged with each progression of its supply network process. The utilization of a vertically coordinated framework implies that Starbucks works directly with its about 300,000 overall coffee producers. The organization trusts that cooperating directly with farmers guarantees that the majority of its coffee beans will accomplish a similar quality and desired standards.  (Preethi Kasireddy 2017)

Starbucks also works directly with producers in light of the fact that the organization is focused on just offering ethically sourced, Fair Trade coffee. The organization even has its own particular Coffee and Farmer Equity (C.A.F.E) standards and Coffee Sourcing Guidelines (CSG), which require that all providers must meet certain standards, sustainability, and quality standards. Starbucks utilizes a stringent verifying procedure to guarantee its cultivators meet and adhere to the rules and standards set up by the company.

Not only do the C.A.F.E. practices and CSG advantage Starbucks, they additionally give certain benefits to providers. The rules secure labourers' rights and guarantee that all cultivators have protected and hygienic working conditions Suppliers also must adhere to minimum-wage requirements and commit to not using child or forced labour.

In conclusion, as a part of its C.A.F.E. rules, Starbucks focuses on providing its suppliers with exceptional preparing and training programs. Starbucks' direct communication with producers, alongside their sourcing and social obligation benchmarks, influence suppliers to feel like they are essential parts of Starbucks' organization. The close relationship and successive correspondence amongst Starbucks and its providers, in this way, influence the organization's supply to tie less vulnerable to significant interruptions, for example, overplanting or worker shortages (Starbucks 2017).

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Sustainability Strategy

One of the companies that is well known for its sustainable strategies is Starbucks. The company has adopted sustainable practices and their commitment to the environment has led to increase in their market share. During the launch of their first sustainability report in 2002 Starbucks announced that they will work towards ethically sourcing their coffee and the company announced in 2016 that the coffee they use is 99 percent ethically sourced. This was achieved with their partnership with Conversation International. This assisted them in developing guidelines to address the ethical sourcing of coffee, known as C.A.F.E practices, these guidelines help coffee grow in a way which is beneficial for the people as well as the planet. The company has a target to achieve 100 percent ethically sourced coffee by 2020. Starbucks plans to provide 100 million healthy coffee trees to farmers by 2025 by utilizing their green coffee purchases in coffee developing communities which are most impacted by climate change. Starbucks has come up with a Starbucks Global Farmer Fund which is a $50 million commitment to provide financing to coffee agriculturists. Through these advance, farmers can bolster agronomy, reclamation and background enhancements. This initiative by Starbucks directly influences the coffee quality, sustainability and the economic benefit for the coffee industry.  (Anon 2017)

Starbucks hopes to be the world's largest green retail business with the aim to minimize its environmental footprint. Starbucks has managed to seamlessly integrate green marketing strategies in their operational framework. The company is committed to proper waste disposal practices and reduction in material use. They organize various campaigns in order to educate the customers on the proper ways on how to reuse, reduce and recycle waste (Confino 2017).  

In addition to this Starbucks has implemented a three-year Climate Change Mitigation approach aimed at obtaining sustainable energy, concentrating on conserving energy, and supporting for aggregate activity. Starbucks takes certain measures to converse energy in their retail stores, they upgrade their machines and tools regularly to obtain more energy efficient machines and tools. The managers in the stores are given energy saving software tools to help them conserve energy. Another part of sustainability strategies undertaken by Starbucks is the Starbucks Foundation which initiates programs that effect youth and beginning groups. The Starbucks foundation gave $8.5 million in 2013, gifts included $3.7 million for Starbucks Youth Leadership Grants (Anon 2017)

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Operations Strategy Matrix

The operations strategy matrix of Starbucks focuses on four key targets. These targets include customer loyalty, a strong team, quality and sustainable operations. In this regard, Starbucks target enthusiastic customers and focuses on giving them excellent service so that they are inclined to become loyal to the brand, a good customer service requires a strong team and Starbucks focuses on having a team which can deliver orders at a fast pace without compromising quality. The second target of a strong team focuses on employing top talent, ensure greater diversity and expertise within the teams. The third target of quality focuses on procuring top quality raw material such as coffee tea and other products. The fourth and the most crucial target within the strategy matrix focuses on pursing global market leadership in ethically sourced coffee, reduction and recycling of waste and initiating plans to help the neighbourhood.

Recommendation

Since Starbucks began its supply chain transformation effort, it has curtailed costs worldwide without compromising service delivery. "As a company," Gibbons says, "we have talked publicly of over $500 millions of savings in the last two years, and the supply chain has been a major contributor to that." To keep this momentum going Starbucks should initiate a program to recruit high level graduates in the field of supply chain education.

The company should also focus on training and upgrading the knowledge of their existing workforce and help them understand the concept of supply chain better. The infusion of new recruits will allow Starbucks to stay focused on its supply chain mission of delivering products with a high level of service at the lowest possible cost to its stores in the United States and around the globe (Ken Boyer 2013). Starbucks should also focus on conserving the environment by preserving water. Starbucks has come up with a water bottle brand by the name of One. The profits from this water are used to conserve and preserve water and to end water poverty. This water is only confined to the United states as of now and Starbucks should sell their water bottles globally in order to earn more profits and help the environment. Starbucks should also focus on using renewable energy in their stores. As of now only few of their stores are operated on renewable energy and this figure should be increased by Starbucks in the coming years. In 2013 Starbucks joined the RE100, a global initiative towards using 100 percent renewable energy. Starbucks should Continue new and existing suppliers on the company's programmes and expectations, to assess supply chain to ensure social and environmental standards are being met, to build a network of resources for suppliers to improve their social and environmental performance and to collaborate with the Fair Factories Clearinghouse and Business for Social Responsibility's Beyond Monitoring working group to influence the entire industry (Anon 2015).

References

• Anon 2015. 10 Ways Starbucks Could Improve. [Online]. Available at: http://www.starbucksmelody.com/2015/05/12/10-ways-starbucks-could-improve/ [Accessed: 7 September 2017].

• A.Cooke, J. 2017. From bean to cup: How Starbucks transformed its supply chain – procurement – CSCMP's Supply Chain Quarterly [Online]. Available at: http://www.supplychainquarterly.com/topics/procurement/scq201004starbucks/ [Accessed: 7 September 2017].

• APICS 2015. eDownload: APICS Dictionary, 15th Edition [Online]. Available at: https://www.apics.org/ProductCatalog/APICSProduct?ID=10697 [Accessed: 7 September 2017].

• Chopra, S. and Meindl, P. 2010. Supply chain management.

• Confino, J. 2017. Best practices in sustainability: Ford, Starbucks and more [Online]. Available at: https://www.theguardian.com/sustainable-business/blog/best-practices-sustainability-us-corporations-ceres [Accessed: 7 September 2017].

• Anon 2017. Corporate Social Responsibility |Starbucks Mission Statement [Online]. Available at: https://www.starbucks.com/responsibility [Accessed: 7 September 2017].

• Das, A. 2006. An introduction to operations management.

• Anon 2017. Global Responsibility Report Goals & Progress 2014 [Online]. Available at: https://www.starbucks.com/responsibility/global-report [Accessed: 7 September 2017].

• HuffPost 2016. What Is Sustainability? [Online]. Available at: http://www.huffingtonpost.co.uk/kylie-barton/what-is-sustainability_b_12544964.html [Accessed: 7 September 2017].

• Ken Boyer, S. 2013. Behind the Scenes at Starbucks Supply Chain Operations it's Plan, Source, Make & Deliver - Supply Chain 24/7 [Online]. Available at: http://www.supplychain247.com/article/behind_the_scenes_at_starbucks_supply_chain_operations [Accessed: 7 September 2017].

• Kumar, S. and Suresh, N. 2009. Operations management. New Delhi: New Age International.

• Preethi Kasireddy, S. 2017. Starbucks Coffee Distribution Network - Supply Chain 24/7 Paper [Online]. Available at: http://www.supplychain247.com/paper/starbucks_coffee_distribution_network [Accessed: 7 September 2017].

• Radomska, J. 2015. The Concept of Sustainable Strategy Implementation. Sustainability 7(12), pp. 15847-15856.

• Starbucks 2017. Responsibly Grown and Fair Trade Coffee [Online]. Available at: https://www.starbucks.com/responsibility/sourcing/coffee [Accessed: 7 September 2017].

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