Product quality, service reliability and management of operations at Starbucks. 스타벅스 카페운영 논문

Abstract

High product quality, service reliability, and management of operations are key factors in business growth and sustainability. Analyzing “The Starbucks Experience” is a pedagogical approach to reinforcing the concepts of control and management of quality, service reliability, and efficient operations in action. The objective of this paper is to show how providing high-quality, reliable products and service at Starbucks have influenced its market share, productivity, and profitability. In turn, Starbucks has improved on these business measures by excelling in operations management. The approach taken was to research the early days at Starbucks to gain insight on what made Starbucks so successful and then to use observational research to assess the customer experience at a particular Starbucks store in a city in the state of Michigan, USA. Sitting in this Starbucks store in the city’s little downtown and observing its operations and customers contact offered the opportunity to observe customers waiting in line, the baristas serving the customers, examining the store’s layout, and listening to conversations that revealed what customers like and dislike about “The Starbucks Experience.” Recommendations are made to improve operations. These areas fall under operations management for a company that sells a product and provides a service. There are three reasons customers choose Starbucks: the coffee, the people serving the coffee, and the experience in the stores. By excelling in these three areas and improving operations management, Starbucks can regain its market share, and improve productivity and profitability.

The Starbucks Experience operations management layout observational research market share supply chain supply chain management

 

Starbucks Coffee Store Layout in a City in Michigan

Starbucks’s strategy in targeting its customers is to position itself as a “third” place in the lifestyles of its customers. That is to say, the prototypical Starbucks customer will spend their time at home, at work, and at Starbucks. To encourage this idea, Starbucks locations are furnished with comfortable seating, provide outlets for electronic equipment, and a blanket no-smoking policy ensures that all customers are comfortable in the environment.

 

The Coffee

Managing Operations Early On at Starbucks:

Today, Starbucks is a publicly traded company, more than a retail store; it’s an importer, a manufacturer, a wholesaler, and a direct mail business organization. However, in the beginning, before going public in 1992, the roasting plant and headquarters were located next to each other in the city of Seattle, Washington. This close proximity allowed Howard Schultz, to be involved in the operational planning and control of this enterprise on a day-to-day basis (Schultz and Jones, 1997). The retail stores were located in the Seattle area. The company was making money, so measuring effectiveness and efficiency was not a major concern; however, the dream, or strategic plan, has always been to expand and educate new customers on the dark roast coffee product it so proudly sold.

 

Starbucks learned early on that the quality of the coffee that ends up in the customers’ hands can be easily ruined by mishandling activities in the supply chain. To control process quality, Starbucks had to manage its own supply chain. Simply put, if the farmer does not get a good price for the green coffee beans, they then would not invest in fertilizer and the maintenance involved in growing quality coffee beans (Schultz and Jones, 1997; Wikipedia II). The coffee can be under or over roasted. If the coffee beans sit on the shelf for too long they go stale, so the right amount of inventory is a crucial factor, which in turn relates to the effectiveness of supply chain management. The water used to make the coffee will affect the taste. If the coffee is brewed improperly the taste is affected. If the coffee sits in a pot more than 20 minutes it is no longer considered fresh. Serving quality coffee in ceramic cups enhances the flavor, but makes it impractical for carry outs. Because of these circumstances, Starbucks prefers to handle its own supply chain, open company-owned stores, and has resisted franchising in fear of giving up its control over selling a high-quality product. Because coffee was the core service at Starbucks, the job of purchasing was not outsourced. The experience came with the original owners of Starbucks when only coffee beans were sold. The entrepreneurs buying the coffee were considered connoisseurs of quality coffee and had many years of “coffee” experience. As a result of this experience, customers were educated about coffee, and it became a value-added service at Starbucks. The more the customer knows about how coffee is grown and prepared, the more loyal they become, and the more willing they are to pay for a high quality cup of coffee.

 

A typical service blueprint of the order process at Starbucks. To start the order process, the barista behind the cash register gives friendly service by looking the customer in the eye and then greeting the customer. The customer gives the order. If the order is for an espresso drink, the barista repeats the order, out loud, and states the ingredients in a predefined order (size, type of milk, type of coffee, etc.) (Gates Gill, 2007). The barista behind the espresso bar repeats the drink ingredients in the same order. This simple poka-yoke technique helps to guarantee that the drink will be made correctly the first time (Gates Gill, 2007). This process was observed at the Michigan store with one addition, the barista asked for the customer’s name and repeated it with the drink order. In the early days, the baristas were trained to ask the customer’s name. Howard Schultz has brought this step back as another way to differentiate Starbucks from the other coffee shops; this act, in turn, has had a positive impact on improving market share.

 

 

The following are recommendations to further improve operations at Starbucks retail stores: • Widen appeal to many customer profiles. Early research showed that the profile of a Starbucks customer was a connoisseur, highly-educated, relatively affluent, well-traveled, technologically savvy, cultured, and interested in the arts. As a result of Starbucks’s global, mass-marketing strategy, other profiles need to be considered and catered to. • Improve housekeeping during busy times. • Offer more types of roasted coffee after noon. • Develop other light roast coffees that will bring in customers that normally avoid Starbucks because of the “bitter taste” of the coffee. • Offer more types of healthy pastries or light sandwiches. • Change the layout of the floor so that long lines do not interfere with customers approaching the condiments stations, for an alternative layout recommended. Adopt a hybrid layout in which the advantages of both the product layout and process layout will be obtained.

 

Conclusion

A study of the early Starbucks shows that product quality and service reliability were a higher priority than cutting costs. Starbucks paid a premium price for high-quality gourmet coffee beans and they managed the supply chain from beginning to end so that quality and reliability would not be compromised. In the early days, Starbucks did not have to focus on improving market share, productivity, and profitability. When a new store opened customers came by word-of-mouth. Starbucks excelled at three things: the coffee, its people, and the “Starbucks Experience.” Starbucks used to be considered “recession proof” (Kirby, 2008). Achieving an international presence, Starbucks is now suffering growing pains in the U.S. The economy is down causing customers to spend less on extras, and there is competition from other coffee stores such as McDonald’s offering of gourmet coffee drinks for less money (Adamy III, 2008). Today there is a need to improve market share, productivity, and profitability. Howard Schultz, CEO, has recently introduced three operational changes: its new product, Pike Street light roast coffee; the baristas grind fresh coffee beans before brewing to add the aroma of coffee to the store, and the espresso machines will be replaced with the old style machine that is low and allows the customer to see the coffee drink prepared. Finally, Starbucks can continue to find ways to improve its operations management processes and still maintain the quality and reliability of its products and services. 

 

 

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