lean or agile stacey ryder. 1.the company 2.industry and competition 3.swot 4.supply chain...
TRANSCRIPT
Lean or AgileStacey Ryder
1. The Company2. Industry and Competition3. SWOT4. Supply Chain Transformation5. Move to a Leaner SC6. Cash-to-Cash Cycle7. Matrix8. Key Questions
Contents
First store opened in 1971 in Seattle.
Now have 17,018 stores worldwide (as of July 3rd 2011) in over 50 countries.
Started by selling freshly roasted coffee beans and brewing & roasting accessories.
Now expanded into: Over 30 coffee blends, Hand crafted beverages, Merchandise, Fresh food.
The Company
Starbucks Coffee Company, Company Profile, July 2011 (www.starbucks.com/assets/aboutuscompanyprofileq3201172811final.pdf)
Coffee is the 2nd most widely traded
commodity in the world.
$70 billion in retail sales globally.
Competition:
Industry and Competition
US• Peet’s Coffee• Caribou Coffee• McDonalds• Dunkin Donuts• Coffee Bean & Tea
Leaf
UK• Costa Coffee• Café Nero• Coffee Republic• Independent coffee
shops
TradeCommodities.co.uk, The 10 most traded commodities, 2011, (www.tradecommodities.co.uk/commodities/)
Strengths
• Established logo, developed brand, copyrights, trademarks.
• Many outlets in highly visible locations to attract new customers.
• Loyal customer base, loyal both to the product and the “atmosphere.”
Weaknesses • Too highly priced products.• Lack of internal focus, with too
much focus on expansion.• Ever increasing number of
competitors in a growing market.• Unhealthy product.
Opportunities• Launching new products/product
extension.• Expansions into retail operations.• New distributions channels
(delivery?).• Capturing emerging international
markets and new customer groups.
Threats• New competition from existing
outlets entering the industry i.e. McDonald's.
• US market saturation.• Coffee price volatility in
developing countries.• Lack of ownership of coffee farms.• Negative publicity from poorly
treated farmers in supplying countries.
SWOT
In 2008 the supply chain was not meeting the
needs of supplying over 50 million customers.
Operational costs were rising even though sales were cooling:
October 2007 Supply chain expenses: $750 million October 2008 Supply chain expenses: $825 million Sales drop during this period of 10%
WHY?
Supply Chain Transformation
Cooke, James A. From bean to cup: How Starbucks transformed its supply chain, 2010, (www.supplychainquarterly.com/topics/Procurement/scq201004starbucks/)
3 Step transformation:1. Recognise and simplify its supply chain
organisation. 2. Focus on reducing cost to serve its stores,
minimizing waste, and improving its day to day supply chain execution.
3. Lay the foundation for improvements in the future.
Simplified structure:
Move to a Leaner SC
Plan• Production
Planning• Replenishmen
t
Source• Coffee• Non-coffee
items
Make• All
manufacturing; in house or contracted
Deliver• Transport• Distribution• Customer
service
Cooke, James A. From bean to cup: How Starbucks transformed its supply chain, 2010, (www.supplychainquarterly.com/topics/Procurement/scq201004starbucks/)
Cash-to-Cash Cycle
(CCC)
DIO: Days inventory outstandingDSO: Days sales outstandingDPO: Days payable outstandingFY: Fiscal yearTTM: Trailing 12 months
Jayson, Seth. How Fast is the Cash at Starbucks, Nov 28 2011, (www.fool.com/investing/general/2011/11/28/how-fast-is-the-cash-at-starbucks.aspx)
Matrix
LeanPlan & optimize
AgileQuick response
KanbanContinuous replenishment
HybridDe-couple through postponement
Demand characteristicsPredictable Unpredictable
Supply characteristics
Long lead times
Short lead times
Q Push or Pull?A Pull, with replenishment driven due to the philosophy of having the highest
quality, freshly brewed coffee and the expectation of the customers.
Q Which is most common, lean or agile?A Lean, due to the commodity nature if the coffee trade, the order winner
being price, dominant cost is the physical cost.
Q Opportunity to become more agile?A It could become more agile in the distribution of merchandise, but not
coffee.
Q Opportunity to become leaner?A Could train staff to make the running of individual stores leaner.
Q Is vendor managed inventory common?A Not within Starbucks, sourcing, processing and distribution are all done
within the company.
Key Q’s
Any More Questions? Thank you