Reducing Bottlenecks, a case study of Starbucks
A supply chain is determined by bottlenecks. It is only after recognizing this fact that cash flow can be increased. In a supply chain, a bottle neck implies to resources that require the longest operations time of the supply for particular demand. Insufficiency and inventory increase are some of the associated with bottleneck. Insufficient materials and excess inventory do not occur always because of inconsistent fluctuations ( Bhalla, 2011).
Bottlenecks determine the supply chain’s throughput. An improvement in the capacity of a supply chain’s bottleneck will increase in throughput. Non bottlenecks have an operating rate is one hundred percent. This implies that there will be an increase in the rate of operations of the non-bottlenecks but only within one hundred percent. This is despite the fact that if there increased bottlenecks, throughput also increases ( Doole & Lowe, 2008).
On the other hand, if non bottlenecks rates of operation go beyond 100 percent it implies that the place of the bottleneck is moved to non-bottlenecks’ place. There must be sufficient recognition of bottlenecks to ensure higher chances of increasing throughput ( Johnson, 2012).
Starbucks has emerged to be the number world retailer of coffee in the world. The company was founded by three partners in the year 1971 who were initially students at the University of Francisco. With 20,891 locations across 62 countries, Starbucks reported a total of $1.38 billion US net income in 2012 ( McKinsey Global Institute, 2011).
The company’s supply chain constitutes of planning, sourcing, making and delivering and its goal is to reduce costs as well as improving efficiencies. Starbucks makes important to understand the total cost of each of its operations within the supply chain besides controlling and monitoring all its supply chain activities. This can be achieved by understanding the purchase prices, analyzing ingredients breakdown and developing various models of costs ( Wilkinson, 2015).
Transporting the beans
This is where coffee beans are selected and shipped in huge quantities to different centers of distribution. Apparently, there are nine regional distribution centers, forty eight central centers for distribution and six warehouses for green coffee. The distribution of coffee begins at the center for receipt of coffee beans from where they are taken to the storage center. From here, the beans are sifted, assorted and then roasted. After these processes, the coffee beans are taken to quality testing unit from where they are tested for quality. After this, they are cooled and blended before being subjected to the final testing. At this point, the beans that have failed the final testing are discarded while those that have passed the testing are packaged and palletized into finished goods ( Stack, 2012).
The supply chain that is currently being used by Starbucks was adopted close to nineteen years ago. Coffee beans could be sourced from one country and milk from another country all together thereby creating a global resource span. This way, Starbucks has managed to expand its company and reach out to as many countries as possible. Furthermore, Starbucks Coffee has been able to offer its customers the best ingredients and at a low price. Just as has been discussed above, all the raw materials used are taken through manufacturing, roasting and packaging plants (Sheth, Sheth, & Sisodia, 2012).
The company has six centers for roasting from which preparation of the beans take place. Although the number of roasting centers for Starbucks Coffee is few, it ensures that the company manages its operations in a centralized system, which is effective. Many people have criticized this approached based on the fact that Starbucks Coffee is an incredibly big company.
The centers for roasting however ensure that all the beans are undergo preparation, manufacturing and packaging in accordance to the specifications of the company using a manufacturing process that is well designed. After preparation of the beans, the delivery process which is rather tedious ensues. Incidentally, the company delivers hundreds of thousands of coffee on a daily basis. Each of the Starbucks Coffee’s stores is sufficiently supplied with enough coffee ( Harford, 2012).
Solutions to reduce or avoid existing bottlenecks at the Starbucks Coffee
There are only possible two ways available for Starbucks Coffee of avoiding bottlenecks. These include increasing the bottleneck step efficiency and decreasing bottleneck step input. Increasing efficiency in the first case depends on the circumstances that surround Starbucks Coffee’s step in chain supply. Some of the reduction measures in this aspect include ensuring that all that is fed into bottlenecks has no defects at all. Doing this ensures that one is saving the bottleneck resources by using it in processing materials that will be discarded later. It will also be important to get rid of all the bottleneck processes that could rather be performed by machinery or other people. Other reduction measures include assigning members of the productive team with technologies that will aid the bottleneck processes as well as adding bottleneck processes capacities.
The option of decreasing input seems ridiculous to some people. However, if a section of the process has the potential of generating more output than what the supply chain mangers at the Starbucks Coffee can handle, then the response can be classified as an appropriate one. There could be a situation in the supply chain department of the Starbucks Coffee to continue raising the amount of inventory work in progress as soon as the first step has been confirmed the working efficiently. For instance, supply chain store evaluators at the Starbucks Coffee can discover some poor quality coffee beans allowed to pass through the quality testing stage. However, to be able to ensure the only the minimal number of poor quality beans pass through the stage, the company will have to employ more personnel and probably incur a lot of costs in the process. On the other hand, if more supervisors are employed to verify the quality of coffee beans, there could be a situation where many coffee beans are discarded as of inferior quality. This is because each of the supervisors would want to be seen to be doing something upon which he or she was employed to do and perhaps keep his or her job. In essence the number of the supply chain’s system will be reduced to the level that it can be able to process successfully.
The efficiency of supply chain is prone to be affected by the existing bottlenecks if they are not checked and avoided in time. The first solution if for everyone involved in the supply chain to set a position. This will ensure that no time is wasted in trying to reposition during the process. It ensures that no one gets into another person’s way and that every person understands what he or she is doing.
References
Bhalla, G. (2011). Collaboration and co-creation : new platforms for marketing and innovation. New York : Springer Science+Business Media, LLC.
Doole, ., & Lowe, R. (2008). International marketing strategy : analysis, development and implementation. London : Cengage Learning.
Harford, . (2012). The undercover economist. New York, NY : Oxford University Press.
Johnson, . (2012). Future perfect : the case for progress in a networked age. London : Allen Lane.
McKinsey Global Institute. (2011). Big data : the next frontier for innovation, competition, and productivity. McKinsey Global Institute: [New York].
Sheth, J., Sheth, J., & Sisodia, R. (2012). The 4 A's of Marketing: Creating Value for Customer, Company and Society. New York: Routledge.
Stack, L. (2012). What to do when there's too much to do : reduce tasks, increase results, and save 90 minutes a day. San Francisco : Berrett-Koehler Publishers.
Wilkinson, A. (2015). The Creator's Code: The Six Essential Skills of Extraordinary Entrepreneurs. Simon and Schuster: New York.
del‐Rey‐Chamorro, F. M., Wegen, B., & Steele, A. (2003). A framework to create key performance indicators for knowledge management solutions. Journal of Knowledge Management, 7.2, 46 - 62.
