Supply Chain Management Essay

Starbucks Supply Chain

Overall Design of the Supply Chain 

Starbucks operates a highly competitive supply chain to ascertain and maintain the value, quality, and standards of the coffee bean from the production to the roasted product in the cup. The Starbucks supply chain is operated with the emphasis of ascertaining that the consumers access the best quality of the coffee products across all Starbucks stores worldwide (Nguyen & Sarker, 2018). The effective running of the Starbucks supply chain is fundamental to make sure that all the 28,218 stores in six continents operate smoothly and assure the consumers of the business continuity and high professionalism in service delivery (Leduc, 2017). The coffee juggernaut requires a highly competitive and value-focused supply chain to meet the set objectives for the strategic performance of the company to maintain a high revenue generation of US$24.71 billion annually.  

The Starbucks overall supply chain design comprises of a vertically integrated approach that enables the company to be extensively involved in every step of the process. This constitutes a centralized system controlled by Starbucks to ensure that the production, logistics, market, and processing, to the final product – shows the company’s involvement in every step of the way (Hugos, 2018). This is focused on sustaining the quality and high standards through a series of activities and processes in the supply chain critical to the creation and value addition to the Starbucks’ products throughout the production process. This implies that the vertically integrated supply chain framework is based on a value chain model. Thus, Starbucks consumers are sure of the quality and brand of Starbucks products in every store around the world (Kang et al., 2018). Thus, it leads to the sustainability of quality and brand creation of the company with one of the most effective supply chains.  

The Starbucks supply chain operates under the principles of the three-legged stool approach, which indicates the reliance of the company, suppliers, and customers to each other. A breakdown of one leg is bound to destabilize the other, causing potential adverse effects on the company. This requires a major emphasis on the creation of value addition throughout the supply chain based on ethical, sustainability, and quality standards (Geereddy, 2013). For example, Starbucks is engaged in the production of the coffee beans by the farmers, a process that involves subsidies and farm inputs materials to control of shipment and transport logistics and distribution to every store around the world. Thus, run a smooth operation with reduced costs and improved service delivery.

External Macro Factors that Impact on Decision Making 

In the running of the Starbucks supply chain – the macro factors with the potential to influence decision-making are based on five key categories. These include inbound logistics, operations, service delivery, marketing and sales, and outbound logistics (Macdonald, 2007). The inbound logistics influence the decision making to ensure a strategic relationship with the suppliers and providing continuity guarantees in the long term. This enhances the effectiveness of the supply chain management impacting on reduced costs and value assurance. 

The operations of the 28,218 stores in six continents require effective operations to ensure customer satisfaction and brand maintenance. This is a vital component of the supply chain that controls the triumph of the corporation and fruition of the efforts made at various stages (Cooke, 2010). The marketing and sales factors determine how the company influences the suppliers and consumers. The marketing and sales factors are influenced by the quality and standards of the processes at every step. Hence, establish the competitiveness of the company and mark the market positioning as a leader and model for effective supply chain emulation. 

The outbound logistics factors comprise the integration of Starbucks operations with the information technology (IT) aspect. IT provides the contemporary ways of doing business in a globalized world. The integration of information technology into the company is fundamental to enhance the competitiveness of the company and quality services assurance (Crandall et al., 2014). The service delivery factors influence the customer loyalty and brand creation capacity of the company. This is the epitome of all the efforts made through the entire supply chain. The most essential and crucial part is to ensure that every consumer access the best service delivery standard. Thus, to customer retention, loyalty, and brand recognition. 

Procurement Strategy 

The procurement strategies determine the purchase of assets and raw materials in which the supply chain relies on the delivery to the consumers. The purchase of assets comprises of the entities and resources utilized in the supply chain process include the outlet stores that connect the company to the consumers (Michelli, 2007). Monitoring of the raw materials from the farm inputs, production of the coffee beans, shipment, and transportation logistics, distribution from the warehouses, and roasting of the coffee bean at every store is critical. Thus, the procurement strategy supplements the service delivery feature. 

Production Strategy and Operations 

The production strategy and operations aspects of the supply chain management that determine Starbucks decision making assess the capacity of the company in turning strategies into fruition. The competitive measures are based on the available infrastructure integral to the actualization of the set objectives (Leduc, 2017). The infrastructural capacity provides critical support to the planning, management, financing, and capacity to coordinate the supply chain effectively.  The opportunities created by infrastructural efficiencies s crucial to the success of the company. The production strategies and operations capacity highly relies on human resources available with the necessary skills and competencies to actualize all the set objectives. The consideration of employee training and development, remuneration, motivation, and other incentives is fundamental to ascertain loyalty and commitment to the company (Geereddy, 2013). Moreover, the integration of technology into the company determines the efficiency in the supply chain and service delivery in the company. Thus, maintain a competitive edge in the industry. e

Apple Supply Chain

Overall Design of the Supply Chain 

Apple Inc. is ranked the world’s top and most effective supply chain model. According to Gartner, a U.S. Based Research and Advisory Company ranked Apple Inc. supply change as a no. 1 for consecutive years from 2010 to 2013. In 2015, the high performance and competitiveness of Apple Inc. supply chain saw the company acquire the Gartner’s “inaugural “Masters” award after previously ranking Apple No. 1 on its ‘Top 25 Study Chains’ list for the past five years” (Hettiarachchi, 2016, 1). Apple Inc. is world renown and famous company for consistency in innovativeness and design of quality products that meet the consumer needs and desires. Apple Inc. supply chain enormous success is attributed to consistency in the inventions, product design strategies, and the development, market, software, and branding objectives that meet the quality standards and needs of the consumers leading to customer satisfaction (Montgomerie & Roscoe, 2013). Apple operates a total of 504 retail stores in 24 countries worldwide with a revenue generation in the fiscal year 2018 accumulating to US$265 Billion. Thus, the supply chain of Apple Inc.’s capacity to meet high standards, quality, and efficiency is fundamental to the profound achievement of the organization.  

The diversification of Apple Inc. supply chain attained a transformative approach to understand the leadership of the late Steve Jobs, who rejoined the company in 1997 following years of turmoil and near bankruptcy of the company. In 1998, Jobs transformed the company into productivity and profit generation (Jing, 20180. In the same period, Tim Cook joined the company when Steve Jobs re-entered the company and, in 2005, assumed the role of the Chief Operations Officer. In 2011, Jobs handpicked Cook as his successor. Cook is a vastly renowned supply chain specialist globally whose insights and expertise in the supply chain have been integral to the success of Apple Inc. 

Apple Inc. supply chain is based on extraordinary inventory control and the use of sophisticated software systems to achieve the supply chain strategic objectives. Apple Inc.’s overall design of the supply chain is based on the use of a highly sophisticated “Agile Supply Chain Strategy” that is well-designed to provide the company with sufficient response and flexible capacity to meet the growing and transforming customer needs (Hettiarachchi, 2016). The Agile Supply Chain Approach provides Apple Inc. the capacity to respond to the rapidly shifting, diverse, and erratic needs of the consumers on the front while at the same time giving the company a lifeline to curtail the back end risks of the supply disruptions (Fayezi & Mirkovski, 2017); Lazonick et al., 2013). Thus, enable continued competitiveness and effective market performance.  

External Macro Factors that Impact on Decision Making 

The effective leadership and objective to offer solutions in the supply chain of Apple Inc. have been the guiding principle of the company. The nature of leadership and capacity to offer solutions has been integral to the performance of Apple Inc. (Fayezi & Mirkovski, 2017). The factors profoundly influence the performance of the company and its potential to maintain high competitiveness that has been set year after year.  

The supply chain planning that provides the external macro factors that can impact on the decision making at Apple Inc. The R&D provides the measures in which the company develops new technology and acquire licensing of intellectual property to safeguard the invention of the company. The concept of testing comprises the analysis of product testing, assembling cost data, market research, and potential quality flaws – all of which are critical decision-making measures (Gramm et al., 2019). The pre-launch stage engages the company in the production ramp issues, software designs, and development for new products, inventory levels, determination of launch quantity, and payment to suppliers. The making of effective decisions at this point is fundamental to the success of Apple Inc. supply chain. The launch processes focus on meeting the market demand forecasts within the stipulated duration. Thus, they enable the company to remain competitive. Finally, the quarterly reviews and assessment inform the company on the critical decisions and changes to make to ensure the company attains the set objectives in the inventory level, demand forecasts, product life cycle, and sales levels. 

Production Strategy and Operations 

The production and operations in Apple Inc. follow the analysis of the supply chain model that comprises the map from sourcing, manufacturing, warehousing, distribution, and returns for the company. The sourcing of the company is based on the vital strategic regions where production and operations of the company are based (Lockamy III, 2017). These include the U.S., China, Europe, and other Asian countries such as South Korea. The choice of the production base is integral to raise the production capacity of the company and the costs involved in the process. Apple Inc. does its assembling in China, which is more convenient and cost-effective than the U.S. The distribution strategy follows the retail stores, online store, direct sales force, and retailers, wholesaler, and network carriers to ensure all the customers access the products quickly (Jing, 2018). Thus, Apple Inc.’s supply chain primary focus is ascertaining the consumers meet the quality and value of their money in the products and services they receive from the company. 

Conclusion

In conclusion, the supply chains of both companies are focused on maintaining high-value proposition and customer satisfaction by sustaining the quality of services and products delivered. The supply chain is fundamental to the accomplishment of each company in its field. The capacity to run an effective supply chain is critical to impact on the success and competitiveness of each company in their respective industries. Apple Inc. utilizes an Agile Supply Chain approach to ascertain enhanced measures and decision making to respond to the diverse and robust market needs that transform from time to time. Starbucks’ supply chain utilizes a vertically integrated approach focused on creating value at every step of the way. Thus, facilitating the improvement of strategies utilized to guarantee high productivity and profits generation for the companies.

References

Cooke, J. A. (2010). From bean to cup: How Starbucks transformed its supply chain. CSCMP Supply Chain Quart4(4), 35-55.

Crandall, R. E., Crandall, W. R., & Chen, C. C. (2014). Principles of supply chain management. CRC Press.

Fayezi, S., & Mirkovski, K. (2017). Toward supply chain agility: The case of the Australian manufacturing sector. Supply Chain Quarterly.

Geereddy, N. (2013). Strategic analysis of Starbucks Corporation. Harward [Електронний ресурс].–Режим доступу: http://scholar. Harvard. edu/files/nithingeereddy/files/starbucks_ case_analysis. pdf.

Gramm, V., Dellantonio, S., & Hoffmann, C. (2019). Market Potential Analysis for Regional Products in the Alpine Space: Value Added Chain–Apple.

Hettiarachchi, H. A. H. (2016). Apple’s Supply Chain Strategy. Research Gate. DOI: 10.13140/RG.2.2.32075.49448. 

Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.

Jing, J. (2018). A case study on Apple, Inc, which affecting the world of Smati Technology Leader or heading down?.

Johnson, K., Li, Y., Phan, H., Singer, J., & Trinh, H. (2012). The Innovative Success that is Apple, Inc.

Kang, M., Yang, M. G. M., Park, Y., & Huo, B. (2018). Supply chain integration and its impact on sustainability. Industrial Management & Data Systems.

Lazonick, W., Mazzucato, M., & Tulum, Ö. (2013, December). Apple’s changing business model: What should the world’s richest company do with all those profits?. In Accounting Forum (Vol. 37, No. 4, pp. 249-267). Taylor & Francis.

Leduc, C. (2017). “Onward How Starbucks Fought for Its Life without Losing Its Soul” Book Review.

Lockamy III, A. (2017, July). An examination of external risk factors in Apple Inc.’s supply chain. In Supply Chain Forum: An International Journal (Vol. 18, No. 3, pp. 177-188). Taylor & Francis.

Macdonald, K. (2007). Globalizing justice within coffee supply chains? Fair Trade, Starbucks, and the transformation of supply chain governance. Third World Quarterly28(4), 793-812.

Michelli, J. A.,(2007), The Starbucks Experience: 5 Principles for Turning Ordinary into Extraordinary.

Montgomerie, J., & Roscoe, S. (2013, December). Owning the consumer—Getting to the core of the Apple business model. In Accounting Forum (Vol. 37, No. 4, pp. 290-299). Taylor & Francis.

Nguyen, G. N., & Sarker, T. (2018). Sustainable coffee supply chain management: a case study in Buon Me Thuot City, Daklak, Vietnam. International Journal of Corporate Social Responsibility3(1), 1.

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