Starbucks purchasing maangement
Purchasing Management Assignment
Submission date: 26th JUNE 2014
Word count:
Purchasing Management Class. Diploma Programme.
Lecturer: Bernard Lian
Introduction
Starbucks Coffee Company was formed in 1971 and now has over 23,000 stores operating in 64 countries. (Starbucks, 2014) The decision of whether to manufacture a product in-house (“make”) or purchase it from outside suppliers/manufacturers (“buy”) can have a significant impact on the operations of a firm and is arguably the most fundamental component of a company’s manufacturing strategy.
My assignment will focus on Starbucks Coffee Company and their “make or buy” coffee bean strategy. I will also analyze Starbucks coffee bean supplier selection and evaluation system and provide recommendations for improvements and lastly I will provide a purchasing cost analysis on Starbucks.
Make or Buy Strategy
The Chief Executive Officer of Starbucks, Mr. Howard Schultz is on record as saying that his company has no interest in vertically integrating. Starbucks currently buys coffee from over 300,000 growers worldwide.
However in 2013, Starbucks bought their first coffee plantation in Costa Rica. This doesn’t mean that Starbucks plans on changing its manufacturing strategy from a buy to a make, but rather this purchase can be seen as a foray into Research & Development. The premier Arabica bean that Starbucks drinkers demand due to its “better “taste is under threat from pests and disease and possible crop extinction.
The Arabica coffee bean thrives in high elevation climates, between 3,500 to 6,000 ft above sea level. However, climate change is having a marked effect within these high elevation ecosystems. According to a report from the International Center for Tropical Agriculture in Colombia, they predict that temperatures will keep climbing and rainfall will become more erratic, neither of which bodes well for Arabica. (Gruley & Patton, 2014)
Higher
Submission date: 26th JUNE 2014
Word count:
Purchasing Management Class. Diploma Programme.
Lecturer: Bernard Lian
Introduction
Starbucks Coffee Company was formed in 1971 and now has over 23,000 stores operating in 64 countries. (Starbucks, 2014) The decision of whether to manufacture a product in-house (“make”) or purchase it from outside suppliers/manufacturers (“buy”) can have a significant impact on the operations of a firm and is arguably the most fundamental component of a company’s manufacturing strategy.
My assignment will focus on Starbucks Coffee Company and their “make or buy” coffee bean strategy. I will also analyze Starbucks coffee bean supplier selection and evaluation system and provide recommendations for improvements and lastly I will provide a purchasing cost analysis on Starbucks.
Make or Buy Strategy
The Chief Executive Officer of Starbucks, Mr. Howard Schultz is on record as saying that his company has no interest in vertically integrating. Starbucks currently buys coffee from over 300,000 growers worldwide.
However in 2013, Starbucks bought their first coffee plantation in Costa Rica. This doesn’t mean that Starbucks plans on changing its manufacturing strategy from a buy to a make, but rather this purchase can be seen as a foray into Research & Development. The premier Arabica bean that Starbucks drinkers demand due to its “better “taste is under threat from pests and disease and possible crop extinction.
The Arabica coffee bean thrives in high elevation climates, between 3,500 to 6,000 ft above sea level. However, climate change is having a marked effect within these high elevation ecosystems. According to a report from the International Center for Tropical Agriculture in Colombia, they predict that temperatures will keep climbing and rainfall will become more erratic, neither of which bodes well for Arabica. (Gruley & Patton, 2014)
Higher