CASE STUDY 36

Q1; Would you describe Starbucks’ production/operations technology in its retail stores as unit, mass, or process?
Explain your choice How does its production/operations technology approach affect the way products are produced?

ANS;
Description of Starbucks' Production/Operations Technology

Starbucks' production/operations technology in its retail stores can be described as a process technology. It involves
a series of steps and processes, from sourcing and roasting coffee beans to preparing customized beverages and
delivering a unique customer experience.

Characteristics of Process Technology

Process technology focuses on utilizing flexible and specialized processes to produce customized products or
services. In the case of Starbucks, this approach allows for the customization of coffee beverages according to
individual customer preferences while maintaining consistency in quality.

Execution of Process Technology at Starbucks

At Starbucks, the production/operations technology encompasses various elements. It starts with
the careful selection and sourcing of high-quality coffee beans from different regions. Skilled
master roasters then utilize their expertise to create Starbucks' signature roasts at the company's
roasting facilities.
In the retail stores, baristas employ a combination of manual and automated processes. This
includes grinding coffee beans, extracting espresso shots, steaming milk, and adding flavors and
toppings to create customized beverages. The store layout and organization are also optimized to
enhance workflow and efficiency.

Impact of Process Technology on Product Production

The process technology approach adopted by Starbucks enables the company to offer a wide range of beverage
options while accommodating individual customer preferences. It emphasizes quality control, consistency, and
attention to detail in the production of coffee products.
The utilization of process technology allows Starbucks to deliver a consistent and unique coffee experience across
its stores worldwide. It facilitates customization, flexibility, and a focus on delivering high-quality products to meet
customer expectations.

Q2; What uncertainties does Starbucks face in its value chain? Can Starbucks manage those uncertainties? If so,
how? If not, why not?

Ans;
Uncertainties in Starbucks' Value Chain:

Weather: The weather can impact coffee crops and the availability of high-quality coffee beans. Factors like
droughts, excessive rain, or temperature fluctuations can affect the yield and quality of coffee, leading to potential
supply chain disruptions for Starbucks.
Shipping and Logistics: Transportation and logistics challenges, such as delays, strikes, or disruptions in the supply
chain, can affect the timely delivery of coffee beans from the growing regions to Starbucks' roasting facilities and
retail stores.

Political Instability: Political instability in coffee-growing regions can create uncertainties in the availability and
sourcing of coffee beans. Conflicts, changes in government policies, or trade restrictions can impact Starbucks'
supply chain and its ability to procure high-quality arabica beans.

Economic Downturn: Economic downturns can lead to changes in consumer spending habits, making Starbucks'
products, especially premium-priced ones, less affordable for some customers. This can affect demand and impact
revenues and profits.

Starbucks can manage uncertainties in its value chain through several strategies:

Diversification of Sourcing: By sourcing coffee beans from different regions worldwide, Starbucks reduces the risk
of disruptions caused by weather or political instability in any single region. This diversification helps ensure a
stable supply of high-quality beans.

Supply Chain Planning and Collaboration: Starbucks can collaborate closely with suppliers and engage in
effective supply chain planning. This includes monitoring weather patterns, building strong relationships with
suppliers, and implementing contingency plans to mitigate potential disruptions.

Robust Logistics and Risk Management: Starbucks can invest in efficient logistics systems and transportation
networks to minimize shipping delays and disruptions. Additionally, the company can implement risk management
strategies, such as alternative sourcing options or buffer inventory, to manage uncertainties in the supply chain.

Adapting to Changing Consumer Preferences: In response to economic downturns and changing consumer
behaviors, Starbucks can adjust its pricing strategies, introduce more affordable options, and offer promotions to
maintain customer loyalty. This flexibility allows Starbucks to balance its vision of a unique coffee experience with
the evolving market demands.

Q3; Go the company’s Web site [www.starbucks.com] and find the information on the company’s environmental
activities from bean to cup. Select one of the steps in the chain (or your professor may assign one). Describe what
environmental actions it’s taking. How might these affect the way Starbucks “produces” its products?

Ans;

Starbucks has made several environmental commitments and initiatives throughout its value chain, aiming to
minimize its environmental impact. Here are a few examples:

1; Ethical sourcing and farmer support: Starbucks has various programs in place to promote sustainable farming
practices, such as the Coffee and Farmer Equity (C.A.F.E.) Practices. These initiatives focus on supporting farmers,
conserving water, protecting biodiversity, and reducing pesticide use.

2; Conservation and reforestation: Starbucks is committed to minimizing deforestation and supporting reforestation
efforts. They work towards ensuring that their coffee-growing regions maintain healthy ecosystems and biodiversity.
3; Energy and water conservation: Starbucks aims to reduce energy consumption and water usage in its stores and
operations. They implement energy-efficient technologies, such as LED lighting and high-efficiency equipment, and
promote water-saving practices.

4; Waste reduction and recycling: Starbucks focuses on waste reduction and recycling initiatives. They strive to
minimize packaging waste, promote recycling programs, and encourage the use of reusable cups and materials.

Q4; Research further the concept of lean organizations. What benefits does “lean” offer? How might a business like
Starbucks further utilize the concepts of being lean?

Ans;

Benefits of Lean:

1; Waste Reduction: Lean helps identify and eliminate non-value-added activities, reducing various forms of waste
such as overproduction, unnecessary inventory, waiting time, transportation, and defects. This leads to increased
efficiency and cost savings.

2; Improved Quality: Lean emphasizes the detection and prevention of defects at the source, leading to higher
product and service quality. By focusing on continuous improvement, Starbucks can enhance the consistency and
excellence of its coffee offerings.

3; Increased Flexibility and Responsiveness: Lean organizations are agile and capable of responding quickly to
changing customer demands and market conditions. This allows Starbucks to adjust its offerings, introduce new
products, and adapt to evolving customer preferences.

4; Employee Engagement: Lean encourages employee involvement and empowerment by providing them with
opportunities to contribute ideas, solve problems, and take ownership of their work. This fosters a culture of
continuous learning and improvement within the organization.

How Starbucks can further utilize Lean:

1; Value Stream Mapping: Starbucks can conduct value stream mapping to identify and eliminate waste throughout
its coffee production and retail processes. This involves analyzing the entire value chain, from sourcing and roasting
to customer service, to optimize efficiency and reduce non-value-added activities.

2; Continuous Improvement Culture: Starbucks can foster a culture of continuous improvement at all levels of the
organization. This includes empowering employees to identify process inefficiencies, suggest improvements, and
implement them in a systematic manner.

3; Standardized Processes: Implementing standardized processes and best practices across Starbucks stores can
promote consistency, efficiency, and quality in the coffee preparation and customer service experience.
4; Just-in-Time Inventory: By implementing just-in-time inventory management techniques, Starbucks can minimize
excess inventory and reduce holding costs while ensuring an adequate supply of fresh ingredients and products.

5; Training and Skill Development: Providing training and skill development programs for employees can enhance
their knowledge and expertise in coffee preparation, customer service, and lean principles. This enables them to
deliver high-quality products and services efficiently.

CASE STUDY 37
Smooth Ride
Q1; What has made Blue Bird’s quality initiative successful? Discuss how you think each of the
programs the company implemented contributed to what it is today.

Ans;
Blue Bird's quality initiative has been successful due to several factors, including the implementation of specific
programs that address quality control, employee engagement, measurement, and safety. Each of these programs has
contributed to the company's current success in the following ways:

1; Material Review Board: The establishment of a material review board allows Blue Bird to systematically evaluate
and address any quality issues related to materials used in the manufacturing process. This program ensures that
only high-quality components are used, contributing to the overall quality and reliability of the school buses.

2; Quality Control Lab with Maintenance Management System: The implementation of a quality control lab
equipped with a computerized maintenance management system enables Blue Bird to conduct rigorous testing and
analysis of its products. This program helps identify and rectify any quality issues before the buses are delivered to
customers, ensuring that they meet the highest standards of quality and safety.

3; Employee Suggestion System: By implementing an employee suggestion system, Blue Bird encourages its
employees to actively participate in improving the manufacturing process and product quality. This program taps
into the knowledge and expertise of the workforce, fostering a culture of continuous improvement and innovation.

4; Weekly Management Roundtable Meetings: Regular management roundtable meetings provide a platform for
discussing and addressing quality-related issues. These meetings facilitate communication and collaboration among
different departments, ensuring that quality remains a top priority throughout the organization.

5; Safety Incentive Program: The implementation of a safety incentive program has contributed to improving safety
measures and reducing workplace injuries at Blue Bird. By incentivizing safe practices and behaviors, the company
creates a safer work environment, reducing the potential for accidents and injuries that could affect product quality
and employee well-being.
Q2; How might value chain management concepts help Blue Bird become even more productive? What
would the company have to do to benefit from managing its value chain?

Ans;
Value chain management concepts can help Blue Bird become even more productive by
optimizing its operations and enhancing collaboration throughout the value chain. To benefit
from managing its value chain, the company would need to take the following steps:

1; Supplier Relationship Management: Blue Bird should establish strong relationships with its
suppliers to ensure a steady supply of high-quality materials at competitive prices. Close
collaboration with suppliers can help identify areas for improvement, streamline procurement
processes, and reduce lead times.

2; Streamlining Production Processes: Blue Bird can analyze its production processes and
identify areas for optimization and efficiency improvements. By implementing lean
manufacturing principles, such as reducing waste, improving workflow, and enhancing process
flexibility, the company can increase productivity and minimize production bottlenecks.

3; Collaborative Design and Innovation: Involving key stakeholders, including customers,

suppliers, and internal teams, in the design and innovation process can lead to better product
features, improved functionality, and reduced time-to-market. Blue Bird should foster a
collaborative environment that encourages input from all stakeholders to drive continuous
improvement and innovation.

4; Distribution and Logistics Optimization: Efficient distribution and logistics management are
crucial for delivering finished buses to customers on time. Blue Bird should optimize its
transportation networks, warehousing, and inventory management to minimize lead times,
reduce costs, and enhance overall supply chain responsiveness.

5; After-Sales Service and Support: Managing the value chain also involves providing excellent
after-sales service and support to customers. Blue Bird should focus on building strong customer
relationships, offering timely maintenance and repair services, and continuously seeking
feedback to improve its products and services.

Q3; From being named a “Best Plant” to being shut down is an ending that you might not have expected.
What lesson(s) can be learned from this situation in relation to an organization’s operations management?
Ans;
The situation faced by Blue Bird Corporation, from being named a "Best Plant" to ultimately
shutting down a facility, offers several important lessons in relation to an organization's
operations management:

1; Continuous Improvement: The journey towards operational excellence and quality should be
ongoing. Despite being recognized as a "Best Plant," Blue Bird faced challenges and setbacks.
This highlights the importance of continually striving for improvement, even when initial
success is achieved.

2; Adaptability to Market Changes: External factors, such as the global recession, can
significantly impact an organization's operations. Blue Bird's decision to centralize operations
and consolidate resources in response to the recession demonstrates the need for agility and the
ability to adapt to changing market conditions.

3; Embracing Lean Principles: Blue Bird's successful implementation of lean principles played a
crucial role in improving quality, efficiency, and safety. However, the situation also emphasizes
the importance of sustaining and continuously reinforcing lean practices to avoid potential
setbacks in operations.

4; Risk Management: Effective risk management is crucial for mitigating potential disruptions
and uncertainties. Organizations need to proactively identify and address risks that may impact
their operations, including economic downturns, market shifts, or changing customer demands.

5; Strategic Decision-making: Blue Bird's decision to close a facility was a difficult one but was
made after significant deliberation. It highlights the importance of strategic decision-making
based on comprehensive assessments of operational efficiencies, cost-effectiveness, and long-
term sustainability.

6; Measurement and Performance Evaluation: Blue Bird's emphasis on measurement and

performance evaluation contributed to its success in quality control, on-time delivery, and safety
improvement. It reinforces the importance of gathering accurate data, monitoring key metrics,
and using performance indicators to drive operational decision-making.
Q4; In the announcement about the plant’s closure, the CEO said that the centralization of all production
operations, technical staff, and services into a single facility would facilitate significant efficiencies.
Using what you’ve learned about operations management, what will it take to achieve such efficiencies?

Ans;

To achieve significant efficiencies through the centralization of production operations, technical staff, and services
into a single facility, Blue Bird Corporation would need to consider several factors and implement effective
operations management strategies:

Process Optimization: Streamlining and optimizing production processes is essential for achieving efficiencies. Blue
Bird should carefully evaluate and redesign its assembly processes, material flow, and supply chain logistics to
eliminate redundancies, reduce waste, and maximize productivity.

1; Resource Allocation: With the consolidation of operations, it is crucial to effectively allocate resources such as
manpower, machinery, and materials. Blue Bird should assess the workforce requirements, align skill sets with
tasks, and ensure optimal utilization of equipment and materials to minimize downtime and enhance operational
efficiency.

2; Standardization and Training: Implementing standardized operating procedures and providing comprehensive
training programs for employees is vital to ensure consistency and proficiency across all production operations.
Standardized processes help reduce errors, increase throughput, and facilitate smoother coordination within the
facility.

3; Technology Integration: Leveraging technology can play a significant role in achieving efficiencies. Blue Bird
should consider integrating advanced manufacturing technologies, such as robotics, automation, and data analytics,
to streamline production, improve quality control, and enhance decision-making capabilities.

4; Supply Chain Management: Optimizing the supply chain is crucial for efficient operations. Blue Bird should work
closely with suppliers to ensure timely and reliable delivery of materials, implement effective inventory
management practices, and establish strong partnerships that align with its goals of quality and efficiency.

5; Continuous Improvement: Embracing a culture of continuous improvement is essential for sustaining and
enhancing efficiencies. Blue Bird should encourage employee involvement in identifying process enhancements,
fostering a culture of innovation, and implementing feedback mechanisms such as suggestion systems and regular
management roundtable meetings.

6; Performance Measurement: Implementing robust performance measurement systems allows Blue Bird to track
key metrics and identify areas for improvement. By measuring and monitoring critical factors such as production
output, quality, lead time, and safety, the company can make data-driven decisions to drive efficiency gains.