PROJECT PLANNING & SCHEDULING

Starbucks corporation has a variety of projects ranging from developing a new type of drink to renovating a location. For the purpose of this blog we will focus on a single retail location of the company. Starbucks retail outlets only really has two projects. These projects are building/renovating stores and operations changes. This blog will focus on a recent operations change that just occurred. The project is repeatable routine of beverages.

The tasks for the project are:
1) Gather information regarding customer wants
2) Analyzing the wants into categories
3) Create a training plan to deliver to stores
4) Train the executive regional trainers on delivery of repeatable routine to the district managers
5) District managers train all store managers within district on repeatable routine
6) Store manager set store meeting on repeatable routine
7) Individual reinforcement of repeatable routine
8) District mangers check on store partners on knowledge/ability of repeatable routine




Once the tasks are set Starbucks uses network diagrams to ensure proper timing of the rollout of repeatable routine. To create this network diagram Starbucks utilizes Microsoft's powerpoint. They also use this program to create the training books to be given out to the mangers. This allows for easy reading and for changes that may need to occur within the tasks much easier, as well as send out corrections to the store faster and more efficiently.

The rollout normally goes smoothly and little recommendations are needed. The biggest recommendation that needs to be delivered is to obtain feed back from partners as well as the customer. This will be vital with timing of the roll out for tasks 6-8. This roll out happened far to quickly for a major change and left many partner confused as to proper operating flow

Quality Management

Starbucks uses several quality systems.  The first starts with the baristas on the floor.  The drinks are called from the barista on the point of sale to the barista making drinks.  This is then recalled to the first barista.  When the drink is called back it is checked for accuracy as well as making sure no drinks are missed.  After the drink is made the barista checks the drink for accuracy before handing it off to the customer.  A second system that Starbucks uses is random check ins from District Managers (DM).  In these check in the DM talks to the customers, watches the baristas, and do random checks of drinks to ensure quality.  The final system the Starbucks uses is a third party.  Starbucks uses a company called ECOSURE to to perform checks on all the stores to ensure all quality standards are met every six months.  The stores have a copy of the required qualifications that it must meet to prepare for these checks as well as maintain these standards.
Quality of Design: A cross-functional design team, including members from marketing, engineering, operations, and other departments are responsible for the quality of design. Customer needs are taken into consideration during this process. Starbucks knows customers are looking for a variety of caffeinated or decaffeinated drinks to start their day. The CEO of the company added even more choices after spending time in Italy and loving their blends of coffee. They have experimented with many different combinations and flavors, which is what makes them so popular today.
Quality of conformance and Availability
Quality of conformance is meeting specifications regardless of what quality of design was reached. For example, Starbucks meets specifications by allowing customers to have their coffee to their liking, non-fat, decaffeinated, foam, a shot of espresso, and other personalized options. Also, availability, reliability, and maintainability, are Important for conformance. Availability is when the product or the machines to make the product are up and running. Starbucks has more than one machine in each store and each employee is trained to service the machine to ensure that it’s working, which makes them more reliable as well. To maintain each machine employees clean them every night and have proper training to use them correctly. The rare occasions it does fail a new machine is ordered or fixed depending on the severity of the problem and within three days everything is back to normal.

Field Service
Field service is customer service and refers to warranty and repair or replacement of the product after it has been sold. Starbucks can fix their problem very quickly because if its not to the customers liking they could just add whatever is missing or make another one to meet the expectations. Also, field service refers to promptness and Starbucks, although there are many locations that have a lot of traffic, speed things up by splitting up the work two people may be in charge of ringing up orders while two others make the drinks or prepare the food the customer orders.
Some new ideas that Starbucks can use as a system is increase the ECOSURE checks to every four months.  This will help ensure that the standards are better maintained.  A second system that could be put into place could be a way to measure the drinks weight before handing off to the customer to ensure proper weight.

QUALITY CONTROL

Starbucks use an attribute control system, which is the measurement based on the quality characteristic on a discrete scale meaning the item is good or defective. This is where percentages are used for the amount of defects. To calculate they take a sample of units at random from a process at specified intervals and the results are plotted on the p control chart. To calculate the center line and control limits of the p chart they take a large number of samples and the percent defected is calculated for all samples to give a true average.

Continuous Improvement is said to be undertaken if the process capability is not adequate to meet present or future needs. Articles from both the Wall Street Journal and CBS News confirm that Starbucks implements continuous improvement however we could not find information of the specific diagrams used.



Lean systems have the objective if eliminating waste defined as non-value-adding activities. Six sigma on the other hand are aimed at reducing defects as seen by the customer. Recently many companies have started combining Lean and Six Sigma practices and Starbucks is one of them. In a Wall Street Journal article Starbucks is described as utilizing a combination of lean and six sigma is practiced. According to a branch manager at one of the locations “It does not make any sense to waste people’s time, energy and resources in doing unnecessary things at the workplace.” Examples of this includes placing equipment and ingredients where they are needed, using one expresso machine and washing pitchers after every use.

Recommendations
The aforementioned articles discussed how Starbucks has high quality control but also highlighted a negative impact due to that which was poor time management. The baristas were responsible for conducting the quality checks such as heating milk for each individual order, rinsing pitchers after each use and stocking ingredients. Though this increased quality, customers were becoming disgruntled as they had to incur long lines and longer wait times. Our group recommends that Starbucks should find a way to maintain its quality control methods but improve its time management. One such way is by having another employee be responsible for the quality checks so baristas could focus on coffee production which should reduce the actual order time and higher customer satisfactiom.

Service Process Design

SERVICE-PRODUCT BUNDLE
The three elements of the service bundle are explicit service, implicit service, and facilitating goods. In the case of Starbucks the explicit service is accuracy and receiving relatively quick assistance. The implicit service refers to how the customers feel about the environment the way workers treat them and how the surroundings add to a pleasant experience. The facilitating goods are the foods and beverages consumed that should be made to how the customers asked for it. This is what should be followed before a good is delivered to appeal to customers and have them return.

SERVICE MATRIX
On the Customer wants and needs in the service package Starbucks uses Standard with options; using moderately repeatable sequence. Customer has some decision making power. This is evident as though customers have the ability to customize their coffee specifically for them, the choices they have are standardized; somewhat mass customization. On the operations service process design Starbucks uses a limited number of process pathways. Line flows, low work complexity. As explained in the process selection section, Starbucks uses a line flow process. All coffee is made in a sequential order; following the same format repeatedly. Hence Starbucks falls into the Co-routed services section of the matrix as it offers a moderate number of choices to customers using moderately standardized processes.

CUSTOMER CONTACT
Starbucks interacts with customers in two ways.  The first way is at the Point of Sale (POS).  The interaction with the customer begins with a greeting, followed by taking the drink/food orders, money exchange, and a farewell.  Pleasant conversation is encouraged, especially with the regular customers.  This builds the idea of the third home: Starbucks's phrase for its ambiance meaning that a person has their house, their work, and their Starbucks to make them feel comfortable.  The second interaction is taken place over the phone or by email concerning questions, comments, or complaints that they might have.  During the the first set of interactions the customer has a high level of involvement.  The customer has all the choices in how they would like their drink made.  Also, the entire interaction take place face-to-face making the interaction more personal for the customer.  There is no self-service or technology used in these interactions.  The second interaction, has medium involvement with the customer and has no face time. 
 
Starbucks supports its partners in several ways.  The support starts with it supervisor team.  These partners are trained with deployment maps.  These maps tell the supervisor where every person should be placed on the floor at any given time based on the number of people on the floor.  Also, the maps tell what each person is responsible for while they are working.  This helps eliminate confusion, as well as control the possible variability that the customers can create with their orders.  The baristas are also trained with various different acronyms that tell the barista how to handle many situations they may run into, as well as easy ways to remember information about different products. 
 
SERVICE RECOVERY
If a situation does arise, Starbucks has several different ways to rectify the situation.  The first way is with their guarantee.  This guarantee is that a customers drink should be made right every time.  If not let your barista know and they will be happy to remake it for you.  This is also called, within company, a right now recovery. This allows the barista to remake the drink to any specifications that were missed in the previous attempt.  If the right now recovery is not enough to fix the situation, the barista can give the customer a recovery certificate.  This is a coupon that allows the customer to recieve any drink of their choosing for free.  Finally Starbucks also has the store managers as well as the district managers leave their business card in the store.  This allows the customer to have direct communication with the management if any situations become out of hand.

PROCESS SELECTION

PRODUCT FLOW
Starbucks coffee uses an assembly line type of product flow they use.  Assembly line flow is characterized by a linear sequence of operations. The product moves from one step to the next in a sequential manner from beginning to end.   When a customer orders coffee, this product is made from one step to the next from beginning to end.  A customer will specify the type of coffee he wants and it is made adding the ingredients in a systematic way.

CUSTOMER ORDER PROCESS
Starbucks uses an Assemble to Order (ATO) process when helping customers. ATO is a hybrid or combination of Make to Order (MTO) and Make to Stock (MTS). Starbucks has the inventory in every branch to reach customer needs, but customers also have the option of personalizing it to their liking. For Instance, a person can order a non-fat latte or a frapuccino without whip cream. The product is made when a customer puts in their order yet all the materials are kept at hand for workers to make each order accordingly. Also, they keep certain things made at all times on hand like caffeinated and decaffeinated coffee because it’s a common order that’s expected to sell and can be customized for the specific customer such as adding sugar or milk if they’d like to.

PROCESS CHARACTERISTICS MATRIX
The process characteristics matrix has six possible combinations that a company can adopt. Starbucks' position on the matrix is Assembly line - Assemble to order. Even though every drink is customized to each customer, they follow the same process. This is done because all materials are made assembly line in bulk for Starbucks. Because of this the baristas are able to follow simple recipies to quickly push the product to the customers. This configuration is common in fast food.

FACTORS INFLUENCING PROCESS SELECTION
Some of the factors influencing the way that Starbucks does their process selection include market conditions; including what do customers want and in what quantities. Starbucks also takes into consideration what is offered by competitors like Dunkin Donuts. Customers might like some of our choices and some of theirs so it is up to Starbucks to make decisions with the given information. Capital requirements are another factor that influences Starbucks process selection; the actual monetary requirements to set up production. This is why it is important to know the amount of capital we have in Starbucks before making decisions like expanding or introducing a new product line. Availability and cost of labor is another factor influencing process selection. Since Starbucks employs different hourly employees at any of its stores, it is important that there are enough employees to run the place smoothly. Not only is the labor easily available but also is their employment cost efficient. Lastly state of technology is another factor influencing the process selection. Inventory is managed electronically and would not be possible if the right technology where not in place. Inventory management is one the keys to success of Starbucks because they can do it easily and also reducing their overhead costs.


ADOPTION OF MASS CUSTOMIZATION
Starbucks currently utilize two types of mass customization in the production of their beverages. One form is modular production - assemble to order process as the baristas assembles standardized components at the moment of sale for its customers. For example each customer’s coffee is customized specifically for them due to the fact that they choose the specific ingredients which are the standardized components such as milk, fat free milk, non dairy creamer, sugar, sweetener etc.
The second type of mass customization is Postponement which is the deferring of a portion of the production until the point of livery. For example standardized beverages such as frapuccinos is brewed and awaits the differing aspects such as whip cream, which is held back to be added at the point of sale.

INVENTORY MANAGEMENT

Inventory is described as “ a stock of materials used to facilitate products or satisfy customer demands.” Typical inventories include raw materials, works in progress and finished goods. (pg 363 of the text) Inventory Management is described as specifying the size and placement of stocked goods.

With the nature of the business the finished goods tend to be perishable inventory, Starbucks uses a P-system and a EOQ system for inventory management on a store level. This system helps the company reduce unnecessary waste and shrinkage within their inventory. The inventory is tracked by computer programming that is attached to the point of sale registers and through the closed network online ordering with Bartlett Deliveries, the delivery company for stores. This program is called Inventory Management Systems (IMS).


Starbucks does its shipping and ordering in two ways. The first is for the retail of the store using the P-system. This order is placed every seven days with a three day lead time. Various pars are set for the different SKUs throughout the store. Over stock for the entire inventory is set at 15% to ensure enough retail for customers. The second order is done on a daily basis using EOQ. This order has a two day lead time. This order is placed for all the materials, for example milk, espresso, and cups, that are needed to make drinks as well as the short life pastries. Sales for Starbucks generally have constant demand patterned with the days of the week. Only on rare occasions does the demand vary. This coincides with the changing of the seasons and school breaks.

On a corporate level, the Starbucks roasting plants/warehouses use a Q-system and a P-system as well. Starbucks uses the Q-system for roasting their coffee. They have set reroasting point for their whole bean inventory. Because it takes on average 3 hours to roast a batch of Starbucks Coffee, they are able to keep up with the demand of the many varieties that they sell. This ensures that they can meet the demand of the stores. The plants use P-system for all other product, for example bottled beverages. These products are bottled for Starbucks by the Pepsi Bottling Corporation and are shipped only on a monthly basis to the plants.

INTRODUCTION

Starbucks coffee company as it is now known was first started as a single store in Seattle’s historic Pike Place market in 1971, where it still stands today (pictured right). It was created by three entrepreneurs; english teacher - Jerry Baldwin, history teacher - Zev Siegl and writer - Gordon Bowker. Starbucks orginally started as a coffee bean store but has grown to now offer approximately 14 varieties of coffee in addition to other products.

In 1981 Howard Schultz joined the company in Seattle as the Director of Marketing. In 1983 Schultz visited Italy and was amazed by the coffee varieties and industry there. Upon returning he proposed that Starbucks offer traditional expresso beverages and beans. The idea was rejected so Schultz left Starbucks and opened his own coffee company called II Giornale in 1985. In 1987 the owners of Starbucks sold the company to Schultz for 3.8 million dollars, who then rebranded II Giornale as a Starbucks and the chain of coffee companies was born. Presently Schultz still serves as the chairman, president and cheif executive officer (CEO) of Starbucks. Schultz is also a significant stakeholder in Jamba Juice which can best be described as a "better-for-you" beverage company.

Under Schultz’s guidance Starbucks grew from a single coffee bean company in seattle to probably the most famous coffee company worldwide. Starbucks has 15,000 stores in 50 different countries. In America alone there are 7950 Starbucks outlets. Starbucks is also very philanthropic; they do community service, a recent example was helping in the effort to rebuild New Orleans after hurricane Katrina. They are environmentally responsible as they practice recycling and water conservation to name a few. Also the operations department really emphasize 'ethical sourcing' by purchasing their ingredients and other inputs such as coffee, tea and cocoa from ethical sources as opposed to immoral or illegal suppliers such as those who use child labor.