Starbucks has been able to monetize these strategies not from deliberate attempts but from the benefits of strengthening its suppliers so they could also experience profitability and reinvest in their businesses.
Integrating to the Starbucks Supply Chain Management System
Starbucks moved beyond using their ethics and CSR initiatives to just support their supply chains and integrated them into their main supply chain systems as well (Witkowski, 2005). Starbucks has successfully defined the corporate value of their CSR programs as a result.
The CAFE program, when tracked as part of the broader Starbucks supply chains, showed that despite the higher costs associated with coffee and ancillary products, the company's quality costs were consistent and predictable due to a stable supplier base (Deutsche Bank 2006). The pricing models of Starbucks are specifically created to take into account high levels of commodity fluctuations including diary, sugar and paper. The company has traditionally managed this risk through the use of hedging and futures-based purchases to alleviate wide swings in pricing (Deutsche Bank 2006). The company has learned over time that the greater the level of stability in their supply chains, the more consistent the level of pricing behavior over time. The supply chain for Starbucks is shown in Figure 1, highlighting the tight integration with estates, small farms and cooperatives. These were the pilot areas of the CAFE program which has since expanded throughout the entire Starbucks value chain (Deutsche Bank 2006). Starbucks relies on a global product development process that seeks to introduce new drinks in...
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