SCM Starbucks
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Reading Assignment: Starbucks Corp.: Building a Sustainable Supply Chain
From which parts of the world is coffee sourced? Why is that a concern for Starbucks?
50% from Latin America, 35% from the Pacific Rim and 15% from East Africa. Starbucks had a significant risk of supply shortage due to regional instability. Without visibility into the supply base, Starbucks did not have a good way to predict the impact of regional instability to its coffee supply. With increased visibility, an outbreak of regional instability could be linked to
a particular quantity of expected coffee supply, giving Starbucks advance notice of the need to find alternative sources of coffee. This could allow Starbucks to be proactive in managing supply disruptions even before they arose.
Describe their supply chain: suppliers, processors...
Most of the coffee producers were small to medium sized family-owned farms. Some farms were able to process their coffee beans, but most sold their outputs to processors through local markets (mills, exporters, or cooperatives). The processors turned coffee “cherry” into parchment or green coffee, and then sold it to suppliers who were exporters or distributors. These suppliers provided many services to processers and farmers, such as marketing, dry milling, technical coffee expertise, financing, and export logistics. Starbucks also purchased coffee through agents from individual estates and producer associations in addition to
suppliers, or directly from the processors.
What is CAFÉ practices and what is its purpose? What are the benefits to Starbucks?
C.A.F.É. practices are a set of coffee buying guidelines designed to support coffee buyers and coffee farmers, ensure high quality coffee, and promote equitable relationships with farmers, workers, and communities, as well as to protect the environment. These practices benefit Starbucks by ensuring a consistent, high-quality supply of coffee beans, enhancing their brand image, reducing supply chain risks, and positively impacting the communities from which they source their coffee.
How does a company join CAFÉ practices? What are the requirements? What are the benefits once they join?
To join companies must meet stringent criteria, including commitment to sustainability, quality standards, ethical practices, and transparent verification processes. Once part of the CAFÉ practices, companies can benefit from expanded market access, price premiums, improved reputation, training and support, and increased resilience in their operations and communities. What are some of the challenges Starbucks faced in implementing CAFÉ practices?
1.
Since members of the supply chain had very poor information systems, it could be very difficult to gain economic transparency – a key goal of CAFÉ practices – from these members. 2.
As CAFÉ practices were updated and refined, it became a daunting job to effectively communicate the revised requirements and practices to farmers, suppliers, and other members in the industry. 3.
Very slow and labor-intensive process to evaluate farmers for scores in CAFÉ program. Auditors had no choice but to travel to the farms, which were often located in barely accessible areas.
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