Then Gibbons came up with a three-step supply chain transformation plan, which had three main steps – reorganizing the supply chain, reducing the cost to serve stores and improving execution, and building supply chain capabilities.

The first step focused on reorganizing the supply chain. This called for centralizing the fragmented supply chain. It was started in 2008 and involved simplifying the complex supply chain structure and reorganizing all the jobs into four functional groups – plan, source, make, and deliver. All the people involved in planning, be it new products, suppliers, production, replenishment, etc. were put into the plan group. ..

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THE STORES

At the stores too, Starbucks was looking at providing a better experience to the customers. It started observing what was happening at the stores and realized that just making all the products available would not necessarily result in happy customers. What was needed was an improvement in the way the brew was made and served. ..

THE RESULTS

The results of Starbucks’ supply chain transformation were reflected in the operational costs of the company. The operating income also showed an increase. In the first two years after the reorganization, Starbucks saved about US$ 500 million per year...

EXHIBITS

Exhibit I:Starbucks – Roasting Plants and Distribution Centers