SUPPLY CHAIN MANAGEMENT

Strategic Supply Chain Management

Strategic Supply Chain Management

Introduction

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

For a moment consider what has to be accomplished in order for a customer to walk into a Starbucks coffee shop and order that double espresso mocha frappachino? How does Starbucks Plan, implement and manage all the companys day to day transactions that gets needed component parts and goods from all the companys suppliers and deliver them to the customer? The way that Starbucks has become a common household name is through the efficient management of the companys supply chain, but what does that mean? How does a company manage supply chains effectively?First, one must understand what supply chain management is, Supply chain management is the process by which a company integrates and manages the way that suppliers, manufacturers, warehouses, and retailers work together in order to make sure that products are produced in sufficient quantities, and are shipped to the proper locations on the best time schedule in order to minimize costs and fulfill system level requirements (Kaminsky, 2003).

Many elements exist within a supply chain like location, production, inventory and transportation. Starbucks acquires its prime raw ingredient known to the rest of the world as coffee beans from all over the world, suppliers in Brazil, Central America, East Africa, Malaysia and Indonesia form the basis of Starbucks supply chain (Starbucks, 2007).

Starbucks acquires its raw goods from suppliers located all over the world, and because of this the need for a well planned, implemented and managed supply chain is paramount. Starbuck employees a supply chain management technique that is referred to as Coffee and Farmer Equity or C.A.F.E., this program has three categories used to help make Starbucks supply chain more green (Starbucks, 2007). The first category stems from Starbucks realization that the majority of its producers will be smallholders grouped into an organization or groups with the purpose of growing the beans that will later be sold to Starbucks suppliers, this group is referred to as the producers (Starbucks, 2007).

The next category is referred to as the producer organization, which can include cooperatives, associations, or federations and is responsible for organizing and facilitating the actions needed to collect and distribute the farmers cocoa beans (Starbucks, 2007). The final category is called the suppliers, Starbucks can have multiple suppliers within a supply chain and therefore, this category refers to the people or organizations that supply the cocoa beans to Starbucks or those that take physical control of the cocoa beans prior to the shipment from the country of origin.

This management technique was instituted when Starbucks realized that there was a real need to ensure a sustainable supply ...