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IOS (Introduction to Operations and Supply Chain Management ) ASSIGNMENT (VII Trimester) Order Fulfillment and Customer Service Process Of Starbucks Submitted to: Prof. Dr. Rahul G. Burra...

IOS (Introduction to Operations and Supply Chain Management ) ASSIGNMENT (VII Trimester) Order Fulfillment and Customer Service Process Of Starbucks Submitted to: Prof. Dr. Rahul G. Burra Submitted by: Kaavya Kashyap(2022-5IPM-29) Bhavika Rungta (2022-5IPM-14) Archita Sharma(2022-5IPM-68) Himani Agrawal(2022-5IPM-24) Devika DJ(2022-5IPM-17)  I. Introduction In 1971, three college friends launched Starbucks near Pike Place Market, Seattle, selling coffee beans, teas, spices, and coffee-making equipment. Although not the first coffee shop chain, Starbucks helped popularize a unique café culture. In 1981, Howard Schultz, captivated by Starbucks' coffee, joined the company. A 1983 trip to Milan inspired him to recreate Italy’s espresso culture in the U.S., envisioning Starbucks as a "third place" between work and home. Initially met with skepticism, Schultz left and founded Il Giornale in 1985. In 1987, with Bill Gates Sr.'s assistance, Schultz bought Starbucks for $3.8 million. Under his leadership, Starbucks grew into a global coffee giant with over 38,000 stores, introducing iconic products like Frappuccino and the Starbucks Rewards program, transforming the brand into a $90 billion company. The operational strategy of Starbucks, primarily since Howard Schultz returned as the CEO in 2008, has contributed a lot to the current success. This was based on the company's recognition of the need to revitalize the brand, regain connection with customers, and improve sales that were experiencing a downturn. Schultz emphasized core values and customer experience to establish operational adjustments. The change initiated a legion of essential operations directed at the improvement of the overall customer experience, which eventually set up the foundation for the rejuvenation of the company. Training and development of employees make Starbucks operate successfully. Closing 7,100 outlets for one day with all the baristas for training translated to Starbucks' commitment to high-quality coffee and exceptional customer service. Spending more on technical and soft skills made the employees better equipped to provide an upgraded experience for customers. In addition, Starbucks further embedded the concept that every employee plays a crucial role in enhancing the satisfaction of customers since they empower them to help resolve consumer complaints. Success in operations at Starbucks has largely been steered by technological advancement and community involvement. The mobile application of Starbucks has transformed convenience in transactions to its customers through mobile order and pay whereby long lines in long queues have nearly become extinct while being personalized through the Starbucks Rewards program. There was also a positive influence on consumers' values since the company did not compromise on ethics in sourcing, environmental sustainability, and community-related projects, thus enhancing the brand image and loyalty. With this integration of these operational techniques, Starbucks improved its customer service and set new benchmarks for success in the café market, further helping Starbucks to become a stronghold as a market leader in its field. In 2011, Starbucks successfully entered the Indian market by teaming up with Tata Global Beverages in a 50:50 joint venture, branded as "Starbucks – A Tata Alliance." With this alliance, Starbucks would now reap the benefits of Tata's immense local market understanding and strategic network while it would provide technical expertise and brand strength. The firm sources and roasts the coffee locally, marking the first time that Starbucks has partnered with a local roasting facility. Such a partnership epitomizes the requirement of selecting local partners while venturing into emerging markets; it might grant access to key resources and a deep understanding of the institutional environment. Starbucks' knowledge of crafting differentiated stores that provide a local café experience and Tata's familiarity with the institutional environment has played a significant role for the brand in India. Why is Process Analysis Important? In any competitive industry, process analysis is key to improving operational efficiency, speeding up processes, reducing error, and delivering quality products to customers. 1. Improvement of Speed : Speed in delivery, especially during peak times when customers expect to receive their orders without much delay, is crucial. This eventually means that order fulfillment is studied for areas of inefficiencies, workflows are optimized, and waiting time is decreased. Pre-preparation of parts of some items can greatly be enhanced with the streamlining of workloads for employees. 2. Minimum Mistakes: Errors such as wrong or missing orders are causes of dissatisfied customers; still, it leads to costs in running the organizations. Firms can see where things tend to go wrong-by order-taking, hand-offs between employees, or at preparation-and implement better training, ways to improve communication, or increased technological aids, like digital display of orders, to avoid mistakes and save on resources. 3. Customer Experience Enhancement: Customer satisfaction is the result of a smooth and efficient process. Process analysis will even identify areas such as long waiting times or order errors so that a firm can fix them quickly and efficiently. Increasing satisfaction with what has been forecasted increases brand loyalty and keeps customers. Benefits of Process Analysis 1. Improved Operational Efficiency: Process analysis helps in the optimization of the workflow, specifically during high demand. In order to improve resource application, reduce waste, and simplify the whole process in its ability to deliver faster service and maximum satisfaction to the customer, companies may attempt the segmental breakdown of the steps involved in the fulfillment process. 2. Determination of Bottlenecks: The order fulfillment process, from placement through preparation and delivery, usually experiences bottlenecks and is therefore delayed. Process analysis reveals bottlenecks and offers perspectives for redesigning workflows or the introduction of better technologies with the management of tasks. 3. Overall Better Performance This knowledge can then be eradicated from such problems which are delaying, erring, or bringing dissatisfaction to the customer. Thus, companies can continuously have better processes in place to meet their customers better and enhance performance overall. In-depth process analysis helps speed up operations, reduce errors, and enhance the overall customer experience by identifying and addressing pain points such as long waits, order delays, or communication breakdowns. Optimizing operational performance through process analysis also strengthens the brand in terms of loyalty and long-term success. II. Starbucks Corporation’s Internal Analysis  Business Model of Starbucks The core competency of Starbucks Corporation has been its successful usage of key product differentiation tactics by providing the customers a premium product mix of high-quality drinks and snacks. Their brand equity is built on providing every customer a unique "Starbucks Experience," derived from superior customer service, clean and well-managed stores. Another of the company's core competencies is its method of developing very strong internal and external linkages with the suppliers, which is crucial to the company's organic expansion into the foreign markets, and also aligns with its long-term strategic goal of being the most recognised and respected brand in the world. SWOT Analysis of Starbucks III. Order Fulfillment and Customer Service Process Flowchart Starbucks has been seamless in its efforts to perfectly execute orders that appeal to its customer base. The way that they have adapted to their customers needs and their personalized coffee orders is what makes them the leader in their industry. In the provided flowchart, their order fulfillment and customer service process has been broken down into several steps that are crucial for a smooth and customer-centric experience from entering the store to receiving the order. However, like any process, this too has some flaws that we’ve hoped to find. Following is a detailed explanation of the process: https://whimsical.com/starbucks-HBLFoL7yEKoGGA3nxqwQ5p  1. Customer Enters Starbucks The customer experience begins as soon as they enter the Starbucks store. This initiates the process of order fulfillment, and it sets the tone for the interaction between the customer and the store staff. It is important to note that the flowchart considers both the physical entrance and potential digital orders, which are tracked separately in the process. It is important to note that the customers that order their food and beverages digitally on the app are also our customers. They are picking up their orders along with the other customers but their order was received before them and will be ready to serve before them as well. 2. Assess situation Once they’re inside, the customer assesses the situation in the store. This involves evaluating how long the queue is and whether or not there is available seating. The decision here plays an important role in determining if the customer will proceed further or leave. If the line is perceived to be too long, or if the seating is fully occupied, the customer may opt to leave the store and go somewhere else, thus ending the process early. However, if the wait time seems manageable or seating is available, the customer decides to stay and continue. 3. Is the customer in Line? The next aspect is whether or not the customer is in a line. In case of being in a line, the customer will have to wait for approximately 6 minutes. Waiting time can be more or less based upon when it is during the day and other busy moments the store has. In case of no line, then a customer can bypass this waiting time and walk right up to the counter where he can find his ready barista to take his order. 4. Barista greets the customer The barista greets the customer on reaching the counter. This is a very important interaction because it creates a friendly welcoming ambience. This step has been estimated to take about 2 minutes of which the customer may either make their orders or ask the barista. 5. Customer places order Immediately after the greeting, the customer makes their order with the barista. This is the core of the process whereby the customer is able to clearly communicate their preferences, which the barista will need to use to fulfill the request correctly. 6. Barista inputs the order into POS Once the customer places an order, the barista inputs it into the store's Point of Sale (POS) system. POS systems are basically hubs that manage sales, customer experience, promotional offers, and operational processes. This electronic record ensures that the order is tracked, both for processing by the beverage station and for payment purposes. 7. Customer pays for the Order The customer then makes payment after the order has been logged into the POS system. This is one of the final aspects of the transaction where the customer sealing their commitment to the order. This will then proceed to selecting the payment method. 8. Payment Method Now, the customer will choose a particular payment method out of cash, card, or UPI. Once the payment method is chosen, it is processed in such a way that the store will collect the payment before the order is done. Then only, after obtaining confirmation, would the transaction proceed to the next step. Starbucks offers several payment options for a convenient customer experience. Customers can pay using the Starbucks app, which allows them to earn Stars through the Starbucks Rewards™ loyalty program. Accepted payment methods include Starbucks Cards, UPI, and major credit/debit cards. Additionally, customers can pay with cash, and contactless payment is available for a faster checkout process. 9. Barista Issues Receipt After payment, the barista hands the customer a receipt. This usually displays an order number which he/she will use to know whether or not her/his order is ready. It is also a proof of payment and aids in the prevention of confusion during fulfillment of orders. 10. The customer then walks to the pickup area. There, they wait for the barista to prepare the drink while using the receipt as a reference in case there are multiple customers waiting in line for various orders. 10. Customer Moves to Pick Up Area Upon receiving the order, the customer proceeds to the designated pickup point. At this point, the customer waits until the barista has prepared the drink and, in the event that there are several customers waiting for orders, the receipt serves as a reference. 11. Order Ticket sent to Beverages Station On electronic output, the POS system transmits the details of an order straight to the beverage preparation area so that the specific drink or its requirements are communicated to the assigned barista. This ensures smooth handover from ordering to preparation. 12. Barista prepares Ingredients At the beverage station, the barista gathers all the ingredients meant to be used for preparation of the order. This is the early stage of drink preparation where careful observation should be there so that an error is not made to prepare the correct order as per the customer's specifications. Ingredients include roasted coffee beans, pre-made brews, sugar syrups, creamers or milk etc. 13. Choosing Coffee Type At this stage, the flow splits according to the type of coffee ordered. To order the drip coffee, for instance, is more time-taking than others since all that would need to be done would be to pour hot water over ground beans, which should take roughly 2-3 minutes. While a manual pour-over cone requires human power to add the water to the coffee grounds, drip coffee uses mechanization instead. For other complex orders that are not drip, such as lattes or cappuccinos, the barista would take about 4 minutes to compose the drink from scratch. The difference in preparation time would ensure that the customer would get the right type of coffee, whether complex or not. Usually the number of baristas are not enough to cater to all the customer orders which eventually increase the throughput rate of the process. 14. Calling the customer’s name They then call out the customer's name or order number to alert the customer that his or her drink is ready for pickup. This is to help better organize the pickup process, especially when there are several customers waiting for their drinks. Clear communication at this step is crucial and will ensure that there is no mishearing or confusion in the pick-up process. 15. Customer receives order The customer collects their order from the barista at this stage. At this point, the order fulfillment process is almost complete. The customer inspects the drink to ascertain whether it is according to their expectations before they leave the store. At this stage, even the customer that placed their order digitally is also picking up his order but the cycle time for his order fulfillment is lesser than those who gave the order after entering the cafe. 16. Customer leaves happily The final aspect of the process then concludes with the customer walking out of the store, presumably well satisfied with the services they received, and what they ordered. Such an outcome reflects a well executed order fulfillment and customer service process, which satisfies the customer and may have them return. 17. Feedback Loops Starbucks has created a strong feedback-driven culture that encourages employees to share their insights. In 2021, the company launched a new initiative called "My Starbucks Idea," which allowed both customers and employees to directly propose improvements. This initiative led to over 1,000 ideas being implemented, including the popular Oat Milk latte. By making customer feedback a key factor in its innovation process, Starbucks not only expands its menu but also strengthens its bond with loyal customers. Businesses aiming for success should prioritize creating similar feedback channels and actively listening to their stakeholders. After careful consideration of the existing process at Starbucks, we’ve deduced the following variables: - Throughput Time: 12 minutes - Bottleneck Activity: Wait-in-line, Calling out Customer order to Barista - Bottleneck Time: 6 minutes, 2 minutes IV. Advantages of the Process The key advantages that Starbucks’ order fulfillment and customer service model provides which makes them the market leader are as follows: 1. Personalized Customer Experience One of Starbucks' strongest advantages lies in its ability to deliver a highly personalized customer experience. From the moment a customer enters the store, the barista engages them with a warm greeting, which fosters an atmosphere that is welcoming. The focus on personal interaction doesn't stop there. Starbucks lets one personalize every dimension of his or her drink order, from the size to the type of milk used in and the sweetener preferred. Such attention to the minute dimensions of individuals makes each visit unique, giving each consumer an experience like no other. This level of personalization has set Starbucks apart from many competitors by developing brand loyalty while keeping customers coming back for a consistently great experience. 2. Seamless Order Customisation Customization, at the heart of Starbucks' service, gives every customer the freedom to create their perfect beverage from thousands of options. If a customer wants a dairy-free latte, no sugar in flavor syrup, or extra foam, the flexibility with which choices are easily made is provided by Starbucks. The order taker, in store and through electronic means, is also facilitated to take all the custom orders with pinpoint accuracy. By integrating customer-specific instructions into the digital Point of Sale (POS) system, Starbucks ensures that the barista has all the information they need to prepare the order exactly as requested. This level of flexibility in beverage creation not only increases customer satisfaction but also appeals to a broader demographic, as it caters to various dietary preferences and lifestyles, including vegan and keto options. 3. Efficient and Consistent Service Starbucks has streamlined its process to ensure that efficiency complements consistency while ensuring a seamless experience for customers, from order placement to fulfillment. The flowchart illustrates how even during peak times, Starbucks has designed its process to handle customer traffic, reduce wait times as much as possible while maintaining high standards. For instance, while waiting in line, customers are still interacting with the Starbucks environment, such as by checking menus or interacting with the barista. Digital orders also improve operations, allowing online customers to avoid in-store waiting. Therefore, it results in a high degree of operational efficiency, making the experience more consistent-whether a customer orders how or when. This reliability is necessary for the brand image of Starbucks and makes it stand apart in a congested marketplace. 4. Strong Digital Integration No other company compares with Starbucks' seamless integration of technology into the digital mainstream. The company's mobile app and ordering systems are designed to offer customers a fast, convenient way to place their orders ahead of time. This system caters to customers who prefer not to stand in any in-store line at all; it does this by integrating the digital experience with the physical store operations. Customers can order their own drinks, pay beforehand, and grab their cup when ready, which is usually within a few minutes. This digital-first approach has helped alleviate line congestion in stores, increase customer satisfaction, and boost overall efficiency. Its digital rewards program also delivers customized offerings, helping the brand increase customer loyalty and repeat visits. This sophisticated blend of in-person and digital experiences keeps Starbucks at the forefront of both technology and customer service. 5. Customer Driven Innovation Starbucks remains flexible and innovative, fostering a culture of actively encouraged feedback. The "My Starbucks Idea" initiative has brought forth so many new products and service improvements that oat milk, for example, among other non-dairy milks, has been introduced into the market, which resonates with customers who are changing their preference. This commitment to listening to both customers and employees ensures the company remains ahead of market trends while deepening its connection with its audience. The feedback loop boosts customer satisfaction and positions Starbucks as a brand that evolves based on consumer demands, furthering its leadership position in the industry. V. Shortcomings of the Process 1. Long Waiting Time - One of the most pressing issues in the Starbucks Order Fulfillment Process is excessive wait times, which can significantly frustrate customers and potentially lead to lost business. Currently, customers spend 6 minutes waiting in line and another 7 to 8 minutes waiting for their order to be prepared. Given Starbucks' target demographic of busy urban professionals, these extended wait times can have a substantial negative impact on customer satisfaction and overall throughput. A Bloomberg report highlights how sometimes some customers and employees have to endure wait times up to 40 minutes. Such inordinate delays damage the reputation of Starbucks and hinder its ability to compete effectively in the market.. Such incidences are more pronounced during peak hours, like early mornings and late afternoons, where customer volume is highest. Several factors contribute to these lengthy wait times: - Limited Service Counters: The number of service counters available is often insufficient during peak hours. With fewer counters open, lines grow quickly, frustrating customers who must wait for both their orders to be taken and for others to complete their transactions. - Complex Ordering Process: The variety of customized drinks—from brewed to specialty options—adds to the bottleneck. Baristas frequently struggle to manage multiple intricate orders within the same system, further increasing throughput time. Additionally, bottlenecks in the preparation area exacerbate the problem. According to La Monica (2017), consumers demand quality products as much as quality services, seeking to minimize their time spent in queues. Quick service is highly desired, making it imperative for Starbucks to address these challenges to enhance customer satisfaction and maintain competitiveness in the market. 2. Excessive Dependence on Manual Processes – One Major gap identified in the current processes was the over-reliance on manual processes, which may be susceptible to errors. While efforts have been made towards digitizing parts of the ordering process, some parts of the workflow are still being done manually. For example, most baristas take orders at the bar; they then input them into the point-of-sale system, either by telling staff preparing the drinks verbally what they have ordered or by printing what they have ordered. This manual process is particularly difficult during peak periods or for highly customized orders, introducing a higher chance of error. Miscommunications in customizing an order or errors in implementing the order can lead to customers receiving the wrong drink after long wait times. It not only draws out service times but also creates frustration and reduces Starbucks' brand value because customers would expect that both speed and accuracy have to be achieved in service. VI. Improvements and Proposed Process Flowchart 1. Self-ordering kiosks - Self Ordering Kiosks would reduce wait lines at Starbucks which is currently 6 minutes. Diverted customer traffic away from the traditional counters would ease congestion and shorten lines. Assuming with the new self ordering kiosks, we can divert half the population from the wait lines to the kiosks, we can reduce the time to ~3mins because customers could order directly without waiting for a barista. The system allows intuitive browsing of the menu and customization of the drink; self-pay would be possible in one to two minutes. It also saves time to order, but it does free up the baristas to focus on drink preparations rather than continually taking orders. This naturally leads to lower waiting periods for customers and, generally, a flow of improvements in peak hours, as kiosks accept multiple orders at one time. Taking up fewer people hours in lines, customer satisfaction increases, and Starbucks may serve more patrons during busy hours. 2. Kitchen Display Systems - Starbucks could also utilize kitchen display systems, to reduce errors (Poka Yoke) and increase the number of correct orders. Orders from the self-order kiosks or POS could come up on digital displays in the prep area, so baristas could make drinks with certain personalizations without the chance of words getting mixed up or being scribbled down incorrectly. Mistake-proofing methods - poka yoke-ing - ensure an uncomplicated, error-free flow. 3. Division of Complex and Non - Complex Drinks - The coffee house has to have different counters for Complex, customized drinks and Non - Complex, regular drinks. High-speed counters prepare simplified beverages such as drip coffees while more complex tailored beverages that call for much complexity and time consumption are prepared at specialized stations using parallel processes. This way the throughput time in preparation of the order reduces from initial 7-8 minutes to current 3-4 minutes by utilising parallel processes, specialised baristas and kitchen display system. 4. Increasing the number of service counters - Starbucks can reduce long lines and customer wait times by increasing the number of service counters. During peak hours, opening additional counters, including both self-ordering kiosks and staffed counters, can help manage the high volume of customers more effectively. This expansion allows Starbucks to serve more customers simultaneously, significantly cutting down waiting times and enhancing the overall customer experience. VIII. Challenges in Implementing the Revised Process Although we proposed several improvements to enhance Starbucks' Order Fulfillment and Customer Service Process, no system is without its imperfections. While these recommendations such as self-ordering kiosks, kitchen display systems, and the division of complex and non-complex drink preparation are designed to optimize efficiency and improve the overall customer experience, they come with their own set of challenges. In this section, we will explore the key challenges that could arise as we implement the revised flowchart. 1. Technology Integration Challenges Implementing self-ordering kiosks and kitchen display systems would require integrating new hardware and software systems with the existing POS (Point of Sale) system. This will require providing adequate training and support for both employees and customers to use the new technology effectively. 2. Customer Experience Challenges Another major challenge would be ensuring a smooth experience for customers using the self-ordering kiosks, particularly for those who are less tech-savvy. In order to avoid alienating such customers creating an intuitive and user-friendly interface becomes crucial. In addition, As the store layout and ordering system modernize, potential frustrations may arise from customers who prefer traditional ordering methods. 3. Balancing the Costs The investments in hardware, software, and infrastructure will need careful planning. In order to ensure profitability, it is highly important to balance the costs of these improvements against the anticipated benefits. Additionally, some funds must be allocated for the maintenance, employee training, and technical support to sustain the long-term effectiveness of the new systems. 4. Scalability and Flexibility Challenges The new systems must be scalable to accommodate stores of varying sizes and layouts. Adapting to different store environments while maintaining efficiency will be a challenge. Furthermore, handling peak demand periods or unexpected situations without compromising service quality will require flexibility in both system design and staffing levels, which may necessitate hiring additional employees. 5. Employee Training and Adaptation Challenges Successful implementation of new systems depends on how well the employee are trained. Staff must be well-versed in using the new equipment and workflows, which may include different responsibilities or processes. Additionally, hiring the right employees suitable for such tech positions is essential. Proper engagement and support will help employees adapt smoothly to the new systems. 6. Workflow and Process Optimization Challenges Reorganizing the workflow to separate the preparation of complex and non-complex drinks could be logistically challenging, especially in high-volume stores. Maintaining communication and coordination between different stations such as self-ordering kiosks, complex drink preparation areas, and non-complex drink stations will be important to prevent bottlenecks and ensure smooth operations. IX. Conclusion Commitment to the customer experience, developing their employees, advanced technology, and community involvement lead Starbucks to operational excellence. The company's strategic concentration on these areas led to the creation of an excellent brand image and customer loyalty. Among its own problems, waiting times are too long, and there is too much reliance on manual processes. Such problems can be handled, while improving order fulfillment and customer service even more, if Starbucks still finds ways to do the following: introduce self-ordering kiosks, kitchen display systems, segregation of complex and non-complex drink preparation, among others. Such strategies can allow Starbucks to become more efficient, reduce mistakes, and make overall customer experiences better. Furthermore, Starbucks can use data-driven decisions to understand its customers even better and improve its service and operation accordingly. Subsequently, Starbucks can use customer data to leverage trends, make personalized offers, and provide services to its customers with specific needs. For instance, Starbucks could use data analysis to generate buyers' patterns of purchasing to recommend the most personalized drinks with the help of preferences by past customers. X. References 1. Argimbayeva, G. (2019). STARBUCKS FINAL. Cud. https://www.academia.edu/38770207/STARBUCKS_FINAL 2. Maleki, P. (2023, September 18). An Insight into Starbucks Supply Chain Strategy : A Comprehensive Guide - 2023. DFreight. https://dfreight.org/blog/an-insight-into-starbucks-supply-chain-strategy/ 3. Operations and Supply Chain Simulation with AnyLogic. (n.d.). https://www.anylogic.com/resources/books/operations-and-supply-chain-simulation-with- anylogic/ 4. Starbucks Inventory Management and Operations | Free essay example. (2023, December 12). StudyCorgi. https://studycorgi.com/starbucks-companys-operations-and-inventory-management/ 5. Starbucks UK’s Operations and Process Management - 2756 words | Report Example. (2024, February 29). IvyPanda. https://ivypanda.com/essays/starbucks-uks-operations-and-process-management/ 6. Sustainability is at the Heart of Starbucks Coffee Sourcing. (n.d.-a). Starbucks. https://athome.starbucks.com/story/sustainability-heart-starbucks-coffee-sourcing 7. Bloomberg - Are you a robot? (2024, May 29). https://www.bloomberg.com/news/features/2024-05-29/starbucks-wait-times-jump-after- changing-work-algorithm-staffers-say 8. La Monica, P, R. (2017) Starbucks still has a problem with long lines