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Comparison of Operational Management at Greggs and Starbucks

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 4666 words Published: 30th Nov 2020

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Operational management plays an important role in transforming resource inputs to processed materials or information as output (Slack, 2018). This report focuses on operation management at a case study company given which is Starbucks. In part A, the operational processes at Starbucks are compared with Greggs with 4V analysis, design analysis and performance objective analysis. In part B, the role of supply chain management for the success of Starbucks is critically discussed.

Part A

4V Analysis

Operational processes at Starbucks and Greggs are different with each other in terms of 4Vs namely Volume of output, Variety, Variation in demand and Visibility degree for the customers (Slack, 2018). The 4V analysis of Starbucks and Greggs is carried out based on global level analysis as below.

4V Analysis



Volume of output

Starbucks produces comparatively high volume of coffee products to serve millions of customers towards 30,000 retail stores across the world.

This high volume results in task systematization and lowering of unit cost at Starbucks.

Greggs has comparatively low volume of output producing breakfast and items in order to serve a relatively less number of consumers through its 2500 stores (Cumming, 2018).

Variety of output

The output variety offered by Starbucks is relatively low than Greggs. This is evident from the menu of Starbucks in (Starbucks, 2019).

There exists variety only under coffee products but the other breakfast, bakery and lunch items have standardized items

In the case of Greggs, the output variety offered is relatively higher than Starbucks. This is evident from the menu of Greggs (Greggs, 2019) including the breakfast, lunch items, sandwiches, drinks, snacks, bakes, platters, sweet treats, hot to go and balanced choices.

Even though this increases unit costs, Greggs is able to meet the needs of wide range of customer segments through its flexible operational processes (Mal and Rodger, 2018).

Variation in demand

The demand variation for Starbucks is comparatively low because of coffee being an essential consuming item at any time in a day (Timan, 2019).

This low variation in the demand makes the operations routine, contributes to high resource utilization along with lowering of the unit costs.

Depending on the high variety of breakfast and snack items, there is demand during the breakfast and lunch times. This shows the existence of comparatively higher variation in the demand for Greggs.

Slack et al (2010) indicated that increase in the demand variation can increase unit costs. Greggs has been tacking this through proper anticipation and operational process flexibility.

Visibility of operations

Starbucks possess high visibility for their operational processes as customers will be able to view transparently. Slack (2018) indicated that his high visibility increases unit cost due to requirement of skilled work force.

Due to Greggs serving more number of breakfast, lunch and savory products, there exists time lack between the production and the consumption activities. This makes visibility comparatively lower for Greggs (Day, 2019).

This could impact Greggs by lowering its unit cost due to supporting standardization of the tasks in the background, less requirement of skilled work force and high utilization of the staff.

This comparison of the 4Vs related to operations processes at Starbucks and Greggs is given in figure 1.


 Figure 1: 4V profiles of Greggs and Starbucks

This comparative analysis shows the ability of Greggs to lower its unit costs to a comparatively higher extent than Greggs.

Performance objective analysis

The performance of operations at Starbucks café and Greggs are compared with each other by applying the five performance objectives specified by Slack (2018). These five performance objectives are quality, speed, cost, flexibility and dependability.


This performance objective empathizes on during things right and the things that have to be right that depending on kind of operation (Slack, 2010).

In case of Starbucks café operations, quality means providing excellent customer service by serving them with ordered items and producing the café products with good taste and acceptable standards.

In case of Greggs means availability of the products despite changing variations in the demand and serving customers with products that are of huge variety, good quality and acceptable healthy eating standards.

Comparison of Quality at both Starbucks and Greggs indicating the both error free products and high importance of customer service quality in case of Starbucks and product quality in case of Greggs. One reason due to the influence of external environment and these companies operating in two different industries


Speed is a performance objective that gives the amount of time elapsed between products/service request made by customers and the time at which they receive them. Companies providing products/services quickly tend to become highly likely in purchasing the product (Slack et al, 2010).

For Starbucks having tolerance to waiting time, Speed refers to fast response given by the staff in serving the customers with their ordered items. This speedy customer service offered by Starbucks that is evident from excellent service (Timan, 2019) greatly depends on the extent of speed within the operations. In case of Greggs that is tolerant to customer waiting times, speed performance objectives highly related to speed within the operations processes used for manufacturing and brining the product to customer visibility. The comparative analysis of 4V shows relatively lower visibility of Greggs there by making it less tolerant to short waiting time. However, comparatively highly variances in the demand requires to adopt speediness within the operations like forecasting, tomorrows demand, making decisions on the number of savory items and bakery items to be provided.


This performance objective measures the reliability of one process on the other (Slack et al, 2010).

 In case of both Greggs and Starbucks, there exists high dependability between the processes. However, the dependability of quick customer service in Starbucks greatly depends on the speediness of other processes like product manufacturing, inventory management and this dependency in case of Starbucks is helping to save the serving time in Starbucks and saving money in the context of Greggs. The main reason for this difference in performance objective of Starbucks and Greggs is due to the differences existing in its 4V analysis and also because of these two companies operating in two industries with Starbucks in Café industry and Greggs in fast food industry.


This performance objective refers to the ability in changing operation (Slack, 2018).

 Both Greggs and Starbucks are having high flexibility in their operations especially products/service flexibility, delivery flexibility. This is due to the option of both these companies in introducing new products according to the changing seasons and customer preferences like balanced diet for health conscious consumers and pumpkin latte in autumn season. 


This performance objective refers to the amount of cost required to undertake the operations (Slack et al, 2010). Both Starbucks and Greggs are trying to reduce their operational cost by achieving internal effectiveness like high resource utilization, high staff utilization and lowering the unit costs.

The result of comparing the performance objectives of Greggs and Starbucks is given in the form of a polar diagram shown below.


  Figure 2: Polar diagram of  Starbucks and Greggs

This polar diagram showing clear differences in the performance of these two companies in terms of speed, flexibility and dependability is because of the external markets of both these companies become highly different.

Design Analysis

From the comparative analysis of 4Vs and performance objectives of Starbucks and Greggs, existence of some significant differences has been identified. For example, Starbucks found to be highly tolerance towards shorter customer waiting time than Greggs because of high visibility of operations towards customers. In the same way, quality for Greggs is mainly focused on the taste of items serviced while quality in case of Greggs has been identified to be focused on both customer experience and also product quality. Taking these differences into account, the operational processes at Greggs and Starbucks stores have been designed. Among the various manufacturing process design types given in Slack et al (2010), Starbucks stores have adopted mass processes and Greggs adopted jobbing processes as design of its operational processes.

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Taking these differences in account, the store layout of Starbucks stores and Gregg’s stores are changed. For instance, Starbucks stores consist of functional layout so that the shop is arranged by giving high importance of seating so that customers can experience excellent customer serving. This functional layout is indicated that Slack (2018) to have higher level of working progress during customer serving process. As a result, serving customers can be done quickly and there by achieving the performance objectives that are specific to Starbucks.

Taking the differences in visibility and performance objectives, the store layout of Greggs is organized as combination of line and cell layout. Less importance of give for customer experience and there by seating arranges are relatively less at Greggs than Starbucks. Only a few stores across UK consist of cell layout using which, seating arrangement for customers is provided. Therefore, this analysis clearly showed that the processes and the layout design at both Greggs and Starbucks are highly dependent on their operations characteristics identified from 4V analysis and also the performance requirements identified from performance objectives.


Part B


Supply chain management refers to management of products/information flows and the relationships among various processes and operations involved in producing products/service that is highly valued by the customer. In a supply chain, there exists non- physical flow of processes and information along with physical flow of the raw materials (Slack, 2018). The operational area that is chosen is this supply chain management and the scope of this operational area within Starbucks lie in dealing with all the operational processes carried out globally to deliver a cup of coffee to the customer. Over the past decade, the supply chain operations of Starbucks have been significantly shaped by the company management by making it a globally vertical integrated supply chain (Fronetics , 2019). Such vertical integration characteristic of Starbucks supply chain is enabling in working very closely to the suppliers without any operations being outsourced. This transformation of Starbucks supply chain to vertically integrated one greatly helped the company differentiate itself from the competitors and thereby improving organizational performance (Ivanov et al, 2017).

Supply Chain and Global Operations Strategy of Starbucks

The operational processes of Starbucks supply chain have been significantly influenced by wider macro environment of global coffee industry. A number of legal issues have raised in the coffee industry due to the poor living conditions and unsatisfactory pay given for coffee bean suppliers across Asian and African countries (Lee et al, 2007). This global coffee industry has also been affected by changes in consumer preferences due to the increased awareness of sustainable sourcing and ethical sourcing (MacDonald, 2007). In response to these changes in the macro environment, Starbucks has made its supply chain highly vertical integrated by having close relations with the coffee bean suppliers and working towards achieving 100% ethical sourcing after achieving 99% ethical sourcing in the year 2015 (Regional Business News, 2019). The supply chain management of Starbucks has also been affected due to the increasing competition in the business environment of global coffee market. In spite to it, Starbucks has entered into partnerships with third party logistics network to support its global growth. For instance, partnership of Starbucks with Alibaba in China is intended to provide highly personalized shopping experience of Starbucks for Chinese consumers and also launch nearly 10,000 greener stores by 2025 across the world (Griswold, 2019).

Vertically integrated global supply chain of Starbucks has also supported Starbucks to implement its operational strategy that is based on top down perspective. The top down operation strategy of Starbucks has made this company to align its operational activities for achieving its corporate strategy of market penetration or product development and also with the business strategy of differentiation (Slack, 2018). For instance, the supply chain activity of requesting pumpkin suppliers is adopted at Starbucks in response to the need of introducing new products like pumpkin latte in autumn season, new product/service development corporate strategy. In the same way, the top down approach implemented by Starbucks towards its global operational strategy to help Starbucks implement differentiation business strategy is supported by this global supply chain that is vertically integrated (Ernst and Haar, 2019). For example, supply chain transformations like 100% ethical trading, sustainable sourcing by working closely with suppliers and technology based and automatic monitoring of inventory capacity and scheduling and also demand by using digital technologies (Regional Business News, 2019).   

Requirements, Challenges and the Capabilities

Starbucks has achieved excellence in supply chain management by transforming its supply chain lean supply chain and also agile supply chain. The need of Starbucks supply chain in meeting the need of growing number of consumers across the world and the need of minimizing the operating cost resulted in Starbucks improving its supply chain excellence through transforming it into agile and lean supply chain respectively (Ernst and Haar, 2019). In the process of this transformation, Starbucks was required to meet the key requirements such as (1) quick supply of the coffee beans with high quality according to customer needs, (2) ready availability of any supplied product when needed to prepare coffee based on customer order, (3) quick availability of the designed paper cups or cutlery for serving customers. All these requirements show the importance of a specific and dedicated logistic system to manage global transportation activities of Starbucks (Gibbons, 2011). Considering the huge presence of Starbucks across more than 50 countries in 2008 and currently across 90 countries, the supply chain activities adopted by this organization are very huge and complex in terms of size and scale (Boyer, 2019). Key requirement was to have integration from diversified and huge number of stakeholders existing in the vast supply chain of Starbucks. As part of this integration, Starbucks also required the need of closely monitoring and working with the suppliers and distributors.

In the process of meeting these requirements related to global logistics, high integration and extensive monitoring and involvement of the company, Starbucks has been identified to be having different resources and capabilities like supporting infrastructure, information systems and the skilled work force. Boyer (2019) indicated that Starbucks possess eight central 48 regional based distribution centers. This infrastructure helped to meet the requirement of global logistics and there by monitor closely using the information systems. As result of realizing these requirements, two key challenges faced by Starbucks are (1) managing stakeholders and (2) controlling the operating costs (Fronetics  , 2019). In the process of meeting the requirements, Starbucks was required to have several meetings and dealing with trade unions and local government of the suppliers so that they can come to a common agreement of following ethical sourcing guidelines provided by Starbucks (Ernst and Haar, 2019). In the process of dealing with diversified stakeholders with each one having different views and perceptions, bringing all the stakeholders to common terms and making them to change their previously followed operational activities to control operating expenses the energy costs has become a challenging issue for Starbucks.

Analysis and Evaluation of Supply Chain Management

Managing wide range of diversified stakeholders has been identified as one of the challenges faced by Starbucks while meeting the requirement of integrating the supply chain activities and implementing the global logistics. Supplier of coca beans is one of the key stakeholders of Starbucks supply chain, who must be managed effectively in order to achieve supply chain excellence. Supply side management is one important element of the supply chain that can be managed using different sourcing strategies like multiple sourcing, direct sourcing and the delegated sourcing (Gadde and Wynstra, 2017). The adoption of multiple sourcing strategy is one of the resources that are helping Starbucks to deal and manage multiple suppliers at the same time.  This multiple sourcing involve in Starbucks getting the coca beans from multiple suppliers (Lee et al, 2007). As a result of this multiple sourcing strategy, Starbucks is able to maintain its competition level in the market, minimize the supply risk along with the increase in the flexibility of the supply chain due to situations like customer demand changes and the suppler failure (Boyer, 2019). This multiple sourcing strategy also helped Starbucks Company to prevent the situations like supplier dependency, through which the ability of this company to manage these suppliers to follow the ethical sourcing guidelines of the company has been achieved.

Another key resource of Starbucks that is identified to tackle with the challenges is the presence of the long-term contracts with the suppliers. Fronetics  (2019) indicated the existence of contracting and partnership relationships as the two type of relationships that can be established with the suppliers (Ivanov et al, 2017). Starbucks is currently implementing the ‘long-term’ partnership relationships maintained with the suppliers. Such relationships has helped Starbucks to make suppliers involve in company success, involve in joint learning and emphasizing on the multiple points of the contract. Taking the different characteristics of partnership based supplier relationships (Grisworld, 2019), it can be said that these relationships have helped Starbucks to develop trust and resolve conflicts during early periods.

Usage of third party logistics (3PL) and the innovative customer relationship management (CRM) are identified as other resources that helped Starbucks to overcome the challenges in improving supply chain excellence (Grisworld, 2019).  Among the different logistics like 1PL, 2PL, 3PL and 4PL given in Slack (2018), 3PL is adopted by Starbucks to integrate all the stakeholders and at the same time minimize the operating expenses. With high integration of the information technologies, innovative CRM is adopted by Starbucks. This has been helping the company to minimize the operating expenses when dealing with the customers, who are also one of the key stakeholders of this company. 


One recommendation that is given for Starbucks to adopt when dealing with global sourcing especially related to managing the supplier side is to implement parallel outsourcing as it sourcing strategy. In other words, Starbucks is recommended to change its sourcing strategy from multiple sourcing to parallel sourcing as part of its integrated global supply chain. This recommended parallel souring help Starbucks to combine advantages of single sourcing along with multiple sourcing aspects. Through this parallel sourcing strategy, single source based relations can be maintained by Starbucks and this helps in improving supplier engagement and involvement with in the organizational activities as mentioned in Slack et al (2010), implementing this parallel sourcing approach as part of integrated supply chain of Starbucks can help the company to maintain and also improve its competition by managing the stakeholders in highly effective manner.

The second recommendation that is given for Starbucks is to have a dedicated supplier portal that can help them in maintaining all the suppliers managed by Starbucks. All these stakeholders must be given access to wide range of inventory management tools and techniques, capacity planning method in this supplier portal. This recommendation of going suppliers’ access t the information technology and information system can improve their coloration and support coordination through which the challenge of stakeholder management and reducing operating cost can be obtained.


The topic of supply chain management, which is one of the key areas of operational management, has been considered in the content of Starbucks. The role of operational management has been evaluated and found major role played in improving the competition position of Starbucks in the global market. The supply chain of Starbucks has been transformed based on business environment changes and further this supply chain supported implementation of operation strategy from top down perspective at Starbucks. In the process of improving the excellent of integrated vertical supply chain, challenges related to stakeholder management and reducing operational costs have been identified. To deal with these capabilities, the resources like multi-sourcing strategy, customer relations management and third party logistics have been identified at Starbucks. Finally Starbucks is identified to implement parallel sourcing strategy along with supplier porter access to inventory management and capacity planning method.


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