The aim of this report is to provide deep insights regarding the production management of the Starbucks Corporation. In this report, the production operation of the Starbucks has been selected. In the report, all the main processes which are involved in the production of coffee have been explained in detail. Not only activities which are involved in the production process are described but also the layout of the process is also described in detail. Starbucks is a world-renowned coffee organization. Starbucks is an American corporation whose headquarter is situated in the Seattle United States. The corporation was established in the year 1971.

Starbucks Overview of Coffee Production at Starbucks

Starbucks is world-renowned coffee organization. Starbucks is an American corporation whose headquarter is situated in the Seattle United States. The corporation was established in the year 1971. According to the 2019 statistics, the organization operates at 30,000 locations across the globe. The key products of the organization include baked goods, coffee beverages, sandwiches and smoothies. Starbucks has a presence in many countries around the world and considers among the largest coffee chains. Over the years, the organization has experienced immense growth.

Production Operation at Starbucks

In this report, the production operation of the Starbucks has been selected. In the report, all the main processes which are involved in the production of coffee have been explained in detail. Not only activities which are involved in the production process are described but also the layout of the process is also described in detail. Through this report, it can be understood how efficiently the organization is managing its production and which activities are involved in the production of coffee. In other words, the report will provide deep insights regarding the production & operation management at Starbucks (Brown & Bessant, 2013).

Main processes & Activities of Production at Starbucks
Material storage of Coffee Production at Starbucks

Starbucks organization has production plants where they create coffee for their customers. The production begins from the first process, which is the storage of the raw material. The raw material is stored in the huge warehouses of the organization. The corporation store the raw material which is required for production. It means that Starbucks does not store raw material in excess. Because if Starbucks is going to store the raw material in excess, then its inventory or storage cost will rise which will definitely be going to affect the profitability of the corporation. Starbucks uses the latest software for managing the inventory operations.

Bean Assortment of Coffee Production at Starbucks

The bean assortment is one of the main activities in the production of coffee. The beans are assorted on the basis of types and their quality. Starbucks creates various blends such as blonde roast, house blend and Dragon blend. For each of the above-discussed bend, the coffee beans will be assorted so that for each type of blend, the coffee beans can be separated. Different types of the blend are created from different types of coffee; therefore, it is highly necessary to assort the coffee beans. That is why the bean assortment is considered among the most important process (Magretta, 2012).

Roasting of Coffee Production at Starbucks

In order to create coffee, the coffee beans are roasted. The roasting of the coffee bean is essential because roasting helps the coffee beans to realize their flavor or aroma. The green coffee beans are not like roasted coffee beans because green coffee smells grassy and they do not have the taste and quality which has roasted coffee has. That is why for creating the coffee, the roasting process is the most important. In the production plant of Starbucks, the roasting of the coffee is done through automated machines. With the help of the latest technology, the coffee beans are perfectly roasted.

Quality Testing of Coffee Production at Starbucks

After the roasting process, one of the main processes in the production of coffee is the quality testing. The quality testing is highly essential for creating a high-quality coffee blend. At this stage, if the coffee beans which are roasted are not tested, then the whole coffee blend quality can be affected. That is why after roasting the coffee beans, the quality of the beans is checked to ensure whether the roasted beans are ready for the blending process or not. The beans which do not fit according to the quality standards are discarded at this stage. Only those coffee beans passed the test which is according to the quality standards.

Final Testing of Coffee Production at Starbucks

After the quality checking of the beans, the beans are moved to the next process that is blending. When the coffee beans are blended, then the final testing of the coffee is made. The final testing is done to ensure the taste and quality of the blend so that the customers will get a high-quality product. Starbucks is a huge brand and it cannot afford fewer quality products (Brown & Bessant, 2013).

Delivery of Coffee Production at Starbucks

After testing the coffee blend, the coffee is then moved to the packaging phase. After the packing of the coffee palletization of the coffee is done. When the coffee is packed and labeled, it is sent to the storage unit of the corporation. From this storage unit, this coffee is delivered to the shops, supermarkets and Starbucks outlets.

Identifying the nature of these processes

Different processes or activities which are occurred in the production of coffee are different in nature. In the flow chart diagram, different activities are described by using different shapes. The activities such as roasting, assortment, and storage are processes; therefore in the flow diagram, these activities are represented through rectangular shape. The activity such as testing quality, is defined through diamond shape. This activity actually presents a decision on whether to pass the coffee beans or reject them. Therefore this activity is represented with diamond because it is a decision which the organization has to create (Mahadevan, 2009).

The layout of the Process of Coffee Production at Starbucks

If the layout of Starbucks’s production is analyzed then it can be said that the Starbucks plant has a line or product layout. In the line layout, the machines in the production plant are arranged in a sequence. The processing equipment is arranged according to the sequence of the operations which have to be performed in the production plant. This type of layout is usually selected when there is only a single type of product has to be created in the production plant. Such a product is produced in huge quantity and the product is usually standardized.

In the line layout, the material is supplied from one end and the product line moves on. The material is moved from one operation to another. In the process layout, the material handling and work in the process remain minimum. At the end of the process layout, the material is converted into a finished good, which is stored for a short time period and then delivered to the customers. The line layout is suitable for the organizations that want to produce standardized products; however, for those organizations that create different types of products that are not standardized, then product layout is not suitable (Spender, 2014).

Advantages of the Line Layout process of Coffee Production at Starbucks

There are many advantages to the line layout or product layout. The first major benefit of the line layout is that it has low material handling the cost. The material does not store for a very long time in the line layout process design; therefore, the cost of material handling remains low. The next major benefit of the line layout is that the work in the process remains minimum in the line layout. In this process, the machines and labor are utilized more efficiently than any other layout type. For line layout, too much floor space is not required which allows the corporation to perform the production function in less area.

The production control of this layout is simple, which means that the management can control the production activities more efficiently. With line layout not only the production time is reduced, but also the complexity of the production process also minimized. When the complexity of the production process declines, then it means that the management can handle the production more efficiently. As there are less storage and work in the process there is no need for huge warehouses, which ultimately reduces the overall cost of production.

Weaknesses of the Line layout process of Coffee Production at Starbucks

As there are many benefits of this layout, there is some major drawback of this layout as well. One of the major drawbacks of this layout is that there is no flexibility, which is usually required in the production process. If the volume of production reduces, then the production cost experience increase in the line layout. If the line is running light, then the machines will be underutilized as well. In the line layout, one of the major drawbacks is that if anyone machine breaks down, the whole manufacturing process gets affected. Inline layout supervision is required so that each activity can be completed accurately and efficiently. In the line layout, each activity depends on another activity and if anything happens wrong during the production process, then the product cannot be completed. It is important to ensure the quality of the product so that the good which is being manufactured can be created appropriately.

The productivity of the system of Coffee Production at Starbucks

There are many ways through which the productivity of the organization can be analyzed. One of the most commonly used ways for measuring the productivity is the financial ratios. Through financial ratios not only the productivity of the organization can be known, but also the efficiency, liquidity, and profitability of the organization can also be known.

Profitability of Coffee Production at Starbucks

Key Ratios -> Profitability
Margins % of Sales	2010-09	2011-09	2012-09	2013-09	2014-09	2015-09	2016-09	2017-09	2018-09	2019-09	TTM
Revenue	100	100	100	100	100	100	100	100	100	100	100
COGS	41.64	42.3	43.71	71.64	69.9	68.88	68.38	69.38	70.26	71.75	71.75
Gross Margin	58.36	57.7	56.29	28.36	30.1	31.12	31.62	30.62	29.74	28.25	28.25
SG&A	38.49	36.76	35.48	6.3	6.03	6.24	6.38	6.22	7.12	6.88	6.88
R&D
Other	7.51	7.91	7.37	7.24	7.09	7.39	7.16	6.99	7.23	6.6	6.6
Operating Margin	12.37	13.03	13.43	14.82	16.98	17.49	18.08	17.41	15.4	14.77	14.77
Net Int Inc & Other	1.05	2.45	2.05	-16.37	2.23	2.88	1.62	1.88	7.98	2.08	2.08
EBT Margin	13.42	15.48	15.48	-1.54	19.21	20.37	19.7	19.29	23.38	16.85	16.85

Profitability	2010-09	2011-09	2012-09	2013-09	2014-09	2015-09	2016-09	2017-09	2018-09	2019-09	TTM
Tax Rate %	34.01	31.09	32.75		34.56	29.3	32.86	33.18	21.83	19.52	19.52
Net Margin %	8.83	10.65	10.4	0.06	12.57	14.39	13.22	12.89	18.28	13.58	13.58
Asset Turnover (Average)	1.79	1.7	1.71	1.51	1.48	1.65	1.59	1.56	1.28	1.22	1.22
Return on Assets %	15.81	18.12	17.76	0.08	18.57	23.77	21.05	20.11	23.46	16.6	16.6
Financial Leverage (Average)	1.74	1.68	1.61	2.57	2.04	2.14	2.44	2.64	20.66
Return on Equity %	28.14	30.91	29.15	0.17	42.41	49.73	48.16	50.9	136.51
Return on Invested Capital %	23.89	26.03	26.53	-0.94	30.79	35.83	31.04	30.05	44.27
Interest Coverage	44.95	55.39	63.97	-7.18	50.29	56.36	52.64	47.68	34.94	14.49	14.49

Source: (Morning Star, 2019).

In the above table, the profitability ratios of the Starbucks organization can be seen. The profitability ratios show how efficiently the organization is performing its operations for generating the profit. It can be seen that the net profit margin has increased from 8.83% to 13.58%. The increasing trend in profitability is a sign that the organization is performing its operations efficiently. The ROA of the corporations is showing positive trends over the years which is a sign that the organization is using its assets efficiently for generating profit. From the profitability ratios of the production of the organization can be analyzed. The organization is producing coffee efficiently and generating revenue as a result. That is why the profitability of the company has increased over the years (Fridson & Alvarez, 2011).

Liquidity of Coffee Production at Starbucks

Liquidity/Financial Health	2010-09	2011-09	2012-09	2013-09	2014-09	2015-09	2016-09	2017-09	2018-09	2019-09	Latest Qtr
Current Ratio	1.55	1.83	1.9	1.02	1.37	1.19	1.04	1.25	2.2	0.92	0.92
Quick Ratio	0.98	1.17	1.14	0.71	0.81	0.64	0.67	0.84	1.86	0.61	0.61
Financial Leverage	1.74	1.68	1.61	2.57	2.04	2.14	2.44	2.64	20.66
Debt/Equity	0.15	0.13	0.11	0.29	0.39	0.4	0.54	0.72	7.77

Source: (Morning Star, 2019)

The rising current ratios show that the company has kept enough cash from which it can pay its short term obligations. Starbuck's liquidity ratios indicate that the company has enough cash from which it can perform its routine operations efficiently.

Efficiency of Coffee Production at Starbucks

Key Ratios -> Efficiency Ratios
Efficiency	2010-09	2011-09	2012-09	2013-09	2014-09	2015-09	2016-09	2017-09	2018-09	2019-09	TTM
Days Sales Outstanding	9.78	10.75	11.97	12.83	13.23	12.85	12.74	13.36	11.54	10.82	10.82
Days Inventory	49.45	55.65	69.29	40.25	34.96	33.15	33.62	32.23	29.05	28.11	28.11
Payables Period	22.5	30.33	29.45	15.22	16.28	16.84	17.71	17.78	20.61	22.73	22.73
Cash Conversion Cycle	36.73	36.06	51.82	37.86	31.91	29.16	28.64	27.81	19.98	16.21	16.21
Receivables Turnover	37.33	33.95	30.49	28.44	27.59	28.39	28.65	27.31	31.62	33.72	33.72
Inventory Turnover	7.38	6.56	5.27	9.07	10.44	11.01	10.86	11.33	12.56	12.98	12.98
Fixed Assets Turnover	4.32	4.9	5.31	5.08	4.9	5.04	4.94	4.74	4.56	4.29	4.29
Asset Turnover	1.79	1.7	1.71	1.51	1.48	1.65	1.59	1.56	1.28	1.22	1.22

Source: (Morning Star, 2019)

The efficiency ratios show how efficiently the corporation is performing its operations. Through efficiency ratios, it can be known how the organization is utilizing its assets or managing its assets. Many efficiency ratios are showing a downward trend, which is a sign that the corporation has not utilized its assets efficiently. The declining trend in the efficiency shows that the production of the organization has to be improved. If the assets of the organizations are going to be utilized more efficiently, than the production of the organization is going to be improved as a result (Fridson & Alvarez, 2011).

Financial Leverage of Coffee Production at Starbucks

Key Ratios -> Financial Health
Balance Sheet Items (in %)	2010-09	2011-09	2012-09	2013-09	2014-09	2015-09	2016-09	2017-09	2018-09	2019-09	Latest Qtr
Cash & Short-Term Investments	22.7	27.86	24.78	28.08	17.15	12.95	15.79	18.73	37	14.35	14.35
Accounts Receivable	4.74	5.25	5.91	4.87	5.87	5.78	5.37	6.06	6.82	5.31	5.31
Inventory	8.51	13.12	15.1	9.65	10.15	10.5	9.62	9.49	5.8	7.96	7.96
Other Current Assets	7.21	5.32	5.29	4.91	5.61	5.75	2.44	2.49	2.1	1.81	1.81
Total Current Assets	43.16	51.56	51.09	47.51	38.77	34.97	33.22	36.78	51.72	29.42	29.42
Net PP&E	37.84	32	32.35	27.79	32.73	32.85	31.64	34.25	24.54	33.46	33.46
Intangibles	5.22	5.89	6.6	9.88	10.51	16.84	15.6	13.79	18.98	22.23	22.23
Other Long-Term Assets	13.78	10.56	9.95	14.82	18	15.34	19.54	15.19	4.76	14.89	14.89
Total Assets	100	100	100	100	100	100	100	100	100	100	100
Accounts Payable	4.43	7.34	4.85	4.27	4.96	5.5	5.1	5.45	4.88	6.19	6.19
Short-Term Debt							2.79		1.45
Taxes Payable	1.57	1.48	1.68	1.09	2.53	2.08	2.57	1.58	1.19	7.64	7.64
Accrued Liabilities	13.11	6.35	5.56	28.77	5.25	5.48	5.27	5.25	3.77	8.04	8.04
Other Short-Term Liabilities	8.78	13.04	14.82	12.58	15.52	16.3	16.01	17.12	12.25	10.23	10.23
Total Current Liabilities	27.89	28.21	26.9	46.7	28.26	29.36	31.75	29.39	23.54	32.1	32.1
Long-Term Debt	8.61	7.47	6.69	11.28	19.05	18.86	22.36	27.39	37.64	58.11	58.11
Other Long-Term Liabilities	5.88	4.73	4.2	3.11	3.65	5.02	4.82	5.26	33.98	42.22	42.22
Total Liabilities	42.39	40.41	37.8	61.09	50.96	53.25	58.92	62.04	95.16	132.43	132.43
Total Stockholders' Equity	57.61	59.59	62.2	38.91	49.04	46.75	41.08	37.96	4.84	-32.43	-32.43
Total Liabilities & Equity	100	100	100	100	100	100	100	100	100	100	100

Source: (Morning Star, 2019)

From the above table, the financial health of Starbucks Corporation can be known. The assets of the corporation are showing a positive trend, which indicates that the business of the organization is experiencing growth. The growth in the business of the corporation is a sign that the corporation production has increased over the years (Jonathan, 2010).

Factors that determine the performance of the system

There are many factors which are determined the performance of the system; some of the key factors are mentioned as follows:

· Technology

· Skilled Labor

· Quality of Material

· Inventory management

All the above-discussed factors have a huge impact on the performance of the production. If any of the above-discussed factors get unavailable, then the performance of the whole production line gets disturbed. Therefore it can be said that these factors are highly important for the performance of the production (Brown & Bessant, 2013).

Elements influence the quality of the system

There are many ways through which the quality of the production can be enhanced. The latest software can help the organization in managing various activities of production. ISO certification is another way through which the organization can enhance its quality (Brown & Bessant, 2013).

Conclusion of Coffee Production at Starbucks

It is concluded that if the layout of Starbucks’s production is analyzed, then it can be said that the Starbucks plant has a line or product layout. In the line layout, the machines in the production plant are arranged in a sequence. The processing equipment is arranged according to the sequence of the operations which have to be performed in the production plant. This type of layout is usually selected when there is only a single type of product has to be created in the production plant. Such a product is produced in huge quantity and the product is usually standardized. There are many advantages to the line layout or product layout. The first major benefit of the line layout is that it has low material handling the cost. The material does not store for a very long time in the line layout process design; therefore, the cost of material handling remains low. The next major benefit of the line layout is that the work in the process remains minimum in the line layout. As there are many benefits of this layout, there is some major drawback of this layout as well. One of the major drawbacks of this layout is that there is no flexibility, which is usually required in the production process. If the volume of production reduces, than the production cost experience increase in the line layout.

References of Coffee Production at Starbucks

Brown, S. & Bessant, J., 2013. Strategic Operations Management. s.l.:Routledge.

Fridson, M. S. & Alvarez, F., 2011. Financial Statement Analysis: A Practitioner's Guide. s.l.:John Wiley & Sons.

Jonathan, B., 2010. Financial Management. s.l.:Pearson Education India.

Magretta, J., 2012. What Management Is: How it works and why it's everyone's business. s.l.:Profile Books.

Mahadevan, B., 2009. Operation Management: Theory and Practice. s.l.:Pearson Education India.

Morning Star, 2019. Starbucks Corp. [Online]
Available at: https://financials.morningstar.com/ratios/r.html?t=SBUX

Spender, J.-C., 2014. Business Strategy: Managing Uncertainty, Opportunity, and Enterprise. s.l.:OUP Oxford.