STARBUCKSBrian P. Germain & William McDougall

Operations ManagementProfessor Ken Hung

Suffolk UniversitySawyer Business School

of Management

Starbucks Overview International Coffee House that

started in Pike Place Market, Seattle Washington in 1977 – Founder CEO Howard Schultz.

17,000 stores in 50 Countries World Wide.

The average Starbucks customer visits the store 6 times per month while a loyal 20% of customers go to the stores 16 times per month.

Famous for their enthusiastic “Baristas,” “specialty coffees,” and lattes.

Sawyer Business School of

Management

Customers are the heartbeat of most businesses, and have a say in the value of the company, what they’re good at, and how to improve on areas necessary.

Employees provide the atmosphere of the company. Without enthusiastic employees that love their job, the company will not grow financially or culturally.

Who is at Stake?

Sawyer Business School of

Management

Inputs/Outputs

Sawyer Business School of

Management

Customers Beverage OrdersFood Orders

Customer with a finished beverage and a fresh packaged

food item.

The Starbucks we will be examining is the store located in Downtown Crossing in the heart of Downtown Boston

Busiest Times include Monday – Friday8 am – 10 am

At most has 6 Baristas on hand taking the orders, preparing the drinks/food, and working the cashiers.

Sawyer Business School of

Management

Starbucks Location

Starbucks Location Layout

Sawyer Business School of

Management

Enter Exit

Food Bar

Cashier x 3

Beverage Bar

Condiments

Manager

Process Flow Diagram

Beverage Bar/Pickup

Cashier 1

Cashier 2

Store Entrance

Sawyer Business School of

Management

Two-Server System

Customers In The System

Sawyer Business School of

Management

Beverage Bar/Pickup

Cashier 1

Cashier 2

Store Entrance

Inter Arrival Time = 0.7 MinService Time = 1 MinStandard Deviation = 2 MinCVp = 2 MinCVa = 2.857

2 Hour Examination8 AM – 10 AM

Ta = 0.7

Flow Time= 120 Min (2 Hr)

Flow Unit= 345 Ppl

Flow Rate = 2.875 Ppl/Min

Process Flow Diagram Breakdown

Sawyer Business School of

Management

Beverage Bar/Pickup

Cashier 1

Cashier 2

Store Entrance

Min = 65Ppl = 187

Min = 5 Ppl = 13.5

Min = 5Ppl = 13.5

Min = 45Ppl = 131

Utilization = 1/0.7*2 = 72%

Time in Queue= 1 * 0.72 ^ √2*(2+1) – 1 * 2^2 + 2.857^2 = 6.7 Min 2 1 - 0.72 2

Time in System= 6.7 + 1 = 7.7 Min

Inventory in Queue = 6.7/0.7 = 9.6 Min

Inventory in Service = 0.7*2 = 1.4 Min

Inventory in System = 9.6 + 1.4 = 11 Min

Customers in the System (Cont.)

Sawyer Business School of

Management

Starbucks Problem Areas

Based on Visual Examination Based on Numbers/Data

Store size. Huge push from 8 – 10. Third register not being

utilized. No intended waiting areas. Inflow/Outflow customer

clashing. Human errors in beverage

preparation.

Inventory in Queue relates to over 50% of the total time spent in Starbucks.

Starbucks bar area congestion due to high volume of customers/drinks per customer.

Sawyer Business School of

Management

By reducing the standard deviation from 2 to 1.5, the time in queue will be reduced from 6.7 min/customer to 3.8 min/customer (roughly 57%).

Utilizing the third register, thus changing from a 2-server system to a 3-server system will reduce the utilization from 72% to 48%, which would reduce the time in queue to 1.33 min’s.

Recommendations

Sawyer Business School of

Management

Changes in the system are difficult for franchises due to standardization.

Opening a third register during peak hours would increase costs.

It is unreasonable to hire an extra employee for 2 hours/day.

The size of the store inhibits their ability to challenge the issue of customer congestion.

Challenges for Starbucks

Sawyer Business School of

Management

Thank You For Your Attentionand Happy Holidays!

Questions?

STARBUCKS

Suffolk UniversitySawyer Business School

of Management