Starbucks supply chain management

Raw Materials – Coffee Beans and Milk (bulk).

Work In Process – Brewed coffee in coffee pot and frozen baked products in the refrigerator.

Finished Goods – Fresh processed coffee under customer specification. Baked Goods (Muffins, Brownies, etc.)

Maintenance, Repair and Operating Supplies – Coffee machine spare parts for use in the scheduled maintenance. Coffee Cups and Lids.

b.Coffee Beans – Dependent demand.

Milk (Bulk) – Dependent demand.

Brewed Coffee in Coffee Pot – Independent demand. (if the order is just black coffee). Dependent demand (if it will be used in one of the special drinks (Cappuccino, Lattes, Mocha) Frozen Baked Products – Independent demand (Though it still need to be baked before selling, it is still considered independent because it is not an ingredient of another product.

Coffee Machine Spare Parts – Independent demand (Given in the example in the book, the original parts used in assembling the machine is dependent however, the replacement parts that bought in a repair shop is considered independent.)

Coffee Cup and Lids – Dependent demand

c.Coffee beans and milk – The economic order quantity (EOQ) model is the method we can use for reordering process. Coffee and milk are the main products of Starbuck’s, therefore stockouts are not allowed and inventory must be available at all times.

Frozen Baked Products – In this kind of inventory, we can use the periodic review system. This inventory needs to be check regularly for expiry and checking the reorder point.

Coffee machine spare parts – Ordering spare parts is tricky because we can never know when the machine will broke down.

I can say these kind of inventory can be monitored by the consignee or the repair company the looks out at the machine. They can give the store management and idea what spare parts can be ordered and stored and how frequent that spare part is replaced.

Coffee cups and lids – These kind of inventory can use the economic quantity model because it is one of the main inventory used in the business and stockouts is not allowed and should be available at all times.