Issues In Starbucks’ Supply Chain Management

C. A. F. E. practice gives Starbucks a competitive advantage over other players in coffee industry. Starbucks is currently the leader in retail of specialty coffee beverages and beans. With more than 6,660 retail stores and having licensed over 3700 shopping and airport stores, Starbucks have wide reach to its customers. Starbucks is widely known for its high quality coffee. The Starbucks brand is highly associated with quality. C. A. F. E. practice has helped Starbucks maintain this high quality of its products. These practices, mainly aimed at ensuring mutual benefit with coffee farmers, have helped set aside specialty coffee from other low quality coffee. Through this program Starbucks pledges to reward suppliers that meet C. A. F. E. standards. Through these practices, Starbucks has been able establish strong and reliable supply of quality Arabica coffee. The high quality received from suppliers is passed down to consumers helping to ensure royalty to its products. By rewarding farmers and supplier for high quality coffee beans, Starbucks is able motivate the farmers to invest more on quality. Thus, the practices have helped Starbucks gain competitive advantage in receiving high quality coffee beans and subsequently give it competitive advantage for quality products.

Disintermediation involves removal of intermediaries in a supply chain. Instead of using traditional supply chain involving intermediate supplier, disintermediation seek to deal directly with producers or customers (Chopra and Meindl, p. 73). Although dealing directly with farmers and local association would lead to full realization of C. A. F. E. practices, it is not a good option for Starbucks. Currently Starbucks supply chain involve, farmers at the base, processors, and suppliers. Getting rid of these intermediaries would bring major financial and technical implications. Dealing directly with farmers and local cooperatives will mean that Starbucks have to keep track of the farms and process the supplies from farms. Considering the number of farms that contribute to the company’s supplies, such a move is close to impossible. Absence of intermediaries will imply that Starbucks have to deal directly to very large number of suppliers. This will not only increase cost but also challenge follow up for C. A. F. E program because of technical difference.

Supply chain visibility involves ability to track supplies. It is achieved by obtaining data and information over supply chain in such a way that any changes in the supply chain can be noted and acted upon in good time (Lambert, p. 73). C. A. F. E. programs helped in improving visibility of Starbucks supply chain down to supply base. Despite of improvement in supply chain visibility, there are some barriers that affect its total realization. Complexity of supply chain and technological difference are some of the barriers to supply chain visibility as Starbucks. Starbuck has many suppliers that serve it with high quality coffee. The many suppliers make the supply chain to become complex. Consequently Starbucks cannot be able to track is suppliers from various parts of the world effectively. Technological difference between Starbucks, suppliers and base supplier makes tracking suppliers a challenge. Supply chain visibility calls for effective communication along the supply chain. Communication however is affected by difference in level of technology used by suppliers and base suppliers. The rewarding system of C. A. F. E. program assumes high supply of coffee in the market. Less supply of coffee or improvement in prices offered by other coffee companies may limit Starbucks’ ability to monitor its supply chain.

Works Cited

  1. Chopra, Sunil and Meindl, Peter. Supply chain management: strategy, planning and operation. New York: Prentice Hall, 2009. Print.
  2. Lambert, Douglas. Supply chain management: processes, partnerships, performance. New York: Supply Chain Management inst, 2008. Print.

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