Starbucks Coffee - T-Log Process Analysis

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Secondly, customers came at a more regular and uniform pace at the Sub compared with the Village where customer arrival was less consistent. At the Sub, customer arrivals were more regularly spaced out, which meant that there was less idle time in the process, and resources were utilized more efficiently even though the entire process was slower, and total capacity was less than that of the village. This contributed significantly to the discrepancy between flow time and queue time, since even though the process of making the coffee took less time, there was also more idle time at the Village compared with the Sub, thus resources were not utilized as efficiently.

Recommendations

General

Design a three tier operational strategy

Create small, medium and large operations strategies instead of having an overarching blanket strategy. Doing so, will allow Starbucks to increase efficiency for all tiers by catering to specific deterministic factors such as store size, the amount of traffic they receive and how well trained their staff are. This information would be critical for reducing variability and achieving efficiency.

Launch ‘Pre-order’ App

Launch an app that allows customers to pay for their drinks before arriving. We identified the cashier as the bottleneck in the process at the Village, so tackling this specific point will allow Starbucks to achieve higher efficiency. The pressure on the cashier will be reduced as customers will be skipping the “bottleneck process” and pay for their beverage before arriving to the store.

Hire managers by internal promotion In the locations we visited, managers were hired externally. This means that time and money is wasted on training individuals that are not familiar with the company culture. Hiring from within means the managers are more qualified and will better handle pressure during peak hours. Which ties back to having a more efficient process.

Case Specific - Village

· More Cashiers / Manager helping out

Through observation and our primary research we learned that the cashier at the village location spent more time taking an order than the one at the SUB (23 seconds vs. 30 seconds). This gap leads to the cashier becoming the bottleneck in the village location. In an effort to eliminate the bottleneck and increase capacity, we recommend hiring more cashiers. We recognize that there is a cost to hiring new workers. However, we observed that the manager helps out at the cash too when the demand goes up and more customers show up. While that does help to some extent, it involves a high degree of variability and uncertainty that has a real and negative cost that could be avoided. The staff at the village could collect data on peak times, the rate at which demand goes up and other associated data to better forecast when exactly the manage should take charge at cash as well. This would increase efficiency and help generate revenue that otherwise would have been lost due to balking.

Case Specific - Old SUB

Increase pool resourceIncrease the resource pool as this proved to be the main bottleneck in the process. This may be done through hiring new workers on the floor and/or increasing machines and equipment. Considering the fact that the flow time is 135% higher at the SUB than at the Village and the major contributor to that is the bottleneck queue shots activity that has a 36 second unit load, this would be a good place to start in terms of reducing the bottleneck. However, this will require some investment and labour costs may go up due to the increased resource pool.

Change in resource pool

As indicated in the analysis above, it takes 66% longer to get coffee from the Starbucks in the SUB as compared to the one in the Village. To reduce this time, become more efficient and obtain a level of standardization compared to other Starbucks, the old SUB Starbucks could replace current poor performing workers with better-trained staff and/or install better equipment. These measures would help decrease the unit load, increase the capacity rate and reduce the flow time. The reduced flow time would bring down the time it takes for customer to be served, thereby increasing efficiency for Starbucks.

These recommendations will aid Starbucks in achieving some form of standardization spreading across three operational strategies for different locations. This in turn would increase efficiency, eliminate current bottlenecks and force Starbucks to design better processes than they are employing now.

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References

Starbucks Coffee Company. Starbucks Coffee International. Retrieved October 27, 2015, from http://www.starbucks.ca/business/international-stores

X. Frei, F. (2006, November 1). Breaking the Trade-Off Between Efficiency and Service. Retrieved October 27, 2015, from https://hbr.org/2006/11/breaking-the-trade-off-between-efficiency-and-service

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Appendix

Appendix 1 – Gantt chart

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Appendix 2 – Raw Data (Village)

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Appendix 3 – Raw data (SUB)

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