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This is Dr. P. Chitramani, Professor in Business


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Administration, Avinashilingam Institute for Home Science and Higher


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Education for Women, presenting to you a course in Supply Chain Management.


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Dear learners, welcome you all to the first


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lecture on Supply Chain Management. And this session


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focuses on what is supply chain? The learning objective is to


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provide a customer view of Supply Chain and to link it to


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the organizational perspective. What is Supply Chain? Supply


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Chain is a flow of raw materials and processes that fulfills a customer need.


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Imagine you get up in the morning and look for a


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cup of coffee. You walk to the kitchen shelf, take the coffee


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powder, sugar and milk from the refrigerator. You switch on the


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stove, set the water to boil and follow the process to make


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coffee. With a cup of coffee you wonder what it takes to get


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a cup of coffee in the morning? Then comes the Supply Chain.


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Let us consider the raw materials for processing a cup of coffee.


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Namely the cooking gas, utensil water, milk, sugar and coffee powder.


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Moving backward as a customer you can identify the


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primary supply chains that is needed to get a cup of coffee.


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Cooking gas is got at your door friend from the gas agent,


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who in turn gets it from the regional gas depos of oil corporations.


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Utensil is got from the supermarkets that


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procure from private label utensil makers, who depend on


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foundries, steel and plastic suppliers for raw materials.


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Water at home flows from the regional water tanks, which


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store and supply water got from the city tanks, dams and various


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water resources. Milk is got from the local Kirana shop who


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replenish daily stock from milk processing units, who get milk


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from the societies and dairy farmers. Sugars journey to your


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cup starts from the sugarcane farmers to the sugarcane


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procurement societies through the sugarcane factories and the


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public distribution systems. coffee powder is got from your


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local retailer who gets coffee beans from the coffee booths, rose


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the beans and powder it. The Coffee Board intern by the


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coffee beans from the local coffee plantations of farmers.


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In short, Supply Chain is a process that satisfies a


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customer need and consists of multiple entities that are


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linked through flow of products, information and funds.


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Transferring the experience of coffee at home to the world


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class Starbucks Coffee, we can understand the supply chain in


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business sense. Starbucks Corporation with more than


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24,000 stores in 70 countries starts the journey of customer


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fulfillment with a cup of coffee across the world with its


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hand picked coffee beans, and other merchandises source across the Globe.


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The goal of Starbucks supply chain is to reduce costs


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and improve efficiency. It follows a plan, source, make


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deliver model of supply chain. What is Starbucks plan? In 2008


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Starbucks to meet the competition


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planned and re engineered its supply chain


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with three major objectives that is


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reorganize to centralize its fragmented supply chain, cut


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costs and improved services, designed supply chains to meet


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its future capabilities. As a sustainable sourcing strategy,


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Starbucks worked directly with its nearly 300,000 coffee


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growers who meet the Starbucks coffee and farmers equity


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standards and coffee sourcing guidelineses. Starbucks


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interaction with the farmers ensured that coffee beans are of


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the same quality and flavor. This empowers the suppliers to


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meet quality standards, ethical standards, like protecting


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workers rights and human working conditions,


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sustainability through social responsibility.


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The handpicked coffee beans generally sourced from


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Latin America, Africa and Asia are


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shipped in ocean containers to its six company owned coffee


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roasting plants in USA and Europe, referred to as greenhouses.


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The beans are roasted and packed in the coffee roasting plants.


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The company also relies on 24 co-manufactures


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in United States, Canada, Europe, Asia and Latin


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America. One world, one logistics systems of Starbucks reduce the


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transportation and logistics cost and increased efficiency.


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After the coffee bean is roasted and packed, it is transported to


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regional distribution centers. Starbuck has five in USA, of


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which three is owned by Starbucks and two are third party


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logistics companies. Two third party logistics companies in


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Europe and two third party logistics companies in Asia.


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The regional distribution centers carry everything that the


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Starbucks stores need from furniture to cappuccino cups.


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The regional distribution centers supply directly to the


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stores if it has a locational advantage. If not, the stores


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are supplied from third party central distributional centers.


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Starbucks uses 33 third party central distribution centers in


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USA, seven in Asia's pacific region and three in Europe and all


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are well connected to the regional distribution centers.


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Their effective communication and storecard assessment ensure


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consistency, on time delivery, reducing end to end supply costs


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and enhanced enterprise efficiency. Further, Starbucks is


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vertically integrated to provide the customer delight.


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Starbucks is integrated backward through purchase agreements with coffee


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growers, company owned bean roasting plants, company owned


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warehousing and distribution facilities and company owned


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coffee bean farms in Costa Rica & China.


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Starbucks is integrated for work with its coffee shops selling


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food and drinks, coffee beans, appliances and accessories.


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The holistic supply chain model of Starbucks depict that the success of


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Starbucks infact is its definition and redefinition of


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its supply chain to meet global challenges. So, student, friends


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with the hope that you all have understood the concept of supply


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chain, let me sum up what is supply chain. A supply chain is


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a global network of raw material and merchandise


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suppliers, manufacturers, logistics partners,


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distributors, retailers, and consumers who are linked through


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flow of products and services, information and funds to meet


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the customer needs or rather a dream. A supply chain is a


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collection of suppliers linked to create one specific product


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or service for a company. Every product has its own supply chain.


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Those certain suppliers are linked for multiple products.


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It is a chain or network of nodes or links,


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which include multiple suppliers, manufacturers


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and subcontractors, warehouses, distribution centers, and stores


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where the consumer can purchase the products. Each link in the


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supply chain is sequenced in a specific direction and order.


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Each link in supply chain adds time cost and customer service.


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It involves human interfaces, digital integration and


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logistics partnership. Supply chains are complicated and when


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managed well lead to competitive advantage. To ensure effective


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control over supplies, value chain and customer service,


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the supply chain can be integrated either vertically


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or horizontally or both. Benchmarking best practices


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and following them leads to sustainable supply chains.


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So, with a hope that you all have understood the concept of supply


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chain and now to trigger your thinking, I asked you these two


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questions from your experience as a customer, they picked a


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supply chain and name the brand you like and sketch the supply


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chain for it. Awaiting for your answer.


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This is Dr. P. Chitramani signing off with a cup of coffee


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until you moved to the next session on supply chain management.