Starbucks Supply Chain Needs: Coffee vs. Tea

Starbucks Supply Chain Needs: Coffee vs. Tea

There is an intrinsic difference in the supply chain needs of Starbucks in regards to its production of coffee (which is largely based on its access to, refinement and transportation of coffee beans) and that of tea (which hinges upon the access to, processing and manufacturing of tea leaves into tea bags). The principle difference in the these needs explicitly related to Starbucks has to do with the quantities involved -- Starbucks is principally a coffee company, and produces considerably more coffee beans than it does tea bags as a result. Therefore, its supply chain needs for tea will always be considerably less so than for coffee, a fact which is most notably underscored by the reality that as of 2010, the organization had five coffee roasting plants owned by the organization in the four corners of the continental U.S. versus a single tea processing plant (Cook, 2010). It is also worth noting that the process for converting coffee beans into a product that can be marketed and shipped throughout the world is less arduous than that for tea, since "Compared to the value chains of other commodities, such as cocoa or coffee, the tea value chain is less fragmented and significantly shorter" (Braga and Strebel, 2011, p. 2).

As previously alluded to, the sheer expense associated with operating facilities pertaining to coffee leaves is much greater than that associated with tea leaves. In addition to the five roasting plants (including one located in Holland) there are also 6 "green coffee" warehouses owned by Starbucks -- the only facility dedicated to just tea is the aforementioned processing plant (Cook, 2010). Additionally, there are also expenses pertaining to the procurement of coffee beans coming from all over the world which require payment to overseas vendors and transportation costs. Once these beans have reached the U.S. (or Holland), they are manufactured at roasting plants and transported to distribution centers. Starbucks has distribution centers all throughout the world and store locations that require their products internationally as well.

The principle difference in the supply chain process between coffee beans and tea leaves is that virtually every single coffee bean has to be imported to the U.S. Or to Holland for Starbucks. However, not all tea has to be exported. Starbucks manufactures different types of tea, both the traditional type that is in tea bag and which requires exportation from parts of the world such as India and Asia, as well as previously bottled cold tea that does not have to imported .Therefore, one of the cons in the supply chain needs for tea is that it can be produced domestically in the United States, and even shipped to locations in the U.S. which significantly reduces fees associated with transportation costs for coffee beans.