Analysis of Starbucks Supply Chain Status Based on 3A3S Model

The 3A supply chain was proposed by Stanford University Professor Hau L. Lee in 2004. In the past five years, he has studied more than 60 leading companies focusing on supply chain management, including Wal Mart, best buy and Martha, and found that the first-class supply chain has three characteristics: agility, alignment, and adaptation. It represents the best state of current supply chain management. He believes that only enterprises with the 3A supply chain can continue to gain a competitive advantage and take the lead in the competition. 3S model refers to the analysis of substitution effect (business substitution), scale effect (scale expansion) and structure effect (production structure and distribution channel change) used in enterprise supply chain management. This paper aims to use the 3A3S model to analyze the current situation of the company’s supply chain with Starbucks as an example and draw conclusions through detailed research and analysis, to provide some experience and lessons for more enterprises’ supply chain management.


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Published by SCHOLINK INC. by environmental pollution related to products and production processes by strengthening the self-restraint mechanism of environmental protection. Green supply chain management can minimize the resource consumption and environmental negative effects of the whole supply chain. Additionally, it can also effectively meet the growing demand for green consumption, thereby enhancing the competitiveness of the supply chain. Hence, the role of supply chain management is highlighted. Its business philosophy is from the perspective of consumers, through the cooperation between enterprises, seeking the overall optimization of the supply chain. Successful supply chain management can improve the reliability and flexibility of delivery, reduce inventory, reduce production and distribution costs, and optimize the overall "process quality" of the enterprise. Therefore, this report aims to use the 3A (Agility, Alignment, Adaptation), 3S (Substitution effect, Scale effect, Structural effect) model to analyze the status of the Starbucks' supply chain, and draw conclusions through detailed research and analysis, so as to provide some experience and lessons for more companies' supply chain management.

Case Analysis
This report adopts the research method of case analysis. In the book of case study: design and method, Yin (2004) mentioned that a case study is an empirical study, but it is different from quantitative research methods such as the experimental method, which needs to design and control the environment and process systematically, accurately, and carefully, and carry out rigorous mathematical calculation and data processing to verify the clear mathematical relationship between several variables.
The topic of this report, "Analysis of Starbucks supply chain status based on 3A3S model", is to explore the specific measures of current enterprise supply chain management and study how to conduct a good supply chain management. However, it is a specific analysis of a specific enterprise, which has many uncertainties and uncontrollable conditions, and cannot carry out exactly accurate mathematical relationship statistics. Therefore, this report adopts the case analysis method, aiming to analyze the status quo of Starbucks supply chain by using the 3A3S model.  has more than 32,000 stores around the world and sells a wide range of espresso, hot and cold coffee drinks, pastries, coffee makers and coffee cups.

Agility
The Agility in Starbucks' supply chain is reflected in the following four aspects: The first is real-time follow-up. Starbucks will collect feedback and demand from consumers through activities such as questionnaires giving drinks and so on, to improve its products and services. The second is food delivery. In the face of consumers' growing demand for delivery services, Ele.me and Starbucks officially launched the trial operation of Starbucks Delivery on September 19, 2018. Recently, its delivery service has expanded to 2,000 outlets in 30 cities across China.
Then, in the face of a post-crisis slump in the coffee market, Starbucks introduced Via instant coffee in 2009. "Instant coffee as good as Starbucks brewed" is its highlight. The launch helped Starbucks reach $100 million in global sales in just 10 months and build more than 40,000 outlets. Finally, Starbucks is in inventory management mode: sales forecast data, inventory structure, actual inventory quantity of products and fluctuation of consumer demand. If the actual stock is below the level of the order point, the purchasing department will issue replenishment orders. The supplier produces immediately after receiving the order, which guarantees that the order period is not more than two weeks. When the sales department receives the customer's order and arranges the delivery of the goods, the ERP system of the Starbucks sales department will automatically generate the settlement order and start the subsequent settlement process.

Alignment
The Alignment of Starbucks' supply chain is reflected in its emphasis on cooperation with suppliers and information sharing.
The first is to pay attention to the cooperation with suppliers. Starbucks attaches great importance to the benign cooperation with upstream suppliers, builds long-term reciprocity with suppliers, implements a complete evaluation system and database, and can accurately evaluate the performance of each supplier, which improves the bargaining chip with suppliers in contract negotiations. In addition, Starbucks pays attention to information sharing with consumers and suppliers, so that they can see a better prospect of cooperation, and at the same time make consumers feel more comfortable and happier to buy products.

Adaptation
The adaptability of Starbucks' supply chain is reflected in the following three aspects.
The first is supplier localization. After strict inspection, Starbucks selects suppliers in the place of sale, which reduces the procurement cost and improves its popularity. For example, Starbucks established Yunnan Coffee Growers Support Center in Yunnan Province. The second is product localization.
Starbucks will develop products with local characteristics according to different local cultures in China, such as the zodiac cup sold by Starbucks. This move has won more consumers' favor. Finally, store design localization. Starbucks will redesign the stores by combining the pictures of the stores and the surrounding environment, so that the stores can better integrate into the local culture and business circle, such as the Starbucks store in Beijing.

Substitution Effect
Swiss food giant Nestle reached an agreement on August 28, 2018, to pay US coffee chain Starbucks $7.15 billion for the right to sell its products worldwide. After the agreement takes effect, Starbucks will focus on its Liberty Cafe business. Kevin Johnson, CEO of Starbucks, said that by outsourcing product sales to Nestle, it replaces the production of the original brand company and creates economies of scale. "The Global Coffee Alliance will bring the Starbucks experience to millions of families around the world through Nestle's influence and reputation".

Scale Effect
The first is the number and layout of stores. As of December 14, 2018, the number of stores worldwide reached 21,300, spread across North and South America, Europe, the Middle East, and the Pacific. It has 3,600 stores in 150 cities across China. In addition, it can be found in shopping centers and shopping malls such as Xintiandi, Sunlight and Global Harbor, as well as office buildings with huge customer flow, which can save the cost of publicity.
Secondly, the expansion of distribution channels. Supermarkets accounted for half of all coffee sales in America in 1998, so the more than 26,000 grocery stores represent a much wider market than Starbucks' retail chain and specialty distribution channels and tapping into that channel could bring millions of customers to the company. Moreover, entering the supermarket can also save the company's transportation costs and reduce operating costs, and the company's retail ability will be further

Structural Effect
The first is the product structure. Starbucks will expand its scope of business from the single raw bean coffee to the catering categories such as bagged coffee, tea, alcoholic beverages, cakes, and bread, and strive to attract customers with a richer selection of products. At the same time, we continue to develop cultural and creative products around the brand, such as cat claw cups and so on.
Secondly, the structure of the production supply chain. With the increase of stores, supply chain management is carried out in accordance with the inventory production mode. The management department regularly understands the forecast sales data and adjusts the inventory structure by combining the predicted sales data with the inventory structure. Then according to the actual inventory quantity of the product, combined with the defined inventory structure and the fluctuation of consumer demand, if the actual inventory is lower than the level of the order point, the purchasing department will issue replenishment orders. At the same time, focus on regional coffee cultivation, cultivate good suppliers, suppliers will produce immediately after receiving orders, shorten the delivery time.
Finally, sales channels. From single store direct sales to online orders, and then into supermarket retail, now with Alibaba to develop takeout business.

Conclusion
By analyzing the supply chain management of Starbucks through the 3A3S model, we can draw the following conclusions: First, when the market or strategy changes, an excellent enterprise does not have to stick to the original supply chain but should make timely changes. Second, if an enterprise wants to move up the value chain, it must move from the production link to the design link, or the demand link, namely the brand marketing, and the service link. Third, building a resilient supply chain requires two key components: the ability to see trends, and the ability to change the supply network.
Fourth, a strong supply chain requires all manufacturers on the chain to work together to achieve synergies.
An outstanding supply chain management can make the supply chain operation reach optimization, with minimal cost, make the supply chain from procurement, to satisfy the final customer of all processes, including workflow, physical flow, cash flow and information flow can operate efficiently, put the right products, at a reasonable price, timely and accurately delivered to consumers.

Limitation and Future Research Plan
This report only takes a case, Starbucks Company as an example and uses the 3A3S model to make a specific analysis of its supply chain. Although Starbucks is big enough and representative enough.
However, it cannot simply "replace the face with the point" and replace the supply chain management method of the whole industry with Starbucks. Therefore, in the future, several enterprises will be further selected according to the scale and characteristics of enterprises and other indicators to use the model for analysis, to further enhance the rigor and credibility of the conclusions of this report.