A warehouse refers to the organization’s planned space that they use to store and handle goods and materials (Tompkins, 2010). Besides, warehouses act as focal points that encompass product and information flow between suppliers and beneficiaries. The warehouse ownership arrangements used by Starbucks Corporation is private warehouses. The corporation owns and manages these warehouses to store exclusively their owned stock of products and materials. Starbucks has six storage sites for “green coffee beans” at the roasting plant (Cooke, 2010). The warehouses receive coffee beans from Asia, Latin America, and Africa. Moreover, Starbucks Corporation has five regional distribution centers in the U.S that store packed roasted beans (Cooke, 2010). The organization owns two regional distributions centers (DCs) while the third-party logistics companies (3PLs) operate three DCs. Lastly, the corporation has 33 central distribution centers in the U.S, three in Europe, seven in Asia and five in Canada (Cooke, 2010). The central distribution centers store dairy products, coffee, paper items such as napkins and cups, and baked goods.
The type of warehouse arrangement that Starbucks uses provide the following economic benefits to the organization. First, the organization benefits from the reduced logistic costs (Tompkins, 2010). With consolidation strategy, the warehouses receive products and materials from the various roasting plants and combine them for a particular distribution center. The products and materials would be on a single transportation shipment. The organization will benefit by realizing the lowest possible transportation rates. Therefore, the organization will incur reduced expense on transportation because the process entails combining the logistical flow of several small shipments to a particular destination.
Second, the warehousing strategy will help to reduce congestion at the receiving docks since fewer shipments are involved in the process. On the same note, with reduced congestion at the receiving dock, the organization will save time and eliminate other logistic expenses that it would have incurred in case of congestion. Third, since Starbuck’s warehouses at the roasting plants pack and label coffee, they can postpone or delay the final production of coffee until they receive an actual demand from the customers. The processing and postponement strategy helps to minimize risk because the company will not finalize packaging until they receive an order for a particular label (Tompkins, 2010). Moreover, the organization will benefit from reduced level of required inventory since it uses a basic product for different labeling and packaging.
In addition, material handling refers to a system that deals with products and material movement, protection, storage and control in the warehouse. Starbucks’s warehouses have advanced material handling systems that include the following. First, the warehouse has automated storage and retrieval system that maximizes the use of floor space by providing dense storage. The system functions by automatically locating and delivering the required inventory to a conveyor system thus reducing the labor required, inventory level and floor space (Blanchard, 2010). Moreover, the system increases productivity and accuracy compared to the traditional manual storage system. Second, the warehouses use integrated material handling systems that ensure all materials handling equipment work together. The system functions by connecting equipment and software to support activities such as receiving, processing, picking and shipping in the facility (Blanchard, 2010). Third, conveyors are used in moving materials and finished products from receiving to storage. Fourth, the warehouses have several storage systems such as shelving, commercial shelving and work platforms that store slow, medium and fast moving products in the facility. Besides, the storage systems are used for short-term and long-term handling of goods and materials (Blanchard, 2010).
Blanchard, D. (2010). Supply chain management best practices. Hoboken, N.J: John Wiley & Sons.
Cooke, J. A. (2010). From bean to cup: How Starbucks transformed its supply chain. CSCMP’s? Supply Chain Quarterly, 4(4), 35-55.
Tompkins, J. A. (2010). Facilities planning. Hoboken, NJ: John Wiley & Sons.
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