Analysis of Starbucks Distribution Strategy and Supply Chain

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Analysis of Starbucks Distribution Strategy and Supply Chain
Starbucks is recognized for the high-quality coffee the firm buys and roasts. The company applies a vertically integrated supply chain. It involves participation in supply chain processes, from sourcing the coffee beans to the end product (cup of coffee). The firm engages directly with worldwide coffee growers to standardize the quality of the coffee beans and flavor standards. Therefore, vertical integration of the supply chain allows Starbucks to acquire an essential element of the supply chain that would otherwise have been outsourced. Hence has greater control over supply chain activities. In the case, Starbucks Fair Trade Line, the firm has negotiated contracts with coffee growers, including the small coffee growers, to purchase their coffee. Due to the lack of economics of scale from small growers, the higher processing costs are passed down to the financial consumers who appreciate the value of ethically sourced Fair Trade coffee.
The use of contracts with coffee growers means that Starbucks has legitimate power over its suppliers (Iacobucci 168). It does not matter where Starbucks gets the coffee since it has negotiated agreements with many different suppliers. The suppliers have to meet the demands of Starbucks with regards to quality if they want to sell to the firm. Also, the guarantee that Starbucks will pay for all supplies promptly offers more power over ...