Starbucks Project

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Operations Management Presentation of Starbucks

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Starbucks Project

  1. 1. Brian P. Germain & William McDougall Operations Management Professor Ken Hung Suffolk UniversitySawyer Business School of Management
  2. 2.  International Coffee House that started in Pike Place Market, Seattle Washington in 1977 – Founder CEO Howard Schultz. 17,000 stores in 50 Countries World Wide. The average Starbucks customer visits the store 6 times per month while a loyal 20% of customers go to the stores 16 times per month. Famous for their enthusiastic “Baristas,” “specialty coffees,” and lattes. Sawyer Business School of Management
  3. 3.  Customers are the heartbeat of most businesses, and have a say in the value of the company, what they’re good at, and how to improve on areas necessary. Employees provide the atmosphere of the company. Without enthusiastic employees that love their job, the company will not grow financially or culturally. Sawyer Business School of Management
  4. 4. Customers Food Orders Beverage Orders Customer with a finished beverage and a fresh packaged food item.Sawyer Business School of Management
  5. 5.  The Starbucks we will be examining is the store located in Downtown Crossing in the heart of Downtown Boston Busiest Times include Monday – Friday 8 am – 10 am At most has 6 Baristas on hand taking the orders, preparing the drinks/food, and working the cashiers. Sawyer Business School of Management
  6. 6. Enter Exit Manager Beverage Bar Cashier x 3 Condiments Food BarSawyer Business School of Management
  7. 7. Two-Server System Cashier 1 Beverage Store Bar/Pickup Entrance Cashier 2Sawyer Business School of Management
  8. 8. 2 Hour Examination 8 AM – 10 AM Ta = 0.7 Cashier 1 Beverage Store Bar/Pickup Entrance Cashier 2 Inter Arrival Time = 0.7 Min Service Time = 1 Min Standard Deviation = 2 Min CVp = 2 Min CVa = 2.857Sawyer Business School of Management
  9. 9. Min = 5 Ppl = 13.5 Min = 45 Ppl = 131Min = 65 Cashier 1Ppl = 187 Beverage Store Bar/Pickup Entrance Cashier 2 Min = 5  Flow Time Ppl = 13.5 = 120 Min (2 Hr)  Flow Unit = 345 Ppl  Flow Rate = 2.875 Ppl/MinSawyer Business School of Management
  10. 10.  Utilization = 1/0.7*2 = 72% Time in Queue = 1 * 0.72 ^ √2*(2+1) – 1 * 2^2 + 2.857^2 = 6.7 Min 2 1 - 0.72 2 Time in System = 6.7 + 1 = 7.7 Min Inventory in Queue = 6.7/0.7 = 9.6 Min Inventory in Service = 0.7*2 = 1.4 Min Inventory in System = 9.6 + 1.4 = 11 MinSawyer Business School of Management
  11. 11.  Store size.  Inventory in Queue relates  Huge push from 8 – 10. to over 50% of the total  Third register not being time spent in Starbucks. utilized.  Starbucks bar area  No intended waiting areas. congestion due to high  Inflow/Outflow customer volume of customers/drinks clashing. per customer.  Human errors in beverage preparation. Based on Visual Examination Based on Numbers/DataSawyer Business School of Management
  12. 12.  By reducing the standard deviation from 2 to 1.5, the time in queue will be reduced from 6.7 min/customer to 3.8 min/customer (roughly 57%). Utilizing the third register, thus changing from a 2-server system to a 3-server system will reduce the utilization from 72% to 48%, which would reduce the time in queue to 1.33 min’s. Sawyer Business School of Management
  13. 13.  Changes in the system are difficult for franchises due to standardization. Opening a third register during peak hours would increase costs. It is unreasonable to hire an extra employee for 2 hours/day. The size of the store inhibits their ability to challenge the issue of customer congestion. Sawyer Business School of Management
  14. 14. Questions? Suffolk University Sawyer Business School of Management

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