Supply Chain Management

RE: Coursework 1

Try to include a diagram for loan, clarify what are you using for Starbucks (lean/ agile) and include diagram. You can highlight when you mention closed loop a liner as a ( supply chain design) and highlight lean as using ( supply chain theory).

try to apply an justify the use of tools (e.g customization and postponement, root cause analysis for quality (agile), and reducing waste, TQM in quality (lean))

You can include some network diagrams. Make sure you have four journals in your references.

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INTODUCITON
Supply chain management is managing and coordinate the flow of products, operations which is delivery goods from raw material to the finished product (Kenton, 2019). It also includes maximizing the customer value, which means adding value throughout the whole process to the end customer.

 

This essay is to critically analyze supply chain management between perishable and electronic products by using appropriate tools or theory as a support, such as closed-loop or linear traditional model, ‘Distribution & logistics,’ and ‘Sustainability & CSR.’ Tesla plc and Starbucks plc are the main products in this report, also will be compared the difference of supply chain models at the conclusion.

Tesla plc is an American international company which is mainly focused on producing electric car and solar panel, cooperate with SolarCity subsidiary, Tesla plc is continuing to release and develop a high-performance electric vehicle since Tesla founding in 2003. Moreover, Tesla plc, as a sustainable energy company that is integrated entirely with the supply chain and product manufacturing, could offer a set of services in terms of energy products, which include incorporates solar, storage, and grid services (Tesla, Inc., 2019).

 

Starbucks plc is an American coffee company, mainly providing merchandise, coffee, fresh food and consumer products to customer (Globalassets.starbucks.com, 2019). Starbucks starting their business from 1971 in Pike Place Market. In 1983, Starbucks would attempt to bring the tradition of Italian coffee bars to Starbucks company culture, which is offering a place to communicate and make deep connection with each other. However, Starbucks grow up considerably and expand physic market to 15,000 stores around 50 countries, becoming the premier roaster and coffee retailer in the global market (Starbucks Coffee Company, 2019).

 

 

 

 

 

SUPPLY CHAIN OF TESLA:

Upstream:

Purchasing and procurement (P&P) is the first step of the journey. Tesla is performing multiple- suppliers, which sourcing components of electric cars from the global market.

 

Midstream:

Tesla suppliers’ do not have enough capacity to meet the order from Tesla plc, because of the location of the company, which is silicon is far away from the traditional suppliers. As a result, Tesla plc needs reliability and stability from the supplier’s demonstration when they are willing to contact with each other. (McKevitt and Edwin, 2017). Therefore, Tesla plc is focusing on human rights in its supplier and reducing the risk in terms of conflict material or child labor by supply chain evaluation (Tesla.com, 2019).

 

Tesla, as an auto manufacturer, lots of raw material and car components like wheels, engine, and copper will be purchasing from different companies, for instance, AGC automotive enterprise providing windshields, brakes are being offered by Brembo plc and battery chiller by Modine Manufacturing (Maverick, 2019). Moreover, one crucial supplier of Tesla plc is Panasonic Corporation, which is a Japanese company having a closer partnership with Tesla plc, supply the essential part of the electric car, which is the automotive-grade lithium-ion battery (News.panasonic.com, 2011).

 

When all the raw material and car component has arrived at California in Fermont factory and placed in pallet, then the automatic robot will start to assembly and deliver items to the right place (Marques, 2019). Finished product will be deliver to the final customer who is ordering and purchasing on official website.

Lean strategy is reducing or adjusting the waste and unvalued step from the production, while add more value to the end customer by resources integration (Rouse, 2019)

.

After assembly procedure, Tesla plc is providing the lean strategy into by streamline car production and make car design simpler, and utilize automatic robots and packing cars (Joann, 2018), in order to reduce the lead-time and add value to the customer.

Lean thinking is applied to Tesla plc in terms of customer service, lead the customer to buy the vehicles directly to the distribution center and using internet to maintain the relationship between Tesla plc and customer experience (Womack, 2018).

 

DISTRIBUTION & LOGISTICS:

Figure 1. Typical MiT Transit Distribution Operation

(CRUZ-MEJIA and Eliseo Vilalta-Perdomo, 2017)

 

Tesla supply chain is adopted the business model of direct sales, which is unlike with conditional francized dealerships. In addition, the customer would directly communicate with Tesla sales by its own selling channel. The service center is providing the service to fix the problem of the car and charging service (Kristina, 2019).

Figure 2. Closed-loop supply chain for LIB

(Battini, Ivanov and Gianesello, 2017)

 

Tesla applying closed-loop supply chain for production of Lithium-Ion Battery (LIB), because of the usage and recycling of lithium, and environmental issue is be concerned by the senior manager (Battini, Ivanov and Gianesello, 2017)

.

 

Downstream:

After all raw materials and car component arrived at Fremont facility which is locate in California. Because of Tesla intergrade the all process of supply chain, the Model X, S and Model 3 will departure from Fremont outbound logistics by Tesla own truck (Tesla, 2018). Finally, Truck will deliver product to the Tesla nearby service center which is customer order by Tesla official website in advance, and customer collect car by themselves after finished the registration paper document (Tesla.com, 2019).

 

SUSTAINABILITY & CSR OF TESLA:

Triple bottom line is a performance measurement of organization illustrate the social responsibility and environmental issue during the operations in what extend. As a result, the Triple bottom line is divide into people, plant and profit, and profit, employee and environment will be examined in the long term. (The Economist, 2009).

Figure 2. Triple Bottem Line

(University of Wisconsin Sustainable Management Degree, 2019)

 

Tesla has achieved sustainability from environment, society and economy aspects by triple bottom line theory.

For society aspect, Tesla core business which is selling electric car is providing profit to the communities, natural environment is suffer less damage and been protect. For instance, Tesla’s environmental- friendly production is highly acceptance by society. Moreover, Tesla’s own patents was available for individual and organization in 2014 (Panmore Institute, 2018).

Tesla potential customer is care for the quality and level of price. As a result, Tesla is corporate with Panasonic to producing its own batteries instead of purchasing Panasonic’s battery. Therefore, the network of supercharge is also expended to improve the range of Tesla customer utilize their product (Panmore Institute, 2018).

Cleaning and renewable energy is having the great contribution to the environment. Model S, X and Model 3 which is the core business of Tesla is now reducing the carbon dioxide release by over 3,500,000 tons all over the world (Tesla.com, 2019).

 

Figure 3. All-time Tesla Energy consumption VS. generation

(Tesla.com, 2019)

According to bar chart illustrate how many terawatt hours (TWh) are consume by Model S, X and 3 and generate by Tesla plc solar energy. The number of Tesla solar energy is over twice bigger than Tesla electric car consumption at 13.25 TWh (Tesla.com, 2019).

 

 

SUPPLY CHAIN OF STARBUCKS:

Figure 4. Coffee supply chain

(Jardon, 2018)

The closed-loop supply chain is adopted by Starbucks supply chain operation. The car driver delivered the fresh coffee beans to ocean ship when the framer was finished picking and packaging the coffee beans process. All beans arrived at six UK and Europe storage sites. After the manufacturing step, Starbucks’ eight central and forty-eight regional distribution centers received the roasted coffee beans from storage sites. Starbucks can operate all faculty and distribution center by a less amount of storage facilities while keeping the same way to process all coffee beans. Starbucks plc effective response and fulfill the order that retailer needs and complete 70,000 requests per week (Fronetics, 2017).

 

Upstream:

Starbucks is putting itself into every process of the supply chain from raw material to complete coffee by the vertically integrated supply chain. Starbucks believes that do business with farmers will ensure all coffee beans can achieve the same quality and standard of taste, which means Starbucks could directly cooperate with almost 300,000 global coffee suppliers (U. osu.edu, 2019).

 

Midstream:

Five manufacturing or roasting plants will start their business after obtaining the raw material from a supplier. The roaster is roasting the green coffee bean, which is not processed, fresh beans to reveal a browned color in each coffee beans. Whole coffee beans will be blending and packaging in the next two steps before shipping to other places. Starbucks having five manufacturing and one roasting plant located in the United States and the United Kingdom, respectively, each faculty could offer 1.5 million pounds of finished product per week (U.osu.edu, 2019).

 

DISTRIBUTION & LOGISTICS OF STARBUCAKS

Downstream:

Third-party logistics is taking over the most process of logistics, Starbucks owns two distribution center in American, and the rest of the tree departure center is managed by a third-party logistics company. 3 PL logistics company using a dedicated truck fleet to deliver coffee from distribution center to Starbuck’s retailer (James A, 2010).

Third-party logistics is to deal with challenges from demand of supply chain, and reserve time to improving their core business value, while a professional third party logistics having comprehensive knowledge in terms of logistics and sufficient resources to helping the company running better throughout supply chain, list five advantages for utilizing third-party logistics (Solutions, 2018):

  • Time and money-saving
  • Expand market
  • Sufficient resources
  • Agility and Scalability
  • Continuous improving

 

Peter Gibbons, who is responsible for Starbucks ‘ global supply chain operations, apply the lean strategy to the Starbucks supply chain. Improving Starbucks supply chain to becoming an efficient and simplification supply chain model and operational structure; Supply chain work divided into four parts: plan, source, make and deliver, while support company better operate and coordinate global logistics network by developing highly concentrated logistics system. Operation safe, on-time delivery rate, the total cost of the supply chain, and retain saving would be evaluated by the scorecard system. Therefore, apart from the scorecard and logistics system, the digital information system utilizes to monitor storage and capacity during the whole process. Those key technologies can lead Starbucks to quick response and change the operation and business plan that make Starbucks having high-efficiency to supply chain (Fronetics, 2017).

 

SUSTAINABILITY & CSR OF STARBUSCKS:

   Starbucks coffee is 99% of coffee is follow up Coffee and Farmer Equity (C.A.F.E) principle by Conservation international. In 2004, Starbucks created high-quality coffee beans for long-term supply and brought positive influence on local farmer’s life by co-operating with Conservation international.

C.A.F.E is to regular the ethical sourcing principal to assist the coffee farmer to be more sustainable and fair to plant coffee beans. Firstly, all raw materials must conform to Starbuck’s high-quality standards. Secondly, payment should be submitted for the whole supply chain, to reveal how much farmers received from Starbucks plc. Thirdly, the Supplier must ensure the human rights for each worker been protected, and the working condition is safe, fair. Child labor and discrimination is no allowance in the workplace. Finally, waste reduction, preserving, and saving water and energy resources use fewer agrochemicals in the production process during the supply chain by protecting biodiversity.

After C.A.F.E published, coffee beans show higher quality and quantity production and less damage nature environment. Moreover, C.A.F.E is protecting one million coffee farmer’s rights and gain benefits (Starbucks Coffee Company, 2019).

 

CONCLUSTION:

Tesla plc and Starbucks plc are having produced an electronic product and a perishable product to end customers, with a different supply chain.

 

One difference between Tesla plc and Starbucks plc is outsourcing. Tesla plc is trying to integrate the whole process by their own such as logistics, to reduce the lead-time and add value to the customer during the supply chain, that is increasing the efficiency of communication. However, Starbucks plc is outsourcing most of the manufacturing and delivery process to the third part company and reserving more time and money to focus on Starbucks core business like roasted coffee bean process, while the 3PL company is a cost-saving choice for the Starbucks to manage their supply chain.

 

Both Starbucks plc and Tesla plc has contributed to producing environment-friendly production, follow up the triple bottom line to improving sustainability and CSR to society.

List of references:

Tesla, Inc. (2019). Investors Overview | Tesla, Inc. [online] Available at: https://ir.tesla.com/ [Accessed 27 Oct. 2019].

 

McKevitt, J. and Edwin, L. (2017). How Tesla worked with suppliers to scale production from hundreds to 50K. [online] Supply Chain Dive. Available at: https://www.supplychaindive.com/news/Tesla-supply-chain-supplier-relationship-production/434152/ [Accessed 1 Nov. 2019].

 

Tesla.com. (2019). Privacy & Legal | Tesla. [online] Available at: https://www.tesla.com/en_GB/about/legal [Accessed 1 Nov. 2019].

Maverick, J. (2019). Who Are Tesla’s (TSLA) Main Suppliers?. [online] Investopedia. Available at: https://www.investopedia.com/ask/answers/052815/who-are-teslas-tsla-main-suppliers.asp [Accessed 1 Nov. 2019].

 

News.panasonic.com. (2011). Panasonic Enters into Supply Agreement with Tesla Motors to Supply Automotive-Grade Battery Cells | Headquarters News | Panasonic Newsroom Global. [online] Available at: https://news.panasonic.com/global/press/data/en111011-3/en111011-3.html [Accessed 1 Nov. 2019].

 

Kenton, W. (2019). How Supply Chains Work. [online] Investopedia. Available at: https://www.investopedia.com/terms/s/supplychain.asp [Accessed 1 Nov. 2019].

 

Brownlee, M. (2019). Tesla Factory Tour with Elon Musk!. [online] YouTube. Available at: https://www.youtube.com/watch?v=mr9kK0_7x08 [Accessed 2 Nov. 2019].

 

Joann, M. (2018). Musk Thinks Tesla Will School Toyota On Lean Manufacturing; Fixing Model 3 Launch Would Be A Start. [online] Forbes.com. Available at: https://www.forbes.com/sites/joannmuller/2018/02/16/tesla-thinks-it-will-school-toyota-on-lean-manufacturing-fixing-model-3-launch-would-be-a-start/#174af4584c74 [Accessed 2 Nov. 2019].

 

Womack, J. (2018). Jim Womack shares his lean take on Tesla – Planet Lean. [online] Planet Lean. Available at: https://planet-lean.com/jim-womack-tesla-lean-thinking/ [Accessed 2 Nov. 2019].

 

The Economist. (2009). Triple bottom line. [online] Available at: https://www.economist.com/news/2009/11/17/triple-bottom-line [Accessed 2 Nov. 2019].

 

University of Wisconsin Sustainable Management Degree. (2019). A Simple Explanation of the Triple Bottom Line | University of Wisconsin. [online] Available at: https://sustain.wisconsin.edu/sustainability/triple-bottom-line/ [Accessed 2 Nov. 2019].

 

Panmore Institute. (2018). Tesla, Inc.’s Corporate Social Responsibility & Citizenship, Stakeholders – Panmore Institute. [online] Available at: http://panmore.com/tesla-motors-inc-stakeholders-corporate-social-responsibility [Accessed 2 Nov. 2019].

 

Tesla.com. (2019). Carbon Impact | Tesla UK. [online] Available at: https://www.tesla.com/en_GB/carbonimpact [Accessed 2 Nov. 2019].

 

Tesla.com. (2019). TESLA IMPACT REPORT. [online] Available at: https://www.tesla.com/ns_videos/tesla-impact-report-2019.pdf [Accessed 2 Nov. 2019].

 

Tesla. (2018). Fremont outbound logistics lot | Week of June 24th, 2018. [online] Available at: https://www.youtube.com/watch?v=BQ_mGqZdAes [Accessed 2 Nov. 2019].

 

Tesla.com. (2019). How Ordering Works. [online] Available at: https://www.tesla.com/en_GB/support/how-ordering-works?redirect=no [Accessed 2 Nov. 2019]

Battini, D., Ivanov, D. and Gianesello, P. (2017). Closed-loop supply chain simulation with disruption considerations: a case-study on Tesla. International Journal of Inventory Research, [online] 4(4), p.257. Available at: https://www.anylogistix.ru/upload/iblock/910/91063dfe903a73dcdfbf1da5cacf4fe4.pdf [Accessed 6 Nov. 2019].

 

 

CRUZ-MEJIA, O. and Eliseo Vilalta-Perdomo, E. (2017). Merge-in-transit retailing: a micro-business perspective. Universidad & Empresa, 20(34), p.83.

 

U.osu.edu. (2019). Manufacturing | Starbucks Coffee. [online] Available at: https://u.osu.edu/commoditychaincoffee/manufacturing-page/ [Accessed 5 Nov. 2019].

 

Jardon, C. (2018). World Coffee Portal – Direct Trade 2.0: How technology is rebooting coffee supply chains. [online] Worldcoffeeportal.com. Available at: https://www.worldcoffeeportal.com/Latest/InsightAnalysis/2018/How-Coffee-Manufactory-is-rebooting-coffee-supply [Accessed 5 Nov. 2019].

 

Fronetics. (2017). Supply Chain Putting the. [online] Available at: https://www.fronetics.com/supply-chain-putting-star-starbucks/ [Accessed 5 Nov. 2019].

 

James A, C. (2010). From bean to cup: How Starbucks transformed its supply chain – Logistics – CSCMP’s Supply Chain Quarterly. [online] Supplychainquarterly.com. Available at: https://www.supplychainquarterly.com/topics/Logistics/scq201004starbucks/ [Accessed 5 Nov. 2019].

 

Starbucks Coffee Company. (2019). Store Products. [online] Available at: https://www.starbucks.co.uk/responsibility/ethicalsourcing/ourstoreproducts [Accessed 5 Nov. 2019].

 

Rouse, M. (2019). What is Lean Management. [online] SearchCIO. Available at: https://searchcio.techtarget.com/definition/lean-management [Accessed 5 Nov. 2019].

 

Solutions, D. (2018). 5 Reasons to Use a 3PL Provider | Derby Supply Chain Solutions. [online] Derby Supply Chain Solutions. Available at: https://www.derbyllc.com/5-reasons-to-use-a-3pl-provider/ [Accessed 3 Nov. 2019].