Fouzan Rafi Khawaja (01 210201 004) Spring 2021 Mid Term Paper Final 07052021 112247pm

Bahria University, Islamabad Campus
Department of Business Studies

Online Mid-Term Examination (Spring-2021)
Class: BBA Evening 2yrs programme
Paper Type: Subjective
Course: Supply Chain Management Date: 20th May 2021

Course Code: Max Marks: 12.5
Teacher Name: Uzma Aamer Total Pages: 02
Time Allowed: 90 Mins
Instructions:
i. All questions are compulsory.
ii. There are total 03 questions.
iii. Use appropriate examples to support your answers
iv. Do not generalize the answers. Be specific
Student’s Name: Fouzan Rafi Khawaja Enroll No: 01-210201-004
Starbucks is pretty much a household name, but like many of the most successful worldwide brands, the coffee-
shop giant has been through its periods of supply chain pain. In fact, during 2007 and 2008, Starbucks leadership
began to have severe doubts about the company’s ability to supply its 16,700 outlets. As in most commercial
sectors at that time, sales were falling. At the same time, though, supply chain costs rose by more than $75
million.
Supply Chain Cost Reduction Challenges: When the supply chain executive team began investigating the rising
costs and supply chain performance issues, they found that service was indeed falling short of expectations.
Findings included the following problems
• Fewer than 50% of outlet deliveries were arriving on time
• Several poor outsourcing decisions had led to excessive 3PL expenses
• The supply chain had, (like those of many global organisations) evolved, rather than grown by design, and
had hence become unnecessarily complex
The Path to Cost Reduction: Starbucks’ leadership had three main objectives in mind to achieve improved
performance and supply chain cost reduction. These were to:
1. Reorganize the supply chain
2. Reduce cost to serve
3. Lay the groundwork for future capability in the supply chain
To meet these objectives, Starbucks divided all its supply chain functions into three main groups, known as
“plan” “make” and “deliver”. It also opened a new production facility, bringing the total number of U.S. plants to
four.
1|Page
Next, the company set about terminating partnerships with all but its most effective 3PLs. It then began managing
the remaining partners via a weekly scorecard system, aligned with renewed service level agreements.
Supply Chain Cost Management Results: By the time Starbucks had completed its transformation program, it
had saved more than $500 million over the course of 2009 and 2010, of which a large proportion came out of the
supply chain, according to Peter Gibbons, then Executive Vice President of Global Supply Chain Operations.
Q1. Under the current scenario how could Supply chain Integration help Starbucks to improve their
performance? [CLO 1 & 2] [05]
Q2. How could Lean Supply Chain help Starbucks to achieve their desired objectives, use the facts and figure
given in the case. [CLO 3 & 4]
[05]
Q3. Write the usefulness of the Pull and Push strategy in Supply chain management. [CLO 2 & 3]
[2.5]
A1.
Supply Chain Integration is a process organizations/companies use in which they make all the parties involved
with the fulfillment of a product/service to get integrated into a single system. The Integration process requires
well focused and specific coordination and alignment so that they can ensure everyone is working effectively to
reach the same goal at every moment in time.
As mentioned above in the Supply Chain Challenges mentioned below can be dealt with easily and
correctly by using the Integration to catch the point at which the process has turned wrong.

• The supply chain had, (like those of many global organisations) evolved, rather than grown by design, and
had hence become unnecessarily complex
Such as looking into all the losses being created by the Third-party Logistics(3PL) as deliveries not being on time,
while 3PL being poor in making outdoor decisions causing further expenses. Starbucks can analyze the selected
3PL’s and either change them or demand performance to be up to the requirements. This step can also help
Starbucks make sure the Deliveries will be made on time as well.
Such Correctional Steps will assist Starbucks in improving the Quality and Performance of Service which they
provide to their Consumers/Customers.
A2
Basically, a lean supply chain tells us how a properly designed supply chain should operate, such as
delivering products quickly to the end customer, reducing the waste to a minimum. When a Lean Supply Chain is
used it enables the Organization to be Lean and Efficient more than the normal.
2|Page
The Organization using a Lean Supply Chain Method will start by eliminating all the non-value-added
costs, while realigning their resources to deliver a better value to the Customer in a faster manner. It will also
assist the Starbucks in looking at the Path to Cost Reduction. Initially the Supply Chain will be reorganized
allowing for a reduction in the Cost to serve the Consumers on time. If the Lean system is applied then it will
allow Starbucks to create a new groundwork for future Supply Chain Management plans to increase the capability
of Correct Deliveries on Time, to the Consumers/Customers.
A3
Push and Pull Strategy are as follows: -
In a push-based supply chain method the product(s)/service(s) are pushed through the channel from production up
to the retailers. This means that production of the company is done on bases of the demand forecast. Whereas in
a pull-based supply chain only the procurement, production, and distribution are based on demand forecasts rather
than being based on predictions.
Under a pull supply chain, actual customer demand drives the process, while push strategies are driven by long-
term projections of customer demand. So in a Pull Strategy the Customers remain Content and Satisfied with the
Service being provided, while the Company might be in a tough situation. In the Push strategy allows the
Company to look at the past experience from Customers and fabricate a long term probability of Customer
demands. In the Push Strategy the Company can have a future planning, but it might come out wrong and leave
the company with loss.
3|Page

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Bahria University, Islamabad Campus

Department of Business Studies

Course: Supply Chain Management Date: 20th May 2021

Student’s Name: Fouzan Rafi Khawaja Enroll No: 01-210201-004

• Several poor outsourcing decisions had led to excessive 3PL expenses

Push and Pull Strategy are as follows: -

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