Starbucks Corporation: Building A Sustainable Supply Chain
Stanford Graduate School of Business
With the growing number of coffee drinkers, Starbuck worked to capitalized on this trendy market. Starbucks went public in 1992 and its stocks appreciated more than 4000% after adjusting for stock splits. In the 90s there was a large growth in the coffee industry and an oversupply of coffee. In order to ensure a sustainable supply of coffee, Starbucks partnered with Conservation International to develop C.A.F.E. C.A.F.E.'s goals were to contribute to the livelihood of coffee farmers and to ensure high-quality coffee for the long term. C.A.F.E. Practices was a way for Starbucks to ensure a sustainable supply of high quality coffee beans, which was an essential component of Starbucks business. The initiative built mutually beneficial relationships with coffee farmers and their communities. It also helped to counteract the oversupply of low-grade coffee on the world's market, which suppressed prices making it difficult for farmers to cover the cost of production. When Starbucks implemented C.A.F.E. Practices, it had six objectives in mind: 1. Increase economic, social, and environmental sustainability in the specialty coffee industry, including conservation of biodiversity. 2. Encourage Starbucks suppliers to implement C.A.F.E. Practices through economic incentives and preferential buying status. 3. Purchase the majority of Starbucks coffee under C.A.F.E. Practices guidelines by 2007. 4. Negotiate mutually beneficial long-term contracts with suppliers to support Starbucks growth. 5. Build mutually beneficial and increasingly direct relationships with suppliers. 6. Promote transparency and economic fairness within the coffee supply chain. C.A.F.E. Practices was a set of coffee buying guidelines designed to support coffee buyers and coffee farmers, ensure high quality coffee and promote equitable relationships with farmers, workers, and communities, as well as to protect the environment. It was not a code of conduct or a compliance program.
I learned in the article that while Starbucks is seen as leading coffee companies in the US it is also a key player in making sure that coffee farmers are paid fair prices. When Starbucks got involved with CAFÉ it was able to make sure that they were able to use the high prices that they charge for their coffee is passed along to the farmers. Not only did this help the farmers but it indirectly helped Starbucks. The program strengthened Starbucks supply base, improved its marketing ability, and increased its visibility into the supply chain. On the marketing side, C.A.F.E. Practices supported Starbucks socially responsible goals.