The Total Quality Management and Quality Control in Starbucks - Case Study Example

How is the Total Quality Management and quality control in Starbucks Conclusion Starbucks, in the specialty of food and beverage, targeting thelargest segment of disposable income spending i.e., food and beverages, has recorded a steady growth and has, in a way, invented a new market structure through its monopolistic structure, a thorough competitive activity, industry costs and capital structure, all achieved through a continuous Total Quality Management. As seen in our literature review, Total Quality Management has been one of the most widespread management ‘innovations’ of the 1990s and one of the most captivating methods because of its achievements. As concluded by Cole, TQM had a gradual but haphazard improvement in US quality. (Howells, J; p 196). With every product that Starbucks brands, markets and sells, or uses in their operations, they uphold their commitment to quality and strive to source their products in a socially and environmentally responsible manner. Hackman and Wageman (1995) have reported that Total Quality Management adopted in US organizations employ five best practices in the name of TQM (Klein J, K et al; p.289) 1. Short-term problem solving teams with the overall objective of simplifying and streamlining work practices. This is characterized by the Quality Circles formed which identify any underlying issues and come up with opportunities for process improvement. 2. Training in interpersonal skills, quality improvement processes, team building, statistical analysis, supplier qualification training, and/or benchmarking. All these are implemented at Starbucks through uniform and robust training methods for employees on communication, etiquettes, presentation etc. All employees are encouraged to constantly identify process improvements and specific tools such as feedback surveys, blogs and view point expression forums, meetings, mission review programmes are used to voice them. The mission principles of Starbucks emphasize respect and dignity for one another and promote team work. As a part of product quality, Starbucks takes responsibility of training their suppliers and verifiers on product quality requirements and inspection. 3. Top-down implementation, with each level of the organizational hierarchy carrying the TQM message to the next lower level. Total Quality Management, as described by the term itself, is ensuring no mistakes at any stage. Aim of TQM is achieved by satisfying internal and external customers and suppliers and has been very well illustrated by Starbucks. Starbucks achieved TQM by implementing strategic business environment, continuous improvement and innovation driven by organization culture. 4. Closer relationships with suppliers in an effort to enhance the quality of products. This strategy has been well incorporated into Starbucks practices and programmes through the Coffee and Farmer Equity (C.A.F.E ) programme, steps taken to ensure sustainable production and supply of high-quality coffee, their relationship with coffee farmers and suppliers, thus benefiting mutually (Starbucks corporation, p 22). 5. Data collection and reporting regarding customer demands and satisfaction. Providing the unique Starbucks experience to customers means extremely good customer satisfaction, and achieving this is has been a very complex and challenging task for Starbucks. Their value for feedback from internal as well as external customers has played a fundamental role in their success. Through the feedback, they were able to aim for Total Quality Management by conforming to the customers’ requirements in each and every aspect. In general, customers expect an outstanding service every time they visit any product outlet. On the same lines, one of Starbucks guiding principles is to ‘develop enthusiastically satisfied customers all of the time.’ To achieve consistent excellence in service, connecting with customers is very important. Starbucks attained this connection by customer feedback through calls, filling in- store comments card, online feedback, customer surveys to know customer satisfaction and their expectations etc. A thorough analysis of such data outlined the issues more specifically for Starbucks, and helped them make more and more opportunities for their growth and prosperity. Advantages of Total Quality Management in Starbucks In conclusion, the overall business performance in Starbucks depended on four main constructs, and Total Quality Management around these four aspects governed the growth and success of Starbucks in a big way. These four constructs are product quality, employee satisfaction, customer satisfaction, and strategic business performance. While Starbucks’ primary goal was growth of business with the best customer service; it also contributed to the welfare of community, created more products and services, and provided a base for the growth and prosperity of its employees. On one hand, it focused on sustainability and health of the organization, and on the other hand, it valued its employees’, suppliers’ and stakeholders well being. Much of its accomplishments in these categories are credited to implementation of Total Quality Management and Quality policies in the four constructs described below: Product Quality: Starbucks strategies in product implementation prove the rich experience around consumption of coffee, an experience that weaved into people’s expectations and taste of everyday life. Their values of fair trade by setting their expectations clear, and only opting for high-quality ingredients formed the key to their sustainable development. Their method of shade grown coffee product, being an environmentally sound practice, gave them a competitive advantage and an edge over other products in the market. Their strategy built an alliance to promote coffee-growing practices of small farms that would protect endangered habitats. This also depicted the company’s corporate social responsibility which gained support and encouragement from the major international environment nonprofit organization. (Austin, J & Reavis, C. 2004). In term of social responsibility, Starbucks reports their materiality assessment, through Global Reporting Initiative (GRI) which includes the significant economic, environmental and social impacts, and substantial assessments and decisions of their stakeholders. To ensure product quality, Starbucks pays premium prices for coffee and maintains economic transparency to evaluate fair and equitable payment for their products. They also ensure a strong relationship and direct engagement with the coffee farmers and suppliers to keep a check on the progress and address issues. Their strategy is also to benefit coffee-growing communities from economic stability of farmers. Thus, by embracing sustainability, Starbucks has lead change within the coffee industry. Starbucks has also helped farmers’ easy accessibility to credits, credit cards and other transactional facilities for a smooth business. Starbucks concentrated on implementing robust mechanisms of evaluating product and product pricing on a large scale by incorporating certain rules and policies in Coffee and Farmer Equity (C.A.F.E) in 2004 to ensure sustainable supply of high-quality coffee, economic accountability, promote social responsibility within the coffee supply chain; and protect the environment. (Starbucks Corporation; p 21) Employee satisfaction: Customer satisfaction is a key to the success of any business, however, employee satisfaction is what creates it. Starbucks goal to deliver a great cup of coffee to every customer is also to give the customer a Starbucks Experience, and this is based on the connection they will have with their local Starbucks outlet. Starbucks strongly works on earning and maintaining the trust of their employees-whom they call partners-and this also means improving their customers’ experience. Creation of best possible workplace environment for their partners, one that attracts and retains the most talented individuals and is regarded as a great place to work, takes high priority on Starbucks goals. This is achieved through employee empowerment, regular employee feedback through surveys, fair reward and recognition for performance, providing training and development, upholding workplace policies and respect for employee rights, and ensuring safe and healthy workplace. Its employee empowerment is achieved through practices such as encouraging its partners to keep in mind its mission statement, monitoring management decisions, submitting comments and questions if they encounter anything that runs counter to any of the six points of their mission. These deeply held values and practices for employees have inspired and driving Starbucks for nearly two decades. It has been the Optima’s award winner for “Quality of Life.” Participation has proven to be one of the important practices at workplace for achieving TQM. Dimensions of participative decision making can be at various levels and can have different levels of intervention. A strategic business approach empowering employees in decision making practice that can have wide influence on business and customers is adopted in Starbucks, and this makes employees feel the power of participation and their ideas being valued. Worker participation in the form of short-term problem solving teams in total-quality movement emphasizes the importance of strengthening worker involvement with an array of complementary management practices, including training, benchmarking and measurement of customer service, all of which were adopted at Starbucks, their ultimate goal being Total Quality Management. Customer satisfaction: The unique Starbucks experience delivered to the customers by Starbucks Partners is a result of their unwavering commitment to excellence and their guiding principles, all achieved through a systematic and uncompromised quality of services and products. It is said that caffeine addicts are not the only fans of Starbucks. It’s philosophy of ‘leave no one behind’ has added much value to its growth. This aspect includes cultural preferences, taste and requirement, presentation, and every other detail to give customers a ‘real coffee experience.’ Starbucks strategy of customer segmentation for effective target marketing and developing products and value propositions based on the customer segments leave no route for any kind of dissatisfaction for customers. Their practice of providing a variety of food range along with a wide choice of quality coffee supports their business and its aim to attract more customers by way of word of mouth has been extremely successful. This also adds to the unique Starbucks experience. Starbucks goal does not stop at providing customers all that they ask for, but going beyond by providing all other unsolicited ingredients such as choice of food and beverages, excellent ambience, value for money and best service, thus leaving no room of choice outside Starbucks, also providing service to customers’ delight. Strategic business performance: A strategic plan in all aspects of an organization is essential for the growth and profitability of any business. These aspects include employee satisfaction, marketing, managing supply chains, achieving customer satisfaction, policies and procedures, practices, costs and accountability, communication, training and development, research on market demand and supply, meeting legal and regulatory requirements, social and cultural aspects etc. Starbucks has laid much stress on continuous improvement, which includes a continuous identification of areas of improvement; taking up these areas as opportunities to perform better. Its employee empowerment encourages employees to actively participate in identifying these opportunities and provides them with a platform to successfully implement their ideas. This standpoint, as quoted by Starbucks partners in their interviews, has been one of the major causes for success. The other advantages of Total Quality Management are improved productivity, higher standards, improved systems, lower costs and higher savings in operating expenditure and time. Essential ingredients to achieve Total Quality Management are knowledge and experience of executing the required tasks with efficiency, having the right systems and tools in place, and the right methodology and measurement to monitor and assess the progress. All of these at the right time contributed to the success of Starbucks which always believed that meeting customer needs, and expectations involved more than providing a product or service. By adopting Total Quality Management practices and techniques, a greater overall effectiveness of the system was successfully achieved, than their individual outputs. While this success has been achieved, Starbucks journey does not end, and continues further aiming at constant improvement in quality of products, services and marketing processes, and providing world class benefits to its employees and suppliers, increase the profitability for its stakeholders, and continue to gain the competitive edge in the market, provide opportunities for diverse businesses, create a positive and sustained economic impact on local communities and an eco-friendly business. Disadvantages of Total Quality Management in Starbucks Starbucks’ focus on the disadvantages of implementing Total Quality Management should not sway away by their success. Many disadvantages have been identified in implementing Total Quality Management and Quality Circles in Starbucks, mainly categorized as strategic business impact, leadership, employee motivation, and tools and techniques 1 Strategic business impact: TQM requires lot of time to yield the intended results. It also demands co-ordination and cooperation by employees of all departments of the company. One of the main disadvantages faced here is in the context-based implementation of some of its strategies based on environmental, socio-cultural or behavioral factors. For example, their strategy of maintaining the standards of quality coffee remains uniform all over the world; it may not be acceptable to consumers at all locations according to their taste preferences. This means, consumers may find their original coffee taste better than the international coffee which may lead to consumers not coming back to Starbucks. Similarly, their infrastructure may not receive the same appreciation or acceptance at all locations. Adopting Starbucks’ standards by all the franchises of the world is very challenging, and failure in any of the TQM practices can lead to failure of Starbucks. 2 Leadership: While leadership and management at Starbucks have formed the key to successful implementation of TQM practices and have shown their results in the form of customer and employee satisfaction, motivated employees and efficient operational procedures, they may be creating certain barriers of innovation or monotony by implementing practices that TQM may demand but may be detrimental to employee motivation. Limited knowledge and skills of employees may not be able to yield the expected results in employee empowerment practices, which hinder successful implementation of TQM. For example, making ideation compulsory, managerial resistance, routine reward and recognition systems, losing balance between growing businesses versus work overload on the employees may be the causes for low employee participation ( Padhi, N & Palo, S. p 248). 3 Employee motivation: Also, failure of the organization to support employee participation with complimentary innovations and other human resource benefits can make Total Quality Management programme fail to suit the objectives it is intended to achieve. 4. Tools and techniques: The existing TQM tools and techniques used by Starbucks cannot guarantee standard results at all locations of the world. For example, supply of raw material ‘just in time’ depends on many external factors such as geographic location, availability, distance to be covered, weather factors and supplier relationship. Secondly, with the growing and changing needs of customers and the competitive market, the tools and techniques used in Total Quality Management may not be as useful as they initially were. This demand needs to be recognized. Sufficient enhancements and developments in the techniques and tools, respectively, are required. Subject to these disadvantages, and for the achievement of Starbucks’ goal, a few recommendations have been made. Recommendations Although Total Quality Management is highly beneficial, many organizations want their methods to stimulate the expected gains in performance or employee morale. And, those reasons need to be handled in the right manner. Very often Total Quality Management programmes and Quality Circle programmes allow employees to make suggestions, not final decisions, or sometimes they increase the employee power to a limited extent. As these programmes are arrangements to increase workers’ commitment to company goals without requiring managers to accept the burdens and risks of full participation, as explained by Levitan and Johnson (1983), Starbucks practice of employee decision making need to be revised to bring more reasonable and practical solutions in business improvement, as the earlier policies around these practices may no longer be working with the same effect. Concentrating on the present day trade qualities, i.e., globalization and rivalry, Starbucks will have to strive harder to maintain its position in this segment. This would demand a further improvement in both controllable and uncontrollable elements, assessing risk factors, and improving profitability across the globe. Controllable elements cover technological development, placement, advertising, research and development. Uncontrollable elements include economic factors, sociological factors, demographic factors, legal issues. Although Starbucks has achieved the best employee satisfaction, its sustainability is a key factor. As in the past, Starbucks will have to continue to strive to harness the best talent in the market and be able to successfully retain their best employees, which certainly poses to be a potential threat owing to the tough competition. Sustaining the Total Quality Management practice itself is a challenge owing to the changing demands of internal and external customers. This also depends to an extent on sociological, economic, demographic, and cultural aspects of the business. To overcome these challenges, a constant and thorough study and research will be required by efficient people in all these aspects. This will help Starbucks keep pace with the changing business environment and the global competition. It will also help in identifying potential markets, and thus, widen the horizon of Starbucks in the world. Starbucks will have to demonstrate a deeper product market diversification through research. This means introducing more and more variety in their products depending upon the market preferences. They will have to be prepared with a much more complex contingency matrix to ensure they are ‘Just in Time’ to serve customers with the best, in terms of supply of products, services, innovative offers to attract all customer segments, employ the best rewards for their partners, etc. Starbucks CAFÉ practices are aimed at inspiring and motivating, to help create a better future for coffee farmers and their commitments, based on a shared interest to sustain the production of high-quality coffee, and it sets this vision to continue into the future. This will require technological innovations to be introduced, which are better yielding in terms of costs, time and quality. This task might require working of Starbucks in collaboration with firms dealing in such technology such as food processors, storage technology, farming technology etc. The amount of time, energy, and resources needed to implement some of the quality measures in Starbucks across such a complex, diverse and sprawling supply chain mounted to be huge with many challenges involved, and these challenges will be faced from time to time, and they need to be overcome. For example, making C.A.F.E practices accessible to small-scale producers added lot of value to Starbucks business. Given the huge economic competition and customer expectations, they understand the importance of staying in touch and training their suppliers and employees (partners) to ensure efficiency at work. Starbucks believes at working continually to address and improve, and to take every obstacle as an opportunity for improvement. With this effect, their aim should be focused on continued emphasis on building and strengthening relationships, communication and training and development. As Starbucks still aims to grow further, they realize that their network of suppliers needs to be strengthened which would require great amount of investigation. Starbucks needs to train verifiers according to their standards, and not rely on outsiders for the task. Many organizations implement worker participation in an attempt to change worker attitudes, rather than to make improvements in quality and productivity. For example, American managers implement quality circles to increase worker satisfaction, while the Japanese managers implement this to improve product quality. Starbucks will have to set the objectives and expectations clear and implement Total Quality Management techniques and practices accordingly. This might exist in their strategies of business improvement, however need to be reviewed from time to time in order to ensure right practices are followed. This will help organizations tackle the issues more efficiently, and be prepared for further challenges, which is essential to sustain their competitive edge in the market. Risk factors, from an economy point of view, could include most of its customers reassessing their daily spending habits on luxury items. In such a scenario, Starbucks revenues and profits may tumble to a great extent. This has already been reported in many Starbucks outlets since beginning of 2008, as reported in NY Times (11 November, 2008). Other risk factors include the locations chosen by Starbucks, which could fail in delivering the expected results in terms of customer satisfaction and profitability for the company. Hiring should also be looked at as a key factor in Starbucks success. This has been realized by Starbucks in the recent years, and as a result Starbucks practice of rehiring the successful executives of the past has been reported. Starbucks will have to consciously revive their hiring and staffing methods, which, in the long run, will show its returns in terms of revenue generation and customer satisfaction for the company. The insane growth of Starbucks in the last two decades has incorporated too many people and resources, and managing this volume would have diluting effects on the success of Starbucks. Keeping this in mind becomes extremely important for the executive and management sector of Starbucks. This is to avoid confusion that might arise due to the involvement and participation practices followed at Starbucks, also concealing some political and socioeconomic influences. Starbucks will have to review their practices and policies to rule out any such risk factors, and be prepared to handle the challenges that could come on the way to brining such changes in their system. In total, the Total Quality Management practices should be revised and reviewed in each and every sector of the organization in order to help Starbucks regain and restore its world-wide business, and sustain its growth in the competitive world by providing the expected value proposition to its existing and potential customers. References Books Howells, J, 2005. The Management of Innovation and Technology, In Innovation and the organisation of technical expertise and work. Published by SAGE. Retrieved from http://books.google.co.in/books?id=GHz8XIFICNYC&pg=PA196&lpg=PA196&dq=Hackman+and+Wageman+1995&source=web&ots=TDFeLCijVB&sig=byyBC4qKbB_ENK53UdeA7qT4GWw&hl=en&sa=X&oi=book_result&resnum=4&ct=result#PPA182,M1 Klein J, K et al., In Power and Participation in the Workplace, 2000. Rappaport, J (Ed) and Seidman, E. (Ed), Handbook of Community Psychology, Published by Springer. Retrieved from: http://books.google.co.in/books?id=jta8Y0ggiFEC&pg=PA289&lpg=PA289&dq=Hackman+and+Wageman+TQM&source=web&ots=2Jca7A0Veo&sig=GJipPAas6Ymxa2KtJLyK1MXzNKc&hl=en&sa=X&oi=book_result&resnum=6&ct=result#PPA288,M1 Padhi, N and Palo, S, 2005. Human Dimensions of Total Quality Management, Published by Atlantic Publishers & Distributors,. Retrieved from http://books.google.co.in/books?id=eUBNJh10A0cC&pg=PA192&dq=Thiagarajan+Zairi+1997+TQM#PPA248,M1 Journals Austin, J and Reavis, C. 2004. Starbucks and Conservation International, Case 9-303-055, Harvard Business School Publishing. 2004 http://72.14.235.132/search?q=cache:V1Yj_rYfOvkJ:www.custom.cengage.com/makeityours/hitt8e/abstracts/Ch9_Starbucks_Conservation.pdf+Austin,+James+E.,+and+Cate+Reavis.+%22Starbucks+and+Conservation+International.%22+Harvard+Business&hl=en&ct=clnk&cd=7&gl=in Starbucks Corporation, Corporate Social responsibility, Fiscal 2006 annual report http://72.14.235.132/search?q=cache:uOg8ajQgqsgJ:www.starbucks.com/aboutus/FY06_CSR_FULL.pdf+Barista+101+learning+journey+guide+Starbucks+Coffee&hl=en&ct=clnk&cd=12&gl=in#22 Read More