STARBUCKS

Role of Cross Functional Teams in a New Store Roll Out Abul Hasan Rajani

IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE

TATA Starbucks - Overview• Tata Starbucks Ltd is a 50:50 joint venture company,

owned by Starbucks Corporation and Tata Global Beverages.

• Headquarters – Mumbai

• No. of stores in India – 63 (as of January, ‘15)

• Starbucks, through an agreement with Tata Coffee, serves coffee that is 100% locally sourced and roasted.

The Cross functional Team

• The different functions that are involved in the roll-out of a new Starbucks Outlet:

• Business/ Store development team• Operations team• Marketing team• Supply Chain Management team• Finance

The Process of launching a new store• BD team uses an excel based analytical tool – SSP tool, to identify

potential locations

• INPUT– Population– Income – Residential/commercial/office premises/educational institutes/malls, etc– Competitive profile of the catchment area (What sales are being achieved by

competitors in that area)

• Based on these inputs SSP tool identifies attractive properties

• The BD team then visits these properties and analyses them . Every property is considered for a lease period of 9-12 years.

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The Process of launching a new store

• The BD team then forecasts/estimates - what sales will be generated from each property, what kind of year on year growth is expected etc.

• The team then, makes a presentation to the top management covering the following details about the property:– P&L– Cash flow– Utility cost– Labor costs

• The top management discusses various aspects regarding the feasibility of the property, before giving their approval

Architects and Construction Team• Once the top management approves and signs off on a particular

property, the architects and the legal team comes into picture

• A team of architects operates from Starbucks, US.

• Usually there are dedicated teams for different regions. E.g.: APAC region, Americas Region, Middle-East region, China

• Architects have certain pre-defined templates of store layout (around 15 design templates)

• Based on the catchment and whether they are targeting a residential area or an office/corporate area, a particular template is chosen.

Architects and Construction Team• The team of architects then sends a design docket team to the construction team in India

• At this stage the legal team is parallely working to get the required permissions

• Once all permissions are got and approval from the construction team, the designs are passed on to builders/contractors

• The contractors do the actual fit-out of the store

• The team of architects from US usually visit every 2 months to supervise the construction work

• Starbucks also has a unique concept of adorning its stores with artifacts that are unique to a particular city or location

• At this stage the marketing and branding teams come into picture, to start pre-launch communication.

HR and Recruitment

• 30 days before the construction begins, the HR head starts with recruitment activities.

• HR functions are centralized, Each city has one HR.• Most of the regulations and HR policies are uniform

across all stores in India, except few like the leave policy

• Leave policy is subject to state and area level rules. For e.g. employee may be eligible for leave on Gudi Padwa in Maharashtra, while in Kerala the same may hold true for Onam

HR and Recruitment

• Intended Career growth:• Partner Supervisor ASM Store manager

District Manager (8 stores)• Every city has a Operations manager who

reports to the General Manager

Parameters involved in selecting a location

• BD team identifies areas known a focal points

• A focal point is typically an area which has attractive demographics and presents an attractive opportunity for a potential store

• The profiles of people in a particular focal point are studied and based on these they decide how many outlets can a single focal point have.

• E.g.: Starbucks in Matunga area (as suggested by Mr. Parthiban)

• Standard checklist is followed which is developed by the company and is confidential to the company.

• This checklist contains a list of amenities and basic facilities a particular location or property must have in order to be eligible to house a Starbucks outlet

Opening in new cities• As of now Starbucks has 63 stores in India, majorly in the

metros and Tier-1 cities

• Before launching of a store in a city, one of the major criteria that Starbucks considers apart from the environmental scan and market analysis, is the presence of an airport

• Because where ever there is an airport, TajSats is present there

• Hence most cities where Starbucks is looking at launching a store is based on the proximity of that city to a TajSats Warehouse

Cross Functional Leadership Team• Heads of 5 functions come together to form a cross functional team of

leaders who overlook the entire process of the store layout.

• Typical points of concern for each functional head:

• BD head – getting the best location at the best price

• Operations head – can efficiency be achieved at all levels, if we put up a store at this location. For e.g. Is the location well connected by public transport systems? Will the store associates (partners) be able to travel with ease from this location ?

• Marketing head – making sure the target customer gets the right message (Mahavir Nagar example). Branding, Engaging through social media, creating a hype before the launch of the store

Cross Functional Leadership Team

• Finance head – will we be able to achieve the required ROI at this location

• SCM head – concerned with distribution. E.g. connectivity of that location to the Warehouse for food, located at Bhiwandi

Distribution • Coffee is sourced from the Tata Coffee co. a subsidiary of TATA global beverages, which

operates for Starbucks only.

• The main supplier of foods is TajSATS. Food is shipped from TajSATS warehouse.

• A dedicated Starbucks team does ethical sourcing of coffee beans all over the world and carries out activities of quality assurance in roasting plants.

• The logistics for delivery of food is handled by a third party. They work towards minimizing the logistics cost. Shipping cost vs WH cost.

• If at times, it is not feasible to source foods from TajSATS, they pick a local vendor, but only after he meets the high quality standards required by Starbucks. Chennai is an example of this.

• Lead times are based on the perishability of the product. They say that JIT is usually not possible for them.

Licenses Required• Construction team hands over the process flow to the Maintenance and

Operations team;

• Meanwhile, Liaisoning team applies for licenses.

• 33 different signatures are required to get started with the licensing process.

• Ex: Due to their own regulations (like music volume constraints, marathi signage mandates) Mumbai BMC becomes the toughest to deal with in terms of licensing.

• After the agreement is signed, Legal team prepares legal documents to talk to the landlord post which they apply for licenses.

• OC (Occupation Certificate) is also required.

• Construction duration is 45 days.

Quality and compliance handling

• The SCM team has a logistics head and a quality head.

• The category manager (called chef) is responsible for handling the assortment at the stores. Assortment has 80% coffee and 20% food.

• The Chef reports to 2 heads, the head of the category team under marketing and the head of the quality team, under SCM

Flow of tasks in a store roll outLeadership team

• Decision

Makers

Finance

• Investment evaluation and financial strategies

Supply chain Team

• Supply of perishable food stuff

Store Operations team

• Store Manager

• Store Employees

Marketing

• Promotions (Locally)

• Brand Awareness(Globally)[Brewing soon]

Construction team/Architects

• India

• USA

Business development Team

• Finding Location as per Focal point

CFT

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