Starbucks Blazes New Trails With Coffee Delivery Service

Starbucks recently announced they will be offering delivery services for their food and beverage items in select locations. To date, details about where products can be delivered, its costs, and how it is going to function have been withheld. Experts are confused as to how any company could offer low cost personalized differences. They do seem to agree that if it works Starbucks will be blazing some new trails in logistics that will be adopted by others.

I congratulate Starbucks on creating buzz in the market because there will be a lot of companies watching how they are effectively going to do this on low value purchases.  The media is ablaze about the development and its implications on e-commerce. Uniquely Starbucks is taking sales and delivery down to a micro level not yet seen on a large scale. 

Starbucks is trend setting by not only offering deliveries, but also providing pre-order cellphone applications that customers can pick up later. No one wants to wait in a long Starbucks line when they know they can grab and go with a pre-order application. Approximately 15% of all their customers’ purchases are being made through mobile devices. 

The great innovations have some theorists wondering. Some have argued that the minimum purchase price needs to be over $20 dollars to make it economically feasible. Certainly this is one possibility. The other possibility is they will require a purchase minimum like $7 and have three deliveries in the same area. Instead of one delivery you are making three within a short distance with each other. 

This would require delivery in high concentrated areas to make a return even possible. There is no doubt technology is lowering costs but to do so on a $2.25 cup of coffee is unprecedented. The only item to effectively beat economy of scale margins would be many small purchases or combining multiple services and benefits together. 

An additional benefit is that more loyalty through habit is being developed with every purchase. The consistent use of technology and applications fits within the tech savvy and trendy markets that create an image that others in society are likely to emulate. Getting customers to make the coffee as part of their working lives certainly makes a difference in longer term sales.

What Starbucks is doing is being a market leader in personalized logistics where members of society can order products and create consumer culture right from their phone. Today you may be limited to a cup of coffee from Starbucks or a bag of groceries from Amazon Fresh but tomorrow you may be having someone deliver your healthy meals three times a day. Wait…you can already sign up for this through a local service. Times have changed and so has the expectation of service.

Manufacturing Rises to Highest Point in 3.5 Years

Manufacturing is heating up and cranking out new products at a rapid pace. According to the Institute of Supply Chain Management, the August PMI rose to 59% (1.9% increase) when compared to the previous month’s numbers of 57.1%. The improvement is the highest experienced in 3 ½ years helping support the smooth running of America’s economic engine. Basic materials have a fundamental impact on the growth of manufacturing within their associated sectors as the products make their way throughout the national supply chain.

As the country seeks to capitalize on its new found growth it is important to ensure that a positive business environment employs and develops matching competencies in the manufacturing labor pool.  Economic expansion will have a difficult time continuing unless highly skilled and motivated employees are available to fill future employment opportunities.  Companies should bolster education and training to secure a ready labor supply and raise income based on performance.

Of the total of 18 industries measured 17 achieved a level of growth. They are “Plastics & Rubber Products; Furniture & Related Products; Fabricated Metal Products; Apparel, Leather & Allied Products; Wood Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Paper Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Chemical Products; Primary Metals; Transportation Equipment; Computer & Electronic Products; Machinery; and Electrical Equipment, Appliances & Components (1).” In competition with cheaper foreign imports, the Textile Mills is the only industry that predictably lost ground.

The type of industries experiencing growth is fundamental to improving manufacturing in other economic sectors. The basic supplies of manufacturers become resources for other arenas that further refine the materials into a final exportable product. As the fundamental industries grow it is also possible to envision secondary manufacturers picking up pace in the near term.

Backlogs of orders increased 3% showing demand is high in the near term and pushing opportunities for growth into the next quarter. Exports of manufacturing rose 2% and imports rose 4% enhancing an already voracious supply based appetite. Companies are starting to invest in the economy again and attempting to expand their capacities. Orders are matching expectations and some companies will need to wait to obtain supplies for expansion. Company strategic planning will become essential to capitalize on the improved market.

If you read the business news on a regular basis you may also notice that consumer confidence and spending are also rising in a way that supports sustainable growth.  A caveat is the increasing imports over exports. As American companies become stronger, nimble, and reach cost parity with low cost foreign suppliers it is hoped the numbers will slowly shift in the other direction. At present, if these basic materials are manufactured into higher quality exports the economy may raise its financial profile. 

http://www.ism.ws/ismreport/mfgrob.cfm

Enhancing Solutions through Developing Social Capital

There is value in our social networks beyond that which serves our immediate needs. Social capital is the ability to use social networks to accomplish something that cannot be done alone. Business social networks are commonly used in areas ranging from product development to supply-chain management. On a wider scale, social capital can be matched with open innovation through appropriate Internet and physical channel expansions to develop something new for economic development. 

We must only think of how each person enters an economic system through their own particular way of viewing the world. They are defined by their background, education, skill set, cultures, experiences and social networks to view topics from a particular vantage point. Problems are defined based upon how they understand them through historically perceived practical solutions.

As these elements begin to act and interact with each other they create new definitions on how to see problems and potential solutions. The longer they interact solving a significant problem the more likely they will share mutual definitions and perspectives. It is a process of social learning and thought construction based in social construction mechanisms of elemental interaction. 

Few relevant solutions come from a single vantage point. All sustainable solutions are socially negotiated to develop new premises and conclusions. It is the changing of perspective, a focus on the solution, and the enactment of a plan that changes the reality of network members. Philosophical reality can be defined as a perspective of communicated why and why nots that enhance shared explanations.

With open-mindedness and active listening people begin to adjust their perspective and understand the factors in new and unique ways. This adjustment often leads to new solutions for complex problems and greater heights of awareness for involved members. It becomes something bigger than themselves that leads to enlightenment about the nature of life and best paths forward for a people, organization, city or nation. 

Mathews and Marzec (2012) studied social capital from varying industry perspectives and developed a model that fits well with operational management. One can see the similarities on how it applies to wider platforms and networks that improve upon social innovation and economic development. Using relational, cognitive, and structural capital it is possible to enhance HR practices to turn initial social capital into resulting social capital that produces meaningful solutions for a wide group of stakeholders. 

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Mathews, R. & Marzec, P. (2012). Social capital, a theory for operations management: a systematic review of the evidence. International Journal of Production Research, 50 (24). 

Singer, M. et. al. (2008). A static model of cooperation for group-based incentive plans.

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Wider Supply Chain Integration Leads to Performance Advantages

Supply chain management and integration has important functions for businesses that desire to create higher levels of financial performance. Since all companies work with related companies in either formal or informal linkages, such as suppliers and distributors, it is important to ensure information is transferred effectively between entities to enhance operations on both sides. Research by Kannan & Keah (2010) show how companies that integrate their supply chains to a wider extent develop a number of advantages. 

Supply chain management entails businesses associated with the development, building, distributing, and returning of products/services. It has been defined as the “cross functional integration within the firm and across the network of firms that comprise the supply chain” (Lambert, 2004). The management of supply chain has come to mean better integration with the supply chain elements to produce value. 

Integration is the creation of inter-firm linkages. Sharing information, building stronger ways to coordinate resources and collaborating on mutual goals creates efficiencies. These efficiencies may lead to cheaper processes, faster movement of products, or better attainment of resources. The functioning of the supply chain has a direct effect on the success of the organization.

There are reasons why some firms seek narrow integration versus wider integration. The factors leading to higher levels of performance can be difficult to understand and master. Significant research, resources and time are invested into the supply chain to create higher levels of efficiencies. Being too wide in orientation can lead to lack of focus and goal confusion. 

The researchers found that by moving beyond first tear suppliers offered significant savings and performance improvements that result in faster product development times, higher sales and strengthened quality. The second tier suppliers have a significant impact on how the whole system functions as an entity. Those companies that fail to consider information from second tier suppliers have a lack of context in which to understand supply chain information putting them at a disadvantage. 

Kannan, V. & Keah, C. (2010). Supply chain integration: cluster analysis of the impact of span of integration. Supply Chain Management, 15 (3). 

Lambert, D. (2004), Supply Chain Management: Processes, Partnerships, Performance. Supply Chain Management Institute, Sarasota, FL.