Starbucks Risk management items for this supplier global expansion Essay

Starbucks Risk management items for this supplier global expansion project and risk breakdown structure, which outlines the orga - Essay Example This writing analyses some of the risks, and risk management strategies employed by Starbuck due to adoption of global supply by Starbuck. Starbucks have always considered the nature of demand of their coffee thus using this as the base of selecting the best suppliers as a way of minimizing global supply risk. As much it may be hard to engage international supply because of many risks associated with the transaction, Starbuck went ahead and realized that risk and return are allied and therefore the more risky the business is, the higher the returns (Katrinli, Gunay & Biresselioglu, 2011). Starbuck is committed in her strong values of ensuring equal treatment of individuals both with respect and high degree of dignity as well as conservation of the environment and this applies to their supply chain. Supplier Code of conduct created by the company was driven by the need for their suppliers to embrace Starbuck’s values. This helps in reducing a lot of risks associated with global supply. Unless a global supplier adopts and strictly follows the Starbuck’s Coffee Sourcing Guidelines, they may not qualify as the preferred suppliers for the company (Berman, Christner & Bell, 2010). Starbuck normally communicates to her suppliers and letting them know about their Supplier Code of Conduct. a supplier must always show commitment to the welfare, economic sustainability, measuring, reporting and verify compliance to the Supplier code of conduct. Also, suppliers must adhere to the local laws and international labor and human rights standard as well as good businesses strategies that enhance environmental protection. The company may carry out an independent audit or just random audit to verify supplier’s compliance (Trent & Llewellyn, 2010). Relationship between Starbuck and her global suppliers of green coffee is so much established in such a manner that the risk of non-delivery on purchases is minimal. As a way of ensuring continuous production of high quality green coffee and leadership sustainability Starbucks empowers her international coffee producers. Furthermore, Starbuck purchases coffee either through the fixed price or price to be fixed purchase commitments dependent on the market conditions (Katrinli, Gunay & Biresselioglu, 2011). Global supply chain is exposed to risks compared to local supply chains because they are longer and complex. In that regard, there is probability of experiencing more uncertainties and challenges thus making information technology very relevant and useful for Starbuck. Information regarding risks such as legal setbacks, custom fees, taxes, political conflicts and cultural differences may be gotten from the newspapers, the internet and other media or through whistleblowing. Thorough coordination and understanding of suppliers’ information is very useful. Such kind of information sources may reflect political turmoil and perhaps currency depreciation and other activities showing that the company is not doing very well (Trent & Llewellyn, 2010). Financial statements of a particular supplier may also be used by Starbucks to assess the level of risk associated with dealing with the company in question. Also, Starbuck may hear from the public opinion or media various serious allegations such as poor environmental dealings and unfriendly labor laws practiced by their suppliers. This is enough information to reflect the activities and the supplier’s attributes. Furthermore, St