Implementing thrive to Starbucks supply chain
Thrive supply chain: The traditional supply chain is criticized as being exploitative of farmers. Thrive allows farmers to own their product further along the supplychain. This allows thrive as a whole to give famers a much more vertically integrated operation selling at a high value product and retaining 5 to 10 times more than the traditional supply chain for coffee. Thrive as a whole focuses on giving farmers the most amount of money in their pocket and supporting the fair trade movement.
How does it work?: THRIVE uses two unique models to optimize efficiency and sustainability throughout their farmers. They are the Farmer-Direct and Revenue-Sharing models. The Farmer-Direct method shortens the supply chain between farmers and retailers, allowing farmers to receive a fair price for coffee. The Revenue-Sharing model allows the success of contracted farm benefits all other contracted farms as well. This allows THRIVE farmers to not only survive, but thrive as well.
Objectives
Our objective is to implement the thrive supply chain within Starbucks for increased profits for farmers and introduce higher quality coffee beans within the Starbucks product line.
Specific- Implementing the thrive supply chain within Starbucks to increase profitability for international farmers.
​
Measurable- Thrive is based on fair trade , one way to go about is to market the benefits of incorporating a supply chain of this caliber and initiate the support of fair trade. Thrive is what is called fair trade 2.0 as it focuses on not just giving the farmers the minimum fair trade price but 50 to 75 % of the sale of roasted beans. Reaching out to Starbucks, the coffee giant, as the emphasis, and hopefully reaching other coffee companies will increase profitability of farmers by at least 50%.
​
Achievable: The main market of coffee corporations is within the millennial generation. Millennials value authenticity and if their money is going to a better cause. I believe the emphasis of fair trade that thrive implements can be beneficial to Starbucks marketing campaigns as it will reach out to consumer values. With the trend of craft coffee shops uprising we believe that implementing a thrive system will not only be simpler but appeal to consumers really wanting premium craft coffee because of the high graded coffee beans.
​
Realistic- Since Starbucks coffee is rather inelastic , implementing this new supply chain can give them an opportunity to increase prices that goes to a better cause. SBUX already implements a system that invests into farmers over seas, with this supply chain they can also receive premium coffee as well rather than the "bulk" focused supply chain they have.
​
Time- We would like for Starbucks to fully incorporate the supply chain by 2020. This way they can have time to adjust to the new system.
​
The objective is important as many of these companies do support fair trade but do not implement a supply chain to fully benefit these farmers as a whole. Most farmers do not have much supplier power but with thrive it gives an opportunity for these farmers to own their product further along the supply chain. With more corporations implementing the thrive supply chain farmers as a whole can produce high quality coffee beans and can expect a proper payout.
Sustainability objective
With the adaptation of the thrive supply chain we suggested that Starbucks work hand and hand with the farmers producing the coffee beans. Starbucks can help with funds and give farmers access to agricultural machinery . Starbucks can also train farmers beneficial sustainability practices for longevity of the coffee beans. As thrive implements on high quality coffee beans it gives Starbucks on the supply chain reassurance that they are receiving premium graded products. Coffee sustainability is a big issue as these farmers in smaller countries are usually poor and working conditions are horrendous. Our goal is to improve sustainability efforts with these farmers and give them the help they need to really focus in on premium graded coffee beans.
​
Specific goal: Directly help farmers with financial and educational intent to promote sustainability and create more of premium coffee beans
​
Measurable: Improve the output of premium coffee beans by 30%
​
Achievable: Starbucks currently plans to invest 50 million to farmers financially and plant 100 million trees for coffee production by the year 2020. This alongside thrive will truly benefit farmers and co alongside their goal of sustainable farming.
​
Realistic: The coffee industry needs help in the sustainability field. Implementing shares of their financial profit to reinvest in sustainability will not only help supply of the coffee bean but also help brand reputation and image.
​
Time: By the year 2025 we hope that Starbucks and other corporations will implement thrive and incorporate practices that benefit farmers over seas.
Strategy
Alternate strategy
Thrive could implement a strategy to partner up with another corporation such as McDonald's coffee branch McAfee. McDonald's is a corporation that has the financial means to incorporate the thrive system and can increase brand reputation and image of the company. The thrive system can also benefit from McDonald's supporting the fair trade movement and can purchase much more of quantity of premium coffee beans. However McDonald’s main focus is not its coffee but rather their food at a cheaper rate. Thrive focuses on high quality coffee beans, McDonald's would much rather purchase in bulk and produce coffee at a cheaper rate. At the consumer level McDonald's is not a restaurant who can charge premiums and expect consumers to abide by the new price range hence the elasticity. In comparison to Starbucks, market researcher Millward Brown stated Starbucks brand valued jumped in 2014 from 2013 by 44% even with the steady price increase of SBUX coffee. From a brand perspective people know Starbucks is more of a luxury premium good compared to McDonald's so if Starbucks does implement a price premium with the new thrive supply chain they will not lose any consumers.
Our strategy consists of emphasizing on the quality of the coffee and reinforcing their brand image alongside fair trade. Many consumers especially in the millennial generation value where their money is going and if it’s considered authentic. With the thrive supply chain we will market certain attributes such as marketing campaigns focused on premium graded coffee and “stories” telling where each cup of coffee comes from and the background of each farmer who produces their coffee. Chick fil a for comparison implemented the thrive supply chain and saw tremendous growth in their coffee sales which doubled from their previous supply chain method and was ranked #1 in Thrillist poll of best fast food coffee beating out competitors such as Dunkin doughnuts, McDonald and burger king. From that analysis if thrive partnered with Starbucks not only will It benefit farmers profitability it will most likely increase sales in coffee revenue for SBUX as well. The current supply chain that Starbucks initiates does help fair trade and promotes financial helpto farmers but they are still focused on just bulk production of coffee and not the highest specialty grade coffee that thrive offers. If they partnered up with thrive they will have the best of both supporting fair trade and receiving premium coffee beans. As a whole are strategy is to market the benefits of the thrive system and list out the numerous details of statistics and analysis of how this thrive system can benefit the corporation in the long run.
Key components (strategy)
Sustainability key points
4 P's
Price- Since we are implementing a supply chain within Starbucks we suggest that Starbucks charge a higher premium of coffee that their original coffee brand. Along the lines of a $.50-$1 increase. Since Starbucks demand is more inelastic they will not lose their consumer base.
​
Place- With multiple thrive farmers we really want to focus in on producers in Chile and Costa-Rica a primary place for coffee production. When it comes to whole sale within Starbucks we will implement the products in all Starbucks locations.
​
Promotion- since we are trying to "sell" the supply chain to Starbucks we can suggest that they can promote the new thrive coffee in a story fashion with TV and online advertisement. Highlighting their support of farmers and telling consumers every time you purchase our coffee it goes to a better cause. Focusing on the background of each farmer and how they build their relationships with them
​
Product- With the implementation of thrive we suggest that Starbucks add a differentiated product line that focus on thrive coffee and using the name of the farmers with their permission with the new coffee and giving some insight and background info on each thrive farmer on their website.
​
​
In regards to our sustainability objective partnering up thrive with Starbucks will highlight on interpersonal relations with each farmer producing thrive coffee. With our strategy we will promote the assurance of the profitability of farmers and to give financial assistance and educational insight in relation to sustainability . With the thrive system being partnered with Starbucks we hope as a whole it will bring better methods and smarter methods of sustainability. The strategy gives thrive farmers a great opportunity to partner with a large corporation that supports this "fair trade 2.0". In the long run sustainability practices will not only be more efficient but also bring a better outlook for farmers in the coffee industry as well.
These tactics will surely benefit our smart objectives. With the partnership with Starbucks and the emphasis on the profitability for farmers, this will not only be beneficial for them but also for Starbucks image and sales as well. When Chick Fil A incorporated this supply chain they saw a tremendous amount of success. If we also implement this system within Starbucks I believe we will see even greater amounts of success. In regards to our measurable S.M.A.R.T goal , I believe Starbucks is a corporation that can truly give farmers the payment they deserve. Starbucks has the financial means and investment insights to truly help these farmers. And is it achievable ? Yes since sbux already supports fair trade this will only give them more insight on how they can benefit farmers and also the quality of their coffee/brand image. This will also appeal to consumers who value where there money is going.