CHAPTER 1

INTRODUCTION

Starbucks Corporation (Starbucks), incorporated on November 4, 1985, is a roaster,

marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries.
The Company operates through four segments: Americas, which is inclusive of the United
States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and
Africa (EMEA), and Channel Development. The Company purchases and roasts coffees that
it sells, along with handcrafted coffee, tea and other beverages and a range of fresh food
items, including snack offerings, through Company-operated stores. The Company also sells
a range of coffee and tea products and licenses its trademarks through other channels, such as
licensed stores, grocery and foodservice accounts. In addition to its Starbucks Coffee brand,
the Company sells goods and services under various brands, including Teavana, Tazo,
Seattle's Best Coffee, Evolution Fresh, La Boulange and Ethos.

The Company's Americas, CAP, and EMEA segments include both company-operated and
licensed stores. The Americas, CAP and EMEA segments also include certain foodservice
accounts, primarily in Canada, Japan and the United Kingdom. Its Channel Development
segment includes roasted whole bean and ground coffees, Tazo teas, Starbucks- and Tazo-
branded single-serve products, a range of ready-to-drink beverages, such as Frappuccino,
Starbucks Doubleshot and Starbucks Refreshers beverages and other branded products sold
across the world through channels, such as grocery stores, warehouse clubs, specialty
retailers, convenience stores and the United States foodservice accounts. Starbucks stores
offer a choice of coffee and tea beverages, as theyll as other coffee, tea and related products,
including a range of single-serve and ready-to-drink coffee and tea products, juices and
bottled water. Starbucks stores also offer an assortment of fresh food and snack offerings.

COMPANY PROFILE
The Starbucks Story

The story began in 1971. Back then they were a roaster and retailer of whole bean and ground
coffee, tea and spices with a single store in Seattle’s Pike Place Market.Today, they are
privileged to connect with millions of customers every day with exceptional products and
more than 30,000 retail stores in 80 markets.
Folklore

Starbucks is named after the first mate in Herman Melville’s Moby Dick. Their logo is also
inspired by the sea – featuring a twin-tailed siren from Greek mythology.
Starbucks Mission

Their mission: to inspire and nurture the human spirit – one person, one cup and one
neighborhood at a time.
Their Coffee

They’ve always believed in serving the best coffee possible. It's their goal for all of their
coffee to be grown under the highest standards of quality, using ethical sourcing practices.
Their coffee buyers personally travel to coffee farms in Latin America, Africa and Asia to
select high quality beans. And their master roasters bring out the balance and rich flavor of
the beans through the signature Starbucks Roast.

Their Stores

Their stores are a neighbourhood gathering place for meeting friends and family. Their
customers enjoy quality service, an inviting atmosphere and an exceptional beverage.

Total stores: 30,000 across 80 markets (as of June 30, 2019)

Their Partners

They offer some of the finest coffees in the world, grown, prepared and served by the finest
people. Their employees, who they call partners, are at the heart of the Starbucks Experience.

They believe in treating their partners with respect and dignity. They are proud to offer
several landmark programs for their partners, including comprehensive health coverage for
eligible full- and part-time partners, access to full college tuition coverage through the
Starbucks College Achievement Plan, and equity in the company through Bean Stock.

Their Products
 Starbucks offers a range of exceptional products that customers enjoy in their stores, at home,
and on the go.

Coffee: More than 30 blends and single-origin premium coffees.

Handcrafted Beverages: Fresh-brewed coffee, hot and iced espresso beverages, Iced Coffee,
Cold Brew, Nitro, Frappuccino® coffee and non-coffee blended beverages, Starbucks
Refreshers® beverages, and Teavana® teas.
Merchandise: Coffee- and tea-brewing equipment, mugs and accessories, packaged goods,
books and gifts.
Fresh Food: Baked pastries, cold and hot sandwiches, salads, salad and grain bowls,
oatmeal, yogurt parfaits and fruit cups.
Consumer products available where groceries are sold
 Coffee and Tea: Whole bean and ground coffee (Starbucks and Seattle’s Best Coffee
brands), Starbucks VIA® Instant, Starbucks espresso capsules available on the Nespresso and
Nescafé Dolce Gusto systems, Starbucks® Coffee K-Cup® pods, Starbucks® and Teavana®
Verismo® pods.
 Ready-to-Drink (RTD): Starbucks® bottled Frappuccino® coffee drinks, Starbucks
Iced Latte, Single Serve Cold Brew, Doubleshot® Coffee Smoothies, Teavana Craft Iced
Teas, Teavana Sparkling Craft Iced Teas, Starbucks Discoveries® chilled cup coffees,
Starbucks Discoveries Iced Café Favorites®, Starbucks Iced Coffee, Starbucks Doubleshot®
espresso drinks, Starbucks Doubleshot® Energy Coffee drinks; Starbucks Refreshers®
beverages, Evolution Fresh™ bottled per share.

 Starbucks was incorporated under the laws of the State of Washington, in Olympia,
Washington, on Nov. 4, 1985.

 Starbucks Corporation's common stock is listed on NASDAQ, under the trading

symbol SBUX.

 For more information, Starbucks Investor Relations

At Starbucks, they have always believed in the importance of building a great, enduring
company that strikes a balance between profitability and a social conscience.
It started with their early travels to the places where their coffee is grown, understanding that
their future is inextricably tied to the futures of farmers and their families. They nurtured
personal relationships and built a global network of support to create a new way to produce
coffee: one that is sustainable, transparent and good for people and the planet. As the threats
of climate change have grown, they have been working to help coffee farms adapt and find
innovative solutions in how they build and operate their stores, while reducing the
environmental impact of their cups, straws and lids.

Their stores are often the heart of a neighbourhood, and they strive to make each one a
welcoming and inclusive Third Place. As they have grown, so too has their opportunity to
make a positive impact, from alleviating hunger through their food donation program to
making investments in local partnerships and coffee- and tea-origin communities through The
Starbucks Foundation.

Stitching all these efforts together is a common thread – a green thread – one that is woven in
the fabric of their company by the more than 300,000 men and women who proudly wear the
green apron. They are dedicated to making their partners proud, providing pay equity and
investing in their success. And they are working to hire veterans and military spouses,
refugees, Opportunity Youth and those formerly incarcerated, and helping they build their
futures once they are with us.

As it has been from the beginning, their purpose goes far beyond profit. They believe in the
pursuit of doing good.
 CHAPTER 3
GREEN LOGISTICS

3.1 Greener Cups and Packaging

Decreasing the waste associated with our business, increasing recycling and promoting
reusability.

Goal: Double the recycled content, recyclability and compostability, and reusability of our
cups and packaging by 2022.

Each year, an estimated 600 billion paper and plastic cups are distributed globally*, and
though Starbucks cups only account for an estimated 1 percent of that total, we are invested
in finding a more sustainable solution. We have made substantial progress to reduce the
impact of waste generated in our stores through cup innovation and improved packaging
design, advocacy for local recycling infrastructure, and offering reusable cups.

Cup Innovation

Starbucks has continually worked to reduce the environmental impact of our cups and lids. In
1997, we introduced a hot cup sleeve to eliminate the popular practice of double-cupping. In
2006, Starbucks developed paper cups manufactured with 10 percent post-consumer recycled
fiber, the first cup of its kind in the food packaging industry to be approved by the U.S. Food
and Drug Administration in 2006. We also introduced a more recyclable cup lid in 2016
which allowed the cup to be more widely accepted.

In 2018, Starbucks, in partnership with Closed Loop Partners, launched a global effort to
bring together entrepreneurs, industry leaders, and recyclers to identify and commercialize
the next generation of recyclable and/or compostable cup solutions via the NextGen Cup
Consortium and Challenge And, we have also committed to phasing out plastic straws from
our 29,000 stores worldwide by 2020, eliminating more than 1 billion straws a year. Plastic
straws will be replaced with a lightweight, recyclable strawless lid, with paper or alternative
material straws available for blended beverages, and plastic straws upon request for
Starbucks customers who need or request one.

3.2 REVERSE LOGISTICS

3.2.1 Recycling

Starbucks has been a leading national retailer in advocating for increased access to recycling
programs throughout the country.

Recycling seems like a simple, straightforward initiative but it’s actually quite challenging.
Our customers’ ability to recycle our cups, whether at home, at work, in public spaces or in
our stores, is dependent upon multiple factors, including local government policies and access
to recycling markets such as paper mills and plastic processors. The current patchwork
approach with varying regulations city by city makes it challenging and confusing for
customers to know where and when to recycle or compost their cup.
As part of Starbucks involvement, we advocate for model legislation and best practices. In
conjunction with the National League of Cities to make access more widely available,
ensuring consistency and reducing confusion about what materials are recyclable or
compostable. In addition, we are working with companies and organizations along the supply
chain as a member of the Food Packaging Institute’s Paper Recovery Alliance and Plastics
Recovery Group. Ultimately, we want our packaging to be recyclable in both material and
practice, so that our customers have access to recycling services wherever they choose to
dispose of their waste.

3.2.2 Reusability

Reusable cups are also an important component of our overall waste reduction strategy. Since
1985 we’ve rewarded our customers with a discount when they bring in personal cups or
tumblers, or use for-here serveware available in our stores. In 2013 we launched a $2
reusable cup in the U.S. and Canada, and a £1cup in the United Kingdom.

Sustainability is about choices. We encourage our customers to join us in envisioning a

sustainable future and choose reusability whenever possible.

3.2 GREEN WAREHOUSING

3.2.1 Greener Stores

We’re creating more eco-conscious stores on a global scale from the design stage right
through to construction and operations.
Starbucks has been a leader for more than a decade in the development and implementation
of a scalable green building program for retail companies like ours. We joined the U.S. Green
Building Council® (USGBC) in 2001 and collaborated with them to develop the LEED® for
Retail program, an effort to adapt LEED (Leadership in Energy and Environmental Design)
to new construction and commercial interior strategies for retail businesses. We opened our
first LEED certified store in 2005 in Hillsboro, Oregon.

In 2008, we challenged ourselves to use LEED certification not just for flagship stores and
larger buildings, but every new, company-operated store.

Now, we are the largest builder of green stores in our sector, opening more than 1,600 LEED
certified stores in 20 countries.

We’ve come a long way since opening our first LEED-certified store, and now look to the
future of Greener Retail.

Our Goal: Designing, building and operating 10,000 “Greener Stores” globally by 2025

In our next evolution of Green Building we are going beyond designing, building and
renovating our stores to LEED standards. We are developing a new store verification
program that drives innovation, sustainability and efficiencies throughout our store portfolio.
We are partnering with experts including SCS Global Services and World Wildlife Fund, to
develop a new, open-sourced Starbucks Greener Stores operations framework. Through this
program we will ensure Starbucks stores continue to minimize their environmental footprint
and contribute to a sustainable future. These standards will ensure Starbucks stores are
effectively operated to achieve water and energy efficiency, divert waste, are built with
responsible materials, are powered by renewable energy and deliver a heathy environment for
our partner and customers – promoting engagement in sustainability.

With performance-based standards that incorporate design and extend throughout the life of a
store, “Starbucks Greener Stores” will focus on:

 ENERGY EFFICIENCY & WATER STEWARDSHIP: Deploying technologies and

practices that ultimately deliver 30 percent water savings and 25 percent avoided
energy over historic store design practices.
 RENEWABLE ENERGY: Powering stores by 100 percent renewable energy through
investments in country-specific solar and wind projects.
 HEALTHY ENVIRONMENT: Designing and operating stores to create a
comfortable experience that promotes wellness for partners and customers, including
lighting, noise, air quality and temperature.
 RESPONSIBLE MATERIALS: Ensuring materials and products for stores are
responsibly and sustainably sourced.
 WASTE DIVERSION: Designing and operating stores to reduce waste.
 ENGAGEMENT: Inspiring a culture of sustainability and empowering partners to
take action, be informed, and engage in sustainability issues and practices.

3.3 Climate Change

The steps we're taking to address climate change not only reduce our environmental footprint,
they also help ensure the supply of high-quality coffee that our customers expect from us is
sustainable for future generations.

Given that our agronomists, quality experts and buyers are on the ground working with coffee
farmers every day, we see firsthand and hear directly about the impacts of climate change. In
addition to increased erosion and infestation by pests and coffee rust, coffee farmers are
reporting shifts in rainfall and harvest patterns that are hurting their communities and
shrinking the available usable land in coffee regions around the world.

The potential impact of climate change on farming communities is a key reason addressing
our environmental impact is a priority for Starbucks. We believe now is the time to increase
our investments in solutions and strategies – both in our stores and at the farm level – that
help tackle this crisis.

Starbucks has been implementing a climate change strategy since 2004, focusing on
renewable energy, energy conservation, climate adaptation and mitigation efforts. In our
stores, we have focused on building to LEED® standards while also becoming one of the
largest purchasers of renewable energy in our sector. To build upon this work, we announced
in 2018 a commitment to not only design, build and renovate, but also operate 10,000 greener
stores globally.

At the farm level, we have worked with Conservation International to include climate-smart
agricultural practices as part of Coffee and Farmer Equity (C.A.F.E.) Practices, our ethical
coffee buying guidelines. We’re also committed to championing progressive climate change
policy in partnership with other businesses and organizations. We are a signatory to RE100,
the global corporate commitment to purchasing 100% renewable energy, as well as the
Corporate Renewable Energy Buyer’s Principles.

3.4 Greenhouse Gas Emissions

To continue to track and quantify our own environmental footprint, we conduct a yearly
inventory of our greenhouse gas (GHG) emissions. Using the World Resources
Institute/WBCSD Greenhouse Gas Protocol, we evaluated the major emissions from our
global retail stores, manufacturing operations and purchased goods and services.
The 2017 inventory found our Scope 1, Scope 2 and Scope 3 emissions were 16,581,000
metric tons of carbon dioxide equivalent. According to the Protocol, Scope 1 includes direct
GHG emissions from sources that are owned or controlled by the company. For Starbucks
these include manufacturing plants, store operations, and company-owned vehicles and
aircraft. Scope 2 includes market-based electricity emissions from the generation of
purchased electricity consumed by the company. Through the purchase of Renewable Energy
Credits (RECs) we are able to offset 62% of our store emissions globally. Scope 3 emissions
is the largest component to our footprint. It includes purchased goods and services, as well as,
emissions from our licensees and partnerships. The leading contributors for Starbucks are
food, dairy, coffee and packaging.

CHAPTER 4
SUPPLY CHAIN MANAGEMENT

4.1 Green Supply Chain

In mid-2009, Starbucks announced a legitimate attempt to address some very vocal
stakeholder issues to clean up its supply chain by starting efforts to ensure that single-use
cups are recyclable by 2012. They convened a “cup summit” with representatives from every
part of the paper and plastic cup supply chain. This included raw material suppliers, cup
manufacturers, retail and beverage partners, local municipal governments, Starbucks
employees, and environmental NGOs and systems thinking Guru Peter Senge. This was no
small task given the internal (vendors and suppliers) and external (end use customer)
variables necessary to make this program a success. They modified their goal to a target of
2015. Starbucks reconvened this summit in spring 2010 and they are continuing down this
open, transparent path to a sustainable supply chain one city, one franchisee at a time. They
are also working with customers and cities to develop more proactive, use friendly recycling
solutions.
In its approximately 2,200 company-owned stores in North America that control their own
waste collection, recycled items are made from one or more materials. While the company
has continued to encourage recycling in cities where it’s “marketable,” a great deal remains
to be done on the customer side. The company is offering farmers incentives to prevent
deforestation, with pilot programs currently underway in Sumatra, Indonesia, and Chiapas,
Mexico. This represents both an upstream and a downstream approach to green supply chain
management. Sustainability is built into the company’s business vision, performance metrics
and product development decisions.  Starbucks has a long way to go to meet its goals but
theoretical goals like theirs may take time, coordination, patience and above all, will. (Meyer,
2010)
4.2 Starbucks’ Operations
Starbucks sells coffee beverages and beans through their owned and licensed retail outlets.
The company’s stated mission is to establish Starbucks as the most recognized and respected
brand of coffee in the world. Through its retail outlets, the Seattle based company also sells
bakery goods, confections, coffee equipment and merchandise. The company has expanded
both its product line and its marketing channels as it has grown. To serve these new channels,
the company has partnered with several high-profile corporations, including PepsiCo,
Dreyers and Barnes & Noble.
What follows below is a description and discussion of two points of Starbucks’ operations.
Firstly, material flow, explaining how the beans flow from the original supplier to the retail
stores all over the world. Secondly, purchasing systems, explaining how Starbucks handles
the purchasing of such large volumes in a global market.
1)  Material Flow
The production, preparation and delivery of coffee is an international process, as no coffee is
grown in the continental United States, and Starbucks has had to develop procedures to not
only protect the, but also the customers who visit our stores. The material flow of Starbucks,
as shown in the diagram below, start from purchasing the green coffee to the shipping port to
unloading the containers at their destination, from roasting and packaging the coffee to
brewing and serving it to millions of customers.
Purchasing coffee beans from the point of origin
1. Starbucks is required to have the submitted material tested for contamination before it is
disposed of, after receiving shipping containers of coffee beans at the roasting plant with the
customer seals in place.
2. Starbucks implemented GPS tracking devices on some coffee shipment to monitor their
progress from farm regions to shipping ports, ensuring that coffee has not been stolen or
tampered with en route.
3. Starbucks implements rigorous quality control procedures, the coffee is inspected at
various points, sampled at several points, and tested numerous times to ensure that what
arrives in stores is the same coffee that buyers found at the point of origin.
4. Starbucks coffee buyers have to travel the world in search of the best coffees available,
even in regions where economic or political instability create hazards for travellers.
5. After the coffee is roasted, it will be placed in the warehouse until required by the
production schedule. The coffee is sampled, roasted and cupped to make sure it is the same
coffee that was purchased. 10% of the bags will be sampled and compared to the flavour
profile that was established from the point of origin. Once it has passed the taste test, the
coffee will be loaded into roasting system
Roasting Plants
Once the container of coffee finishes its journey from the point of origin, Starbucks receive it
at one of their three U.S. roasting plants or at their European roasting plant in Amsterdam.
Today’s coffee roasters use computerised controls to help identify any hot spots and internal
quenching systems to cool the coffee beans down if the temperature gets too high.

Distribution Centres
When the coffee has been packaged, it is sent to the Distribution Centre (DC), where it is
picked by partners filling store orders.
Stores
Once the coffee arrives at one of the stores, it is available for retail sale either as whole bean
coffee or as a component in one of the hand-crafted beverages.
2) Purchasing System
Although most coffee is purchased in the commodity market, coffee of the quality sought by
Starbucks is usually purchased on a negotiated basis at a substantial premium above
commodity coffees, dependent on supply and demand at the time of purchase.
After a new coffee has been purchased and sold for a period, Starbucks will implement
quality control to produce high-quality green beans that can be sold to speciality coffee
companies. Starbucks is always concerns about the supply chain management for its coffee
beans as a priority and creates many programs to ensure this process is both effective and
efficient for all stakeholders:
1. In 2000, Starbucks introduced a line of fair trade products and now offers three
options for the socially conscious coffee drinker. Starbucks have become the largest
buyer of Certified Fair Trade coffee in North America (10% of the global market) and
the only company licensed to sell Certified Fair Trade coffee in 23 countries.
2. Starbucks entered into fixed-price purchase commitments in order to secure an
adequate supply of quality green coffee beans and to limit its exposure to fluctuating
coffee prices. Starbucks is confident in the subsequent relationships and believes the
risks of non-delivery on purchase commitments are remote.
3. During the past year Starbucks has been developing a new set of coffee sourcing
guidelines. These sourcing guidelines are a flexible point system that rewards
performance in sustainable categories with financial incentives. Ultimately, those who
qualify for 100 points will be granted preferred supplier status with the Company’s
coffee buyers. This program is called Preferred Supplier Program (PSP).

Starbuck’s Consideration in Purchasing

  Starbucks’ concern about the quality of the coffee bean is due to their aim to establish
Starbucks as the most recognized and respected brand of coffee in the world. However,
quality is not everything in the eyes of Starbucks.
Beans-Related Concerns to Better Choose the Supplier
There is the Starbucks program to find the effective supplier, “Preferred Supplier Program
(PSP)”.
This is a set of guidelines which will not only protect high quality standards but will also
promote the long term viability of quality, economic and environmentaly sound practice.
Starbucks sets the program and requests the supplier to meet the specific requirement.
Preferred supplier status will be awarded to vendors who achieved a score of 100 points.
(Starbucks Corporation, 2011)
The first dimensions in the Preferred Supplier Program (PSP) relate to the beans:
1. Quality Criteria: Prerequisite: every coffee must meet Starbucks quality standard in
order to be considered for purchase. High quality is an integral component of
sustainability at all levels of the coffee supply chain.
2. Quality varieties: the company will purchase only Arabica varieties of coffee.
3. Flavour characteristics: Starbucks cup quality standards are based on specific
descriptions for each coffee purchased. Every coffee is expected to represent the
flavour character unique to the country or region. All coffees are expected to provide a
perfectly clean cup, with medium to heavy body and excellent aroma. All washed
coffees must be of good hard bean (or better density) and have good acidity.
Other-than-Beans-Related Concerns to Better Choose the Supplier
Other elements in Preferred Supplier Program (PSP) are those not related to the beans:
 Environmental Impacts
 Soil management: Farm management practices should effectively control
erosion and enhance soil structure and fertility, relying as far as possible on means such
as organic fertilizers, covering crops, mulch and compost.
 Water reduction: Coffee should be processed using methods that reduce water
consumption.
 Clean water: Coffee should be processed using methods that prevent pollution
of surface water and ground water.
 Water buffer zone: Vegetative buffer zones should be in place adjacent to all
water sources. No alteration should be made to the courses or hydrology of streams or
other surface water bodies.
 Energy use: Coffee growing, processing and drying should use energy
efficiently, employ renewable sources wherever possible and not rely on firewood
obtained from forest clearing. For example, patio drying should be used as much as
practical and solar coffee drying technology employed where feasible.
 Acceptable agrochemical: Coffee production systems should minimize and
wherever possible eliminate inputs of agrochemicals such as chemical pesticides and
synthetic fertilizers.
  Waste management: Waste and coffee by-product are managed to minimize
environmental impacts by applying the principles of reduction, reuse and recycling e.g.
composting or recycling of coffee pulp and parchment.
 Economic issues
Coffee production systems and commercialization should benefit rural communities by
boosting producer incomes, expanding employment and education opportunities and
enhancing local infrastructure and public services. In order for coffee production to be
sustainable, it must be economically viable at all levels of the supply chain, from seed to cup.
 Long-term relationships: Starbucks seeks to develop long-term trading relationships
with preferred suppliers.
 Incentives: Through its purchasing and pricing policies, Starbucks seeks to provide
incentives and support for sustainable coffee production, processing and shipping
methods.
 Economic transparency: In order to ensure that the entire supply chain – farmer,
miller, exporter and importer – benefit from the Starbucks preferred supplier program,
vendors are expected to provide reliable documentation regarding prices paid to their
suppliers.