Write a Case study on, discuss the reason of using smartphone application as a n

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Write a Case study on, discuss the reason of using smartphone application as a new Starbucks business operations strategy. Include the Conclusion,Appendix and References One of Starbucks' biggest strengths is becoming a huge problem for the chain Walking into a Starbucks recently, you may have noticed a frustrating change. In Starbucks' ideal world, people craving coffee would pull out their Smartphone and order a latte on the chain's app a few minutes before arriving at the coffee shop. Then, they would walk into the closest Starbucks and find - voila! - A barista calling out their name, drink in hand. The customer would grab the coffee and leave, with the entire process taking mere seconds of their time. Recently, that simply hasn't been happening Starbucks customers have increasingly found themselves crowded around the pick-up counter, wondering if a barista will ever call their name. Some people have even started walking into Starbucks, taken a look at the crowd waiting for their drinks, and immediately exited, executives said in the company's call with analysts on Thursday. That's because when customers order on their Smartphone's, during busy times of day. these orders are all immediately dumped on baristas. Then, when the hoard of customers shows up to pick up their drinks at the exact same time, it creates bottlenecks and scares walk-in customers from even attempting to order. Starbucks' digital ordering platform has been one of the company's crown jewels in recent years. Mobile order and pay accounted for 7% of US orders in the last quarter, up from 3% in the prior year, the company reported Thursday. In the US, customers now pay for more than one in four Starbucks orders using a mobile device. However, the growth of mobile ordering is now also having a measurable, negative impact on sales at the chain. Starbucks reported that transactions, a measure of customer traffic, dropped 2% in the most recent quarter, in large part due to problems caused by mobile ordering The company's shares fell more than 4% on Friday morning. Starbucks is now scrambling to find a solution. I'm not really worried. I know that the market has over-reacted,"CEO Howard Schultz said on CNBC on Friday, repeatedly promising that Starbucks would solve the issue. While Schultz did not provide concrete details on what this solution would be, other executives have hinted at potential fixes. Reuters reported the chain has begun adding one or two more baristas focused on mobile ordering and payment at certain especially busy locations during peak hours. Other solutions being considered reportedly include new work routines and testing text notifications to alert customers when orders are ready By Kate Taylor January 27, 2017: Business insider

Explanation / Answer

Starbucks new mobile ordering system

Introduction

Starbucks has introduced an order ahead feature as part of their “Mobile order and pay” app making it possible to select your drink of choice on your phone and simply grab it from the barista without standing in long lines! The problem with this however is that a lot of people are ordering on the app, and when they come into the store to pick up the order, there is a big crowd of people all waiting to get their order, and the waiting time goes up. This also causes others who are entering the store to be put off by the crowd and leave without ordering. The problem is that there will be peak times when many orders come in, creating backlog of orders. Starbucks need to find a solution to this problem as otherwise, their sales will be affected and also a negative image will be the result. Starbucks admitted to a drop in sales in the last quarter that could be attributed to this issue.

Background

Starbucks started in 1971, and has been in the business of providing high quality Arabica coffee. They have stores all around the globe, and is the premier retailer of speciality coffee in the world. With the advent of smart phones and apps being developed for online purchases, Starbucks also introduced it’s Mobile order and pay app in 2015. It allows customers to place and pay for their order in advance and then visit the nearest Starbucks location to pick it up without having to wait in line to order.

This service was meant to let customers skip in-store lines and simply walk in and pick up their orders. But in many busy locations, the increase in order volumes especially in peak times like going to office or returning from office ultimately backed up the line for in-store customers and caused resentment for the mobile order customers who don’t have their orders right away. Some potential shoppers would walk into stores, see the long queues and walk right back out.

Another problem was that some items may be missing in store, and you need to then tell the barista what other options you would like to opt for. This again killed the concept of zero waiting time to pick up order.

Also, not all products are available to order online. This could be because they may not be stocked in all locations.

Servers errors, orders not reaching the barista etc are the other problems that were faced with the app.

Alternatives

SO what can be done to resolve this issue? Starbucks has announced that they are working on solutions to rectify this issue

One of the ways being discussed is to have new digital order managers (DOM’s) which is tablet based and helps the barista track and manage the order. But will that reduce the wait time for the pick up? Especially during peak rush?

Another option is to provide customer with the exact time when the order is ready instead of an estimated time. But if the waiting time is not reduced, the customer is still unhappy as they have to spend that time waiting somewhere or the other.

One option that was tried was to have a delivery station where there is only pick up of orders and no ordering line or seating. This would require additional resources and will take time to roll out in many places.

Open more stores. Again a capital intensive solution.

Proposed Solution and Recommendations

The solution should be aimed at reducing waiting for customers who have ordered on the app. And other walk in customers should not be disturbed. A combination of solutions will be required for this and this is what is proposed.

In the existing stores, a separate dedicated delivery counter for pick ups for app based customers have to be created. This will avoid confusion between walk in customers and online customers and their pick up lines would be different. More baristas would need to be employed in peak hours, which is during morning hours before office hours and evening after office hours. Combined with this, small kiosks which are pick up kiosks should be deployed in high traffic areas where only pick ups for mobile app ordered customers are available. Drive in kiosks can also be setup for pickups.

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