Dunkin’ Donuts vs Starbucks

Company Overviews
Dunkin’ Donuts:
Dunkin’ Donuts was founded in 1950 By William Rosenberg. “Bill” Rosenburg opened Dunkin’ Donuts’ first shop in Quincy, MA. It was incorporated in 2006 and is now based in Canton, Massachusetts. Dunkin’ Donuts is a chain restaurant known mostly for its coffee and baked goods in the United States and also internationally. The company offers hot and cold coffees, donuts, bagels, muffin and a few more drink and food options including sandwiches. In addition, the company sells some of their beverages online. They even sell Dunkin’ mugs and cups. Dunkin’ Donuts has about 12,000 restaurants in 36 different countries. As you know, Dunkin’ Donuts sells a variety of bakery items and sandwiches but is mostly known for their hot and cold coffees. Drinks attribute to about 65% of their sales. Their main slogan is “American Runs on Dunkin'”.

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Starbucks was founded in 1971 in Seattle, Washington by three partners. Starbucks operates in about 27,000 locations in 75 different countries. Starbucks is mostly known for their hot and cold beverages similar to Dunkin’, but also include Teavana products. They also sell some pre-packages food like chips and sandwiches. They sell products similar to Dunkin with their travel cups, mugs, and even coffee beans. In addition, Starbucks markets its coffee through grocery stores and licenses its brand for other food and beverage products. Starbucks does not have an advertising slogan; however, their logo is widely recognized.

Competitive Advantage
Dunkin’ Donuts:
One of competitive advantages on Dunkin’ Donut’s side is the new low calorie foods they have been putting on their menu. Nowadays, people are very conscious of what they are putting into their body, with low calorie food they can take that target market by storm. On top of that, they always provide deals and specials for upcoming holidays and even sports teams in your area. For example, when the Eagles were in season, every time they won a game if you were a rewards member you received a $1 coffee. This is key way to differentiate themselves from other markets since it’s so similar.

A competitive advantage for Starbucks is that they keep their brand quality by managing the production process by themselves. They do this from growing the coffee plant, selecting the coffee nut, roasting the nut, and grinding the nut. Once they make it into a cup of coffee they then sell it in their own stores. Another thing Starbucks does is provide free Wi-Fi in all their locations. Not only do people want to stop in for one cup of coffee now, but they will potentially buy multiple if they stay and do work.

Supply Chain Management
Dunkin’ Donuts:
Every product Dunkin’ makes available to its customers goes through its supply chain. The coffee is made in Brazil. It’s then picked, sorted, processed, packaged, then sent out for delivery to one of Dunkin’ Donut’s main facilities. Once it ends up there, its then delivered to one of their restaurants. Throughout the supply chain, the coffee is being transported from one place to the next. The coffee isn’t actually owned by the company until it reaches one of its main facility. This isn’t just for coffee but relates to all the products that Dunkin’ sells. For example, products like coffee mugs are outsourced from other plastic manufacturers. They then are shipped from that manufacturer to one of Dunkin’ Donut’s distribution centers, from there they are shipped to individual restaurants.
When it comes to items like bagels and donuts, their supply chain differs. These items are mad by chefs who work within the company, therefore they aren’t outsourced. These good are shipped daily to restaurants in the surrounding area. Dunkin’ Donut has a very well put together supply chain management system, they are very quick and efficient.

When it comes to Starbucks supply chain management, they use a centralized system which manages not just its supply chain, but its logistics across the six continents where they have their distribution centers. To evaluate their supply chain efficiency, they use 4 categories: safety in operations, on-time delivery and order fill rates, total end-to-end supply chain costs, and enterprise savings. Starbucks heavily relies on technology to help them be as efficient as possible. For example, they use an automated information system which helps them monitor the demand on a day to day basis. When it comes to their suppliers, they put in social responsibility standards they must follow which they call CSG (coffee sourcing guidelines).

Quality Management:
Dunkin’ Donuts:
Dunkin’ Donuts uses quality control as one of their continuous improvement methods. Each of their items on the menu has step by step instructions the employees must follow to prepare the food or drink the exact same way each time. This decreases the variation of each product across the company. They measure this by using undercover shoppers. These people look like customers, but they are inspectors who are there to examine the food and drink quality relative to the instructions.
On top of this they have quality control when it comes to each product. For example, if a coffee is sitting on the burner for longer than 18 minutes, it gets thrown away. For all the food, it gets thrown away at the end of each night and gets fresh perishable items delivered each morning. The managers use this to see which food isn’t bought as much so they can limit the amount of inventory. Even if a bagel or muffin looks odd, it is tossed away instead of sold to customers.
Starbucks has a very similar method when it comes to checking for quality. Starbucks District Managers randomly stop in to check on the shop. These managers talk to the customers, watch the workers known as baristas, and check the food and drinks to ensure good quality.
On top of this, Starbucks also uses an outside company, EcoSure, to preform checks on all the shops every six months. Something differently Starbucks does is using their baristas as a way to improve quality. They give them employee benefits and empower them, so they work better and more efficiently.

Inventory Management:
Dunkin’ Donuts:
When it comes to inventory, Dunkin’ Donuts has a lot. Each morning they get a new shipment in of perishable goods. To keep track of this, managers calculate weekly inventory manually. That report is then sent to the operating department for it to be analyzed.
Dunkin’ Donuts has a system that monitors inventory usage and even labor cost. When it comes to this business, fluctuation in sales are very common. For example, when it is hot outside, iced coffee is of higher demand and vice versa when it is cold outside. Managers need to keep a close eye on this so they know how to manage their inventory. It is important for Dunkin’ to have their inventory counts as accurate as possible because of how they order a specific number of goods. Using First-In-First-Out is one of the important methods they use to keep their inventory and ordering accurate and consistent.

In this business, most of the products that make up Starbucks and its competitors inventory are all perishable items. Starbucks uses a EOQ and P-system for each of their stores. This helps them keep track of their inventory so they don’t over order and produce waste. When it comes to the P-system, an order is placed every week with a three-day lead time. The other order system they use is done daily using EOQ with a two-day lead time. This EOQ system is used for perishable items that won’t last that long, like milk and bakery items. For Starbucks, most of their demand is very constant so it makes ordering inventory easy. It is very rare for their demand to break its pattern. It takes about three hours for Starbucks to roast a batch of their coffee so it is easy for them to keep up with the demand.

Dunkin’ Donuts and Starbucks are two of the largest coffee chains in the United States. For those consumers on the go, Dunkin’ Donuts and Starbucks are where you stop to get your morning fix or afternoon pick-me-up. Their huge span of operating locations and similar affordable prices and menu items make choosing in between them almost interchangeable. Although they may seem interchangeable, most consumers are only loyal to one of the companies. These companies are replacing the idea of brewing a cup of coffee on your own, however, if consumers choose to do so they can also buy either one of their coffee beans.
When comparing these companies, I realized they are not as similar as I first thought. Of course, they both have almost the exact same menu but the way they get/make their products are not as similar. For example, I am a loyal Dunkin’ Donuts customer simply because I prefer the taste of their coffee better. But now I that I learned Dunkin’ doesn’t brew their coffee from scratch like Starbucks does I am a little taken back. If Dunkin’ wanted to fix anything about their supply chain management I would recommend figuring out how to make their coffee on their own.
When it comes to Starbucks, I would recommend them to create a rewards program like Dunkin’ Donuts has. Besides just thinking the coffee tastes better, the amount of deals and gifts I get from having the app on my iPhone will always have me choose Dunkin’ Donuts over Starbucks. If they wanted to diminish Dunkin’s competitive advantage they should consider better rewards and deals.


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