Starbucks Didn’t Always Have an All-Star Supply Chain

Now that it’s fall, you might think more about the Pumpkin Spice Lattes at Starbucks rather than their supply chain, but it’s good to know that Starbucks chairman Howard Schultz acknowledges the importance of the supply chain.

During a recent interview at the Council of Supply Chain Management Professionals’ annual global meeting in San Diego, Schultz was told by reporter Kevin Smith that the company makes 20,000 deliveries every day and supports over 22,600 stores in 65 countries and territories. Smith then added, “I don’t think you know that.” To which Schultz replied, “I know that!”

Not only did Schultz know that, he believes that the supply chain needs to be at every corporate checklist. But Starbucks didn’t always have an all-star supply chain. Back in 2008 when Schultz returned to the company after eight years away, he was faced with a supply chain that was completely inadequate for a company of Starbucks’ size.

Starbucks had experienced extreme growth, resulting in overpopulated stores and a supply chain that was completely a mess. Supply chain management discipline had been tossed aside—there were few processes in place and no metrics to measure service performance.

Essentially, Schultz walked into a supply chain nightmare. And when he did implement measurement criteria in 2008, less than half of all store orders in the US and Canada were delivered on time.

Now, almost eight years later, Starbucks’ supply chain runs like a dream. Schultz puts so much emphasis on the supply chain, referring to supply chain management as the “primary co-author of our business.” Supply chains shouldn’t be looked at last, but rather, thought about as the first thing. “You cannot scale a company of any kind without the skills and base of a supply chain,” Schultz added.

So now, when you sip your Pumpkin Spice Latte this fall, you can rest assured that the coffee beans used to make it were a part of a spectacular supply chain and arrived in the most efficient manner possible.