Starbucks: Supply Chain Overhaul to Reduce Costs

Serving more than 27.000 stores and 90 million people a week in 51 countries. This is the logistical challenge for Starbucks, one of the largest coffee chains on the planet and one of the stopping points of the United States Technical Mission, sponsored by ILOS.

No wonder Starbucks chose Reno, Nevada, to host one of its distribution centers. The logistical attractiveness of the city is due to the fact that it is just a day's journey by truck from 11 states in the western United States. The great location makes Reno receive not only the Starbucks DC, but operations of retail giants such as Amazon and WalMart, also visited during the ILOS Technical Mission.

In addition to the Reno DC, Starbucks' US logistics network comprises four other regional distribution centers and 33 smaller central distribution centers. In addition, there are two more regional DCs in Europe and two in Asia, in addition to another 7 central DCs in the Asia/Pacific region, 5 in Canada and 3 in Europe. They are all responsible for storing coffee and other essentials for the stores, from furniture to napkins, cups, food and promotional materials.

Video – Get to know a little about Starbucks global operation

Source: Starbucks

The large number of items received and distributed and the large number of stores to be served globally make the operation complex and make it one of the most analyzed in the world.

Ten years ago, however, the global operation went through a restructuring due to the increase in logistical costs, although sales of stores with less than a year were falling. The restructuring of the supply chain involved 3 phases, which led to the reorganization and simplification of the chain around the world, cost reduction by improving the level of service and, finally, the formation of a highly capable team, also committed to developing future talents for the sector.

The result of the project was a reduction of more than half a billion dollars in the logistical costs of the worldwide operation in the two years following the redesign. This operation has also become capable of supporting the company's strong annual growth globally, which it expects to reach 37.000 stores in 2021, and guarantee around 70 weekly deliveries, in addition to bringing new products to the market and all promotions.

Reference:

How Starbucks chanced supply chain management from coffee bean to cup

Starbucks Supplier Guidance Global Reference – version 1.0

From bean to cup: How Starbucks transformed its supply chain