Greg Javor from Starbucks; The Boardroom Agenda: Value-Chain Leadership for Post-Recession Success

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The document provides an overview of Starbucks' supply chain transformation journey. It discusses how Starbucks has grown from a single coffee shop to over 16,700 stores worldwide serving over 50 million customers per week. It outlines Starbucks' mission and the role of its supply chain in responsibly sourcing high quality products. The document then describes the need for supply chain changes due to financial pressures and increased competition. It details Starbucks' strategies, structure, and goals to improve supply chain operations through a focus on safety, quality, cost, and developing supply chain talent.

Starbucks Coffee Company
A look inside the Supply Chain transformation journey
Gregory Javor
VP Global Supply Chain Operations
Tuesday June 22nd 2010

Starbucks Confidential Page 1

Today’s Talk

Starbucks The Starbucks The Supply Chain
Supply Chain Transformation
Journey

Starbucks Confidential Page 2

Where We Began

Starbucks Confidential Page 3

From One Little Bean Store
Stores

• 16,700 retail stores
• Our products:
• 120,000 partners
- Coffee and Tea
• 51 countries - Handcrafted Beverages
• 50M customers per week - Consumer Products

Starbucks Confidential Page 4

More Than a Cup of Coffee

Our mission is to
inspire and nurture
the human spirit –
one person, one
cup, and one
neighborhood
at a time.

Starbucks Confidential Page 5

Starbucks Partners

“We’re not in the coffee
business serving people.

We’re in the people
business serving
coffee.”

Starbucks Confidential Page 6

The Starbucks Supply Chain

...is responsible for the supply
of all products
that contribute to
the Starbucks experience
…from the coffee in your
cup, to the cup itself and
the table it rests on –
at every Starbucks
store around the world.

Starbucks Confidential Page 7

The Starbucks Supply Chain

• Plants
> $4.0B Enterprise Spend - Coffee Roasting: 5
- Tea: 1
> $0.8B Operating Expense - Co-Manufacturing: 24
> 4.4M Deliveries per year • Distribution
- RDCs: 13
> 1.1M Picks per day - CDCs: 42
- Green Coffee Warehouses: 6

Starbucks Confidential Page 8

The Starbucks Supply Chain

“Get goods into customer hands”
Provide information that completely answers the
customer’s question in a manner that builds confidence
in the Supply Chain
Starbucks Confidential Page 9

The Starbucks Supply Chain

At the heart of what we do are products
sourced ethically, made with the highest quality,
and freshly delivered to our customers.
Starbucks Confidential Page 10

The Case for Change - 2008

$

US Sales Supply Chain Costs
Supply Chain Performance
Starbucks Confidential Page 11

The Case for Change - 5 Theatres

1. Admission of Guilt of self induced mistakes
by the SLT
2. Global Financial Crisis
3. Competition
4. The Web
5. Foundation - preserve and enhance our
culture and values

Starbucks Confidential Page 12

The Supply Chain
Transformation Journey

Starbucks Confidential Page 13

Supply Chain Strategy - Our Purpose

Starbucks Confidential Page 14

Our Game Plan - How We Operate

Treat people Get the job done Bring new Move
well – safety, service, products to to a higher
quality & cost market performance
level

Starbucks Confidential Page 15

Structure - How We Organize

Plan – Source – Make – Deliver

Starbucks Confidential Page 16

The Golden Rules - How We Lead

Highlight Problems Be Transparent Sleep Well
We’re paid to know Operate with an Don’t lose sleep over
what’s broken, needs “open window” so things you don’t know
to be improved, anyone can see what how to handle –
changed or fixed and how you are ask for help
doing
Starbucks Confidential Page 17

Winning - Measuring Success
Safety Incidents Cumulative Total Enterprise Savings
OSHA Recordable Frequency in SCO Manufacturing Network

On-Time In-Full (OTIF) Supply Chain Operating Expense MAT

Starbucks Confidential Page 18

Strategic Framework - The Long Term Plan

Starbucks Confidential Page 19

People - Develop Partners and Talent

• Develop partners and attract talent to build world-class capability
• Foster a workplace where partners are:
- Entitled to training
- Mentored for success
- Inspired to advance
Starbucks Confidential Page 20

Starbucks relies on a complex global supply chain to source, process, distribute, and sell coffee and other products. They control coffee purchasing, roasting, and packaging. Supply can be affected by factors like weather, costs, and politics in producing countries. Starbucks has over $1 billion in future coffee commitments. An interruption anywhere in the supply chain could negatively impact business and profitability. Recommendations include opening a new warehouse in Texas to reduce costs and better serve growth in Mexico, or alternatively a location in California for even greater efficiency.

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