Management

Starbucks Corp. built its business as the antifast food café. The Great Recession and growing competition a few years ago forced the coffeehouse giant to see the virtues of behaving like its streamlined competitors. Under an initiative put into practice at its U.S. stores, there would be no more bending over to scoop coffee from below the counter, no more idle moments waiting for expired coffee to drain, and no more dillydallying at the pastry case. Pushing the Starbucks’s drive is Scott Heydon, the company’s “vice president of lean thinking.” He and a 10-person “lean team” were going from region to region armed with a stopwatch and a Mr. Potato Head toy that they challenge managers to put together and rebox in less than 45 seconds. Heydon says reducing waste will free up times for baristas—or “partners”—to interact with customers and improve the Starbucks experience. “Motion and work are two different things. Thirty percent of the partners’ time is motion; the walking, the talking, reaching, bending,” he says. He wants to lower that. If Starbucks can reduce the time each employee spends making a drink, he says, the company could make more drinks with the same number of workers or have fewer workers. One of Starbucks’ biggest expenses is store labor, which costs about 24 percent of revenue annually. The company began testing lean methods in Oregon. One of the first stores was managed by Tara Jordan, in Oregon City. “In my eyes, we couldn’t get better,” says Jordan. Her store boasts one of the fastest Starbucks drivethrough windows in the company, with an average time per order of 25 seconds. To help her understand how work can be done more efficiently, Kim Landreth, a member of the lean team, brought a Mr. Potato Head to Jordan’s store and sprinkled the ears, nose, lips, and other accessories across several tables. Using a stop watch, Landreth timed how long it took Jordan to assemble the toy and place it in its box. It took more than a minute. Landreth than asked her to think about how she could complete the task faster. Moving items closer together shaved time, as did altering the order of assembly. Over the course of two hours, Jordan amended the time: about 16 seconds. “That really opened my eyes,” she says. The next project: observing the area where blended drinks, such as frappuccinos, are made. “I thought it was going to be the best station in my store,” Jordan said. “What I saw was how much my partners were moving and reaching for things that were never made in the same place. It took way too long to make one beverage,” she says. They moved all but the most commonly ordered syrup flavors and store pitchers closer to where drinks are made. After learning that topping the drinks with whipped cream and chocolate or caramel drizzle at the drink station was slowing down production, they moved those items closer to where drinks are handed to customers. The changes shaved eight seconds off the 45-second process. “Just to top the beverage with whipped cream and drizzle took six seconds,” Jordan says. In all, new methods have cut two seconds off the store’s drive-through time—to an average of 23 seconds. Between September 2008 and June 2009, her store experienced a 10 percent increase in transactions. The company says that having food and drinks ready to go quickly can boost traffic because that keeps people from leaving stores.

At a lot of stores, Starbucks baristas used to grind all of the day’s coffee in the morning and keep it under a counter. They had to bend over and scoop the grounds each time they made a new batch. The absence of grinding sounds and the fresh coffee aroma were among the things Howard Schultz criticized before he returned to the company as chief executive in January 2008 to try to turn things around. Now baristas are required to grind beans for each batch and timers buzz every eight minutes to signal when it’s time to make new coffee. At a busy downtown Chicago Starbucks, store manager Ryan Dobbertin says bins of beans are kept under the counter so barristas can find a particular roast without having to pause and read the label. They quickly differentiate between pitchers of soy, nonfat, and lowfat milk. At the beginning of an April day a few years ago, Dobbertin’s store had a customersatisfaction score of 56 percent; by June it had jumped to 76 percent. His store has seen a 9 percent increase in transactions between April and June. Not all stores are as far along. At a different downtown Chicago store, baristas one morning temporarily ran out of coffee around 7:45 a.m. Heydon observed two workers at the espresso machine and traced their movements on what’s been called a “spaghetti map” because of all the lines. Starbucks has faced some resistance to the program. “They’re trying to turn workers into robots,” says Erik Forman, a barista in Minneapolis. “It’s going to essentially turn the café into a factory. They want to control our every move in order to pinch every possible penny.”

1. To what extent has Starbucks caught on to a cost-effective way of reducing labor expenses in their stores (cafés)?

2. How should Starbucks managers deal with baristas who do not like the lean methods of working?

3. What would you think of Starbucks using instore coffee vending machines to save even more money?

4. What effect would the amount of store traffic at Starbucks stores have on the true cost savings derived from lean techniques?

5. If you have visited a Starbucks store recently, can you suggest how the baristas can be even more productive, thereby earning or saving the company more money? Maybe you can patronize a Starbucks café just to complete this assignment. (The expense could be tax deductible!)

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