Operational Problems Slow Starbucks Growth
Starbucks is blaming operational problems for their sales slide (actually, it’s just the rate of sales increase that fell, from 7% to 4% – let’s ignore the faulty Wall Street math that views a 4% increase as a “slide”). With their frozen Frappucino coffee or fruit drinks being so popular, apparently it is bogging down their lines and some frustrated customers are bailing out (some classic “queue balking,” in Industrial Engineering terms).
I’ll pick on Starbucks for not being faster in realizing that if the frozen drinks are more labor intensive (something they should test and model during their product development phase). Is Starbucks developing new drinks and “throwing them over the wall” to the stores? Starbucks is going to add labor to better balance their cycle time (how long it takes to make a drink) with their takt time (customer demand). Not planning properly for these new products seems more “GM-like” than “Toyota-like.”
I’ll give Starbucks credit, though, for owning up to their operational challenges. Admitting that you’re reponsible is definitely more Toyota-like. If Starbucks wanted to be GM-like, they would have a hundred excuses, ranging from oil costs, healthcare costs, etc. Sure, they should have fixed their operational problems earlier, but they’re taking responsibility. Good for Starbucks.
“Chief Executive Jim Donald said the company was working to solve the problem by having more baristas work the morning peak hours, among other possible changes, including reducing the time it takes to blend cold drinks.”
I normally just order drip coffee, a simple process and fast turnaround time. For those of you who order frozen drinks or more complicated drinks, how would you use lean principles to fix Starbucks? I found an example of “visual controls” once at a Starbucks, but I lost the picture.
I also found an old blog posting of mine, from April 2005 about how Starbucks had “efficiency experts” working on their processes. So much for relying on experts! I wonder if the experts thought things would be OK, but people at the stores were screaming for help?
The WSJ article I linked to then, said:
“Times for drink preparation range widely, from less than 20 seconds for a Tall black coffee to about 90 seconds for the Venti Double Chocolate Chip Frappuccino Blended CrÃ¨me.”
I can’t find a free version of the article, but it’s still there for the WSJ subscribers. I can’t post the whole thing, unfortunately.