Can Starbucks employ lean manufacturing techniques used by fast-food rivals without becoming a fast-food joint itself?
That question was raised by a Wall Street Journal story highlighting how Starbucks is trying to deploy “lean thinking.” In a nutshell, Starbucks has a lean team that times baristas and teaches them aspects of Toyota’s production system. There are even Mr. Potato Head assembly drills.
The conundrum: Lean techniques are great for manufacturing, but not non-repeatable human tasks. What business is Starbucks in? You’d have to argue both. Starbucks workers manufacture coffee and tea drinks, but really sell a vibe. Needless to say, this movement, which could ruffle a few old school baristas, has its risks. It has helped the bottom line though.
Starbucks reported a solid third quarter. On the company’s earnings conference call, Starbucks CEO Howard Schultz said:
The majority of cost reductions we’ve achieved come from a new way of operating and serving our customers. Over the quarter, we began to roll out our better way initiatives, a series of process improvements in our stores using lean principals.
We’ve been seeing encouraging results over the past couple of quarters, not just improving efficiency and reducing costs but most importantly we are improving customer engagement.
Even as we make considerable progress in improving our bottom line, we remain as focused as ever on initiatives that will remind our customers what sets Starbucks apart. We are doing this through immediate traffic driving strategies and enhanced customer experience, and longer term brand-building.
Indeed, the Journal story focuses on how Starbucks has moved ingredients around to save an extra few seconds here and there. Rivals such as Dunkin Donuts already deploy such techniques. Manufacturing and Business Technology highlighted Starbucks’ lean manufacturing experiments in March.
If Starbucks can become more productive and free folks up to chat with customers then the idea is smart. If Starbucks just becomes another fast food joint perhaps it isn’t such a bright idea. Overall, Starbucks has to adapt and lean manufacturing can help. Thus far, the company’s menu, manufacturing and service tweaks appear to be on the right path.
Extracted from SmartPlanet
The blog from a Lean Thinker 
Mark Graban
August 11, 2009 at 11:28 pm
I agree they need to be productive AND have a good vibe. My local store (which has NOT implemented lean) does NOT have a good vibe. Employees seem overburdened and stressed. I bet by using Lean to make work easier would calm them and give them time to be nicer and friendlier to customers.
cebrianpablo
August 14, 2009 at 6:45 am
I
f you’ve been to Starbucks lately, you probably noticed the fast-paced employees working their java magic as they take orders from customers in line, not at the register, so that baristas can start the order, and sometimes finish it, before the customer even pays for it.
Yes, I’m all for fast and good service, but lately, the Starbucks Experience hasn’t been good. You see, for me Starbucks is a special treat, it’s the place I go to get away from my two cute boys when I need a 20-minute break from motherhood; it’s the place I go to because it smells like intelligence when I need a shot of creativity during the day.
So I go to Starbucks to enjoy the atmosphere, the great background music, and the coffee paraphernalia, among other things. But when I recently entered Starbucks and stared at its mouthwatering menu, not able to decide which of the mochas, or lattes, or scones I was going to buy, a guy behind the counter asked me in a rush that you usually see in fast-food joints, “Can I get you started with anything ma’am?”
“Uh, ok, I’ll have a tall mocha and… uh, a croissant and… uh, no… ok. Yeah, that’s fine.” My turn at the cashier was up and the mocha was already ready for me on the pick up counter.
That day I left Starbucks bothered, but didn’t know why.
A couple of days later, I came across Larry Dignan’s piece at SmartPlanet.com, “Starbucks eyes lean manufacturing techniques,” where the author poses the question, “Can Starbucks employ lean manufacturing techniques used by fast-food rivals without becoming a fast-food joint itself?” Fast-food service—that’s how I felt the other day.
Starbucks started implementing lean manufacturing principles to its processes earlier this year, CEO Howard Schultz said during a press conference on the company’s quarter results. “The majority of cost reductions we’ve achieved come from a new way of operating and serving our customers. Over the quarter, we began to roll out our ‘better way’ initiatives—a series of process improvements in our stores using lean principles.
“We’ve been seeing encouraging results over the past couple of quarters, not just improving efficiencies and reducing costs but most importantly, we’re improving customer engagement.”
According to its 2009 third-quarter report, the company delivered about $175 million in cost savings, exceeding the company’s target of $150 million, according to the financial report.
“Our store partners have embraced the cost disciplines and efficiency initiatives that are enabling us to expand our operating margin,” Schultz said. “In doing this, they have also delivered increased service speed, measurably improved customer service, customer satisfaction, and an overall enhanced Starbucks Experience.”
Starbucks has a “lean team” headed by vice president of lean thinking, Scott Heydon, that goes around the country with a stopwatch and a Mr. Potato Head toy to test store managers if they can put it together and rebox the toy in less than 45 seconds, according to a report by Julie Jargon in The Wall Street Journal.
When I tried to contact the company directly to ask about this lean way of doing business, it declined an interview, but a spokesperson issued the following statement: “Starbucks is applying traditional lean concepts in a unique and fresh way to all elements of our business, most notably our stores. Our goal is straightforward—to increase operational efficiencies and ultimately our competitiveness in the marketplace by improving customer and partner (employee) experiences. Through our efforts, we have already seen a positive impact on product quality, freshness, and service time.”
“Still, some baristas fear the drive will turn them into coffee-making automatons and take away some of the things that made the chain different,” Jargon’s article says.
“Yes!” I thought, that’s exactly what they are now—a bunch of coffee-making machines. The company’s third-quarter results exceeded analysts’ expectations, as The Wall Street Journal reported, and that may be seen as a lean success story. In the human perspective, however, lean has transformed what used to be a pleasant experience into an expeditious, efficient, but in the end, unsatisfactory customer experience.
As one reader from the web site StarbucksGossip rightfully puts it, “Customers come into Starbucks—at least they did—to experience something that could only happen without lean—friendly banter with a barista, sampling coffee or a pastry, etc. Lean is best suited to assembly lines and factories, not so for managing human interaction, which is never a repeatable routine.”
http://www.qualitydigest.com/inside/quality-insider-article/starbucks-lean-ruins-experience.html