Starbucks CEO credits supply chain organization for company’s success

“Supply chain has to be at the forefront of every enterprise in the world, especially ones that are consumer-facing,” Starbucks CEO Howard Schultz said Monday at the Council of Supply Chain Management Professionals’ annual conference in San Diego.    The supply chain department is a strategic asset at Starbucks that has been critical to the coffee chain’s growth and profitability, CEO and Chairman Howard Schultz said Monday at the Council of Supply Chain Management Professionals’ annual conference in San Diego.
   “Supply chain has to be at the forefront of every enterprise in the world, especially ones that are consumer-facing,” the Starbucks leader said.
   During the Q&A format, Schultz talked about the importance of developing a strong corporate culture, having a mission that extends beyond making money, and why the company has made it a priority to try and hire veterans. But it was his comments on logistics that drew the most attention from the packed hall of nearly 3,000 industry professionals.
   Companies too often neglect supply chain and human resources when building a company when those disciplines are the foundation for growth, according to Schultz.
   “You cannot scale a company of any kind today without having the expertise, the skill base, of a world-class supply chain organization,” the Brooklyn native said.
   Starbucks made the same mistake, he acknowledged. Schultz said executives took supply chain for granted eight years ago, which contributed to a decline in financial performance that led Schultz to retake the reins of the company in 2008.
   Seattle-based Starbucks restructured its organization and now depends on the supply chain department for its existence. And supply chain execution is becoming even more important to business success in an era of digital commerce in which people expect immediate service and quick delivery of goods purchased, he added.
   Schultz called the Internet the “death of distance,” with retailers trying to figure out how to do home delivery in the shortest amount of time possible.
   Starbucks, which operates about 22,000 stores and another 10,000 retail and food service locations, procures products from 18,000 suppliers and ships more than 7,000 unique items every year. The $16.4 billion company makes 20,000 deliveries a day from 150 shipping locations in 67 countries.
   As a global business, the key for Starbucks is to apply supply chain best practices developed in the United States throughout the world, said Schultz.
   Schultz received a round of applause when told by interviewer Kevin Smith, a former supply chain executive at CVS, that he is one of the few CEOs that “gets” the importance of the supply chain function.