October 4, 2010
special report | Building for the Future

Starbucks: The next generation

Starbucks: The next generation

Starbucks spent the past two years revamping its supply chain. Now it seeks the next crop of leaders to run it in the future.

By Mark B. Solomon

Help Wanted: Seattle-based mega-brand seeks prospective college graduates or graduate students to be groomed for the next generation of supply chain management leadership. Successful applicants will be highly motivated, possess a deep knowledge of best practices, and have graduated at or near the top of their class. Demonstration of leadership capabilities is preferred. Must be open to working in a dynamic culture in the United States and abroad.

P.S. Must love coffee.

Since the summer of 2008, Peter D. Gibbons has been focused on transforming Starbucks Coffee Co.'s once-struggling supply chain into a successful enterprise that can stand the test of time.

Just two years later, the supply chain overhaul is largely complete. But Gibbons, the company's executive vice president of global supply chain operations, is not stopping there. He has already embarked on the next and perhaps most ambitious and crucial phase of his grand design: recruiting the best young people to run that supply chain after he and his peers are gone.

Throughout the fall, executives at Seattle-based Starbucks have been fanning out across six schools—the names of which Gibbons declined to identify—to interview undergraduates and graduate students with backgrounds in logistics, engineering, and operations research. From this process will come a select group of young talent who, starting in July 2011 and continuing for an undetermined number of years, will be hired and groomed to head Starbucks' supply chain for perhaps as long as the next two decades.

During the past two years, Gibbons has imported professionals from the outside to support his re-engineering efforts. "Now, we want to grow our own talent to support the growth of our business, in North America and globally, and to support normal staff turnover," he says. "Creating a strong pipeline at all levels is part of our core mission to improve service, lower cost, and develop talent."

Looking for a few good men (and women)
The initiative centers on attracting top-flight undergraduate and graduate students—many of whom are already familiar with best practices—to execute on processes already in place and to leverage key learnings of their own, according to Gibbons.

During the past year, Starbucks has developed programs covering 30 supply chain capabilities, as well as training manuals for new hires, Gibbons says. "The point is to ensure that development plans cover skill-building and development for each individual," he explains.

He adds that the company is testing a supply chain training system that will "provide the bulk of our technical training and will add formal coaching and mentoring to round the process out."

Gibbons declined to specify how many recruits will come on board each year. The initial phase will be aimed at building out the U.S. organization, followed by a similar staffing process for the company's international operations, he says.

After that, Starbucks will focus on creating an internship program with an eye toward recruiting underclassmen interested in a career with the company. In some cases, Starbucks may not have to look beyond its own counters; Gibbons says there could be students working part-time as "baristas"—Starbucks lingo for servers—who would be good fits for the program because they are already inside the culture.

In what Gibbons calls a "dry run" for the overall program, Starbucks earlier this year hired two engineering graduates from Purdue University, one of the nation's leading engineering schools. The vetting experience produced mixed results, according to Gibbons. Recruits thought Starbucks told a compelling story, he says. However, "people were not aware that we are a supply chain organization," he admits.

The company will only consider the top 10 percent of the graduating class of the schools it partners with, according to Shawn Simmons, Starbucks' vice president, partner resources for supply chain operations. The ideal candidates will have exposure to Fortune 500 organizations either through prior work experience or through internships, Simmons says. In addition, they must demonstrate prior leadership experience, and be willing to rotate between domestic and international positions, he adds.

If successful, the strategy will yield multiple benefits, according to Gibbons and his team. It will brand Starbucks as a bona fide logistics organization both within academia and industry. It will ensure a seamless human resource transition over time as the old guard nears retirement. And the company will reap the intellectual windfall of advanced ideas and concepts that graduates take out of school and into the workplace. Gibbons says Starbucks expects to learn as much from its new hires as they will learn from the company.

Playing catchup
The recruiting initiative, which Gibbons says absorbs about 40 percent of his time these days, is the last piece of a puzzle that began forming in July 2008, when the 48-year-old Scotsman was promoted after one year at Starbucks to head up its worldwide supply chain.

What he found wasn't encouraging. Years of extraordinary expansion had put growth in the driver's seat, with the supply chain essentially coming along for the ride. And it wasn't a particularly helpful passenger—it was constantly behind the curve, struggling just to meet the burgeoning demands of Starbucks' stores. Before Gibbons took the reins, costs had risen faster than sales for three years running.

There were no metrics to measure service performance, and when Gibbons instituted measurement criteria in 2008, he discovered that less than half of all store orders in the United States and Canada were delivered on time.

"All we were trying to do was keep up," says Dale Perrott, the company's vice president of global supply chain development. Perrott, who in six years at Starbucks' supply chain division has borne witness to its incredible growth arc, says the company was too busy building its brand, opening stores (sometimes as many as eight a day), and satisfying a rapidly expanding customer base to give its supply chain the attention it deserved. "There was no focus on getting us aligned with how a supply chain would operate," he says.

Under Gibbons, that changed. Through a near total revamp of Starbucks' supply chain, the company has realized significant improvements. (To read more about the company's supply chain overhaul, look for a companion story in the Quarter 4 edition of CSCMP's Supply Chain Quarterly.) Today, on-time delivery performance to Starbucks' 16,500 worldwide stores—70,000 weekly deliveries in all—is close to 90 percent and getting better, Gibbons says.

With internal processes firmly in place and performance improving, Gibbons feels he can now shift his focus from the short-term fix to the longer-term strategic initiative.

Gibbons admits that Starbucks—which turns 40 next year—is "starting from scratch" with its recruitment program, and professes a sense of urgency to complete the task ahead of him.

"Our business is growing, the competition for top supply chain talent is intense, and our entry into campus recruiting has come later than many other supply chains seeking similar talent," Gibbons says. He adds, "we have to do this fast. It's not been done at our company before, and we're getting one shot at it."

—with James A. Cooke

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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