Starbucks Advances 24-Hour Inventory Turnover, Aiming for 'Never Out of Stock'
During its July 29 earnings call, Starbucks disclosed that it is testing a 24-hour operating model and expanding daily deliveries, with the goal of building a pull-based supply chain that completes inventory replenishment within 24 hours to ensure 'never out of stock.' CEO Brian Niccol noted that this move will reduce back-of-house space and achieve 'right inventory, right place, right time.' Previously, Starbucks abandoned a computer vision inventory counting system due to employee feedback calling it 'unreliable,' and has already cut 30% of its SKUs to simplify the menu.
Quick Overview:
- Starbucks is testing a 24-hour operating model while expanding daily delivery scale to improve supply chain speed, availability, and reliability. Information comes from the July 29earnings call transcript。
- With this 24-hour system, the coffee company aims to build a platform that creates a "pull effect" in the supply chain and completes inventory replenishment within 24 hours, ensuring "never out of stock," said CEO Brian Niccol.
- Niccol said the initiative is expected to reduce back-of-house space in stores and ensure Starbucks "has the right inventory in the right place at the right time."
Deep Dive:
Starbucks is testing new methods to optimize inventory management and build a more efficient, modern supply chain. Niccol said new technologies, including inventory ordering systems, will be key components of the fiscal 2027 strategy.
The coffee company's latest move comes after itdeployed an AI-driven toollast year. The tool is designed to help employees better track in-store inventory, using computer vision and 3D spatial intelligence technology, aiming to partially automate inventory counting and plan to automate some replenishment orders later.
However, nine months later, Starbucks decided todiscontinue the computer vision inventory counting systembecause employees found it "unreliable." Instead, the coffee chain is seeking to adopt a unified process across all inventory counts to ensure accuracy.
Last year, the coffee chain alsocut its SKUs by 30%to simplify the menu. According to the company, reducing menu items (including some beverage options) also helps speed up the preparation of core menu products.