Transforming Supply Chain Management: Starbucks and Z Studio’s Success Story
for Starbucks (2023)
Problem
The absence of inventory projections in Starbucks stores presented a notable challenge. Without accurate projections, Starbucks faced difficulties in managing its supply chain and ensuring that each store is well-stocked with the right ingredients and products.
There was a risk of overstocking perishable items, resulting in avoidable waste and financial strain. Conversely, understocking could lead to frustrating stockouts, potentially turning loyal customers away.
Starting with small steps
In one Starbucks store, nestled in a bustling city, a game-changing decision was made. Faced with inventory management challenges, Starbucks implemented an advanced inventory projection model and automatized the workflow end to end, from data ingestion to output delivery. The objective was to transform the customer experience, ensuring consistent availability of favorite beverages, enhancing efficiency, and empowering baristas. This was the beginning of something bigger.
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The goal
Starbucks wanted to implement an advanced inventory projection model for six stores within one country. Their vision went beyond these initial locations; they aimed to refine and scale this model across 153 stores.
Once models were deployed they would be analyzed to determine how much was saved on waste costs.
The result
Model Metrics: A remarkable R-squared (R2) value of 0.77, based on bi-weekly iterations for 3 months to fine-tune the model to meet the dynamic demands of the retail environment.
Cost Reduction: Based on careful analysis of 6 stores, the savings added up to 1%. That’s $30k in dollar value. Once expanded to its 153 stores, the results where substantial, saving nearly USD $1 million in waste costs, alongside enhanced inventory management and an elevated customer experience.
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