Category Archives: Miscellaneous

Even Starbucks has to Benchmark

Considering it’s benches are always full of hipsters sipping their half-caf low-fat moccachinos, you might think that Starbucks would have no need for benchmarking, as many of its benches already have permanent rear-shaped impressions from long-time customers. But that’s not the case at all.

In a great case study in DC Velocity on the Starbucks Supply Chain, we find out that, as of 2008, costs had risen faster than sales for three years running (since you can’t grow fast in a market that’s already near the saturation point), there were no metrics to measure service performance and, once measurement criteria were instituted, less than half of all store orders in the United States and Canada were delivered on time.

However, once the company started benchmarking and focussed on revamping the supply chain to improve its performance, in a mere two years, Starbucks was able to increase on-time performance to almost 90% and results are still improving. So if you want to improve your supply chain, it starts with a good benchmark.

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Seven Supply Chain Commandments? I Think One Commandment Is Enough!

SupplyManagement.com recently posted an article on “Command and Supply” which stated that if you apply the seven supply chain commandments to your procurement practice — and ensure its daily execution is faultless — you will achieve superior performance. While I don’t disagree, I think the commandments can be simplified and amalgamated. In fact, I think they can be reduced to one!

But first, the commandments:

  • Articulate a clear value-creation algorithm
  • Approach the supply chain as a comprehensive value delivery system
  • Segment the supply chain and consistently adapt it to the characteristics of each segment
  • Optimize the global operations architecture for scale, access, flexibility and risk mitigation
  • Selectively invest for mastery in differentiating capability areas
  • Deploy information systems that deliver insightful analytics, alignment and responsiveness
  • Drive process execution discipline with the right talent, powered by a culture that enables high performance

They’re all good. But I think this one commandment covers it:

Focus on Value

If you do, you

  • will create a value creation algorithm,
  • focus on the creation of a value delivery system,
  • segment the supply chain into segments which require different approaches for value creation,
  • optimize for scale, flexibility, and risk mitigation,
  • invest for mastery where the returns are greatest,
  • will acquire systems that provide real analytics, and
  • drive for continual improvement in process execution.

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