By Lt. Cmdr. Michael Dausen, SC, USN
The water is just off the boil and is being poured into the tasting cup full of freshly ground coffee. I’m in the cupping room at the 6,000-partner Starbucks Support Center (SSC). Coffee has always been at Starbucks’ core and within easy reach of the leaders. Each employee is called a “partner,” receiving “Bean Stock” or shares in the company, making them real partners in the business. Also, the SSC is not a headquarters in the normal sense, but a focused set of caring partners who assist the front-line partners “in the field,” connecting with customers daily. Back at the SSC, coffee tastings start every meeting and bring the team together to focus on what is most important to Starbucks as described in the company’s mission statement: “To inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.”
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Supply team from the USS Nimitz (CVN 68) visits Starbucks. From left to right: CSSN Porter L. Williams, CS2 Cristina Pagan, SH2 Liza Pangborn, SH3 Keeric D. Amos, SH3 Priscilla Mendoza, Lt. Cmdr. Michael Dausen, Lt.jg Aaron G. Loya, SHSN Emani J. Lovett, CS2 Elissia Johnson, SH3 Azianna L. Sistrunk, CS2 Mariah N. Cecil, SHSN Kai M. Richardson, and SHCS Jorge A. Gutierrezherrera.
Back in the cupping room, the coffee grounds have fused with the water for the prescribed four minutes. I take a spoon and “break” the crust of grounds floating atop and let them settle to the bottom so that I may smell, and then slurp. As with wine tasting, one must first smell, then aerate when slurping, to ensure the coffee aspirates the mouth for the best possible tasting. It is a wonderful immersion into the culture of the company. Yet it brings me back to the ship and watch on a cold, pitching deck with nothing but a cup of Joe and my zeal for God and country to keep me going.
There is a sea of change at Starbucks. The founder, Howard Schultz, retired in June and the company is shifting from founder-led to founder-inspired. The retail climate is in flux at Starbucks as well, as sales are slowing and the company must adapt. There is so much passion in the culture, it is almost addicting. How does a publicly traded company care so much and still run a profitable business? It is part of their mantra of being a “performance driven company through the lens of humanity.” Starbucks gives back to the community in so many ways -- through financial grants and various hiring initiatives. This giving is balanced with focusing more on objective, data-driven decision-making, which ensures and sustains future growth and success, and therefore the continuation of the company’s generous direction. The coffee as core is merely a means to an end, connecting to the customer—to inspire and nurture the human spirit.
The realities of business and changing consumer behavior are driving the new CEO, Kevin Johnson, and the SSC, to take a close look at processes and the organization for the better. A recent SSC internal review and restructuring gave Starbucks the opportunity to reshape the company by focusing on innovation relevant to the customer and their own baristas. One might look at the Navy and her 243 years of experience for comparison. There are certainly some lessons to be learned at Starbucks, yet the mission and structure is different. Starbucks is a corporate socially responsible (CSR) focused company, however it must still report to its shareholders and overall profit is a goal. The U.S. Navy understands its fiduciary responsibilities, yet our mission requires us to be “ready for sea” beyond cost or profit.
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Lt. Cmdr. Dausen, with Starbucks employees Cameron Bartok and Pedro Rotta, in the cupping room. –photo by Alisa Carroll
Starbucks must stay aligned with its customers and listen and adapt. An overall goal is efficiency, especially regarding innovation and new product launches. This will be done through reshaping to remove isolation within the functions, as well as sharpening the decision-making processes. I believe these distinct functions have worked for Starbucks and the corporate environment, but not for the battle rhythm of the military. Starbucks is maturing its supply chain, working on the bottom line, and thereby pinpointing end-to-end visibility through new cross-functional, regional teams.
The Global Supply Chain (GSC), where I reside, is on the forefront of Starbucks maturation. Passion must continue, yet within the guidelines of objective direction. Hans Melotte, the executive vice president for GSC, mentioned in a quarterly town hall that the days of artisan supply chain are over—essentially transitioning from manual spreadsheets to digital coding and automation. My projects are within the GSC’s Strategy & Deployment branch. This branch focuses on strategic projects driving optimization, including creating a digitized supply chain, aligning resources against priorities, and building capabilities through long-term capacity planning and supply chain intelligence, including the Advanced Analytics team, where I sit.
The ability to take advantage of big data requires a new set of skills and capabilities. Three areas in which Starbucks is leveraging these capabilities are:
- Network Optimization (NO) – Selection of the optimal supplier and flow path of products to the end customer that minimizes cost
- AI & Machine Learning – Prediction of future customer demand to ship products to stores without partner (employee) intervention
- Metrics & Reporting – Real-time tracking of the health of the supply chain to rapidly respond to critical business issues and inform longer term strategy
Starbucks is a top 10 supply chain, and it did not earn that in a vacuum. The Other Supply Officer (OSO) transfer support continues beyond Supply Officer days, as Lt. Cmdr. Marcus Thomas, The Home Depot (THD) Training With Industry (TWI) fellow, and I connected THD and Starbucks for future sharing. Starbucks also uses consultants and professional research companies to conduct research and benchmarking across similar companies. Apparently, my Supplier Inbound Network Optimization project is the first of its kind across the industry and other companies are intrigued.
My project is a premiere Global Supply Chain (GSC) program as it crosses the functions of sourcing, transportation, and planning to ensure a wholistically optimized network for most affordable total landed cost of products. We are optimizing the network across manufacturers and suppliers delivering products into the Starbucks distribution centers. This requires alignment and buy-in from partners who are focused on their own specific tasks or savings goals.
Fortunately, I still get to connect with the Navy through tours to the SSC. My first visitors came from the USS Nimitz (CVN 68) supply team. A few Culinary Specialists (CSs) and Ship’s Serviceman (SHs) came to learn more about coffee and left with greater knowledge as well as a broader understanding of a civilian company. They were eager to get back to the ship and share with their shipmates.
I am blessed to have this TWI opportunity and my wife, Abbie, supporting my Navy career. I am also excited to share my experience and what I’ve learned with the fleet. I understand the civilian world is one we must all eventually return to, as my late mentor, Capt. Bill Dawson mentioned upon his departure from the service about us always being citizens and merely Sailors serving for a time. Yet I look forward to continuing to wear my uniform for the foreseeable future.
But first, back to sniffing and slurping with my current partners and reminiscing of my big deck days at our own Navy “Big Sip” Starbucks.