2024 GLOBAL SRM RESEARCH REPORT
INTERVIEW: STARBUCKS - MEASURING OUT VALUE
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“Ongoing supplier management is the mechanism for retaining contracted value.”
Cultivating a global mindset As Starbucks expands to Honduras and Ecuador, the company will be present in 88 markets around the world. Delivering on Starbucks mission to be a truly global company demands a global approach to supplier management. “For our key suppliers, which is our top-tier classification, we engage technology executives and global counterparts to align on relationship priorities that make up a global technology footprint,” says Derickson. “Various teams are responsible for identifying and planning global technology capabilities which can add to the list of contractual considerations.” Sourcing and Supplier Management are working further out on contract renewals to optimise terms based on Starbucks full buying power. This has resulted in cost savings, especially for the smaller regional entities, driven by volume or internal benchmark insights.
The team draws from multiple places to set the agenda: C-suite messaging, key business initiatives, introduction of new leaders, Voice of the Supplier survey feedback, and the Starbucks mission and values. “We want our suppliers to feel informed and connected to our priorities, inspired to help us solve for the future, and take back to their companies that Starbucks is a customer of choice that they should prioritise and invest in,’’ says Derickson. Hearing from Starbucks CTO, Deb Hall Lefevre, helps Starbucks suppliers to connect their solutions to business outcomes, she says. “When the Triple Shot Reinvention strategy was developed, our CTO and her leaders refreshed technology’s strategic imperatives and shared them at SuRF. Aligning a supplier’s solution to an imperative – such as the ‘Tech Enabled Partner Experience’ – highlights the importance of the supplier’s performance and business continuity for the 235,000 Starbucks partners in stores across the US who rely on a great technology experience every day.”
Cultivating partnerships with strategic suppliers is a multi-org effort, where business objectives and technology roadmaps come together as a unified voice to suppliers. At SuRF, technology leaders host their business counterparts on stage. “It’s important that our suppliers see the alignment amongst functional business and technology leaders. On stage interviews showcase business opportunities and challenges that can be solved through AI and automation and end up spurring opportunities for innovation.” These are the types of conversations suppliers are interested in, she says, and Starbucks benefits from it in the way of supplier engagement and offerings to resource proof of concepts. Given the pace of technology change, Derickson and her team view SuRF as an opportunity for human connection. “Throughout the year, it seems everyone is heads- down in full execution mode,” she says. “SuRF is our one time to collectively lift-up, reconnect, and align to the bigger picture.”
Return on relationship governance A fully executed governance framework continues to deliver on retaining contract value. “So much work goes into establishing the contract that it’s incumbent upon us to ensure we have the right focus from the beginning on metrics tracking, changes, quality issues, overconsumption, and lack of continuous improvement and innovation,” says Derickson. Consistent meeting practices and transparent information allow for joint accountability. Measuring and tracking performance to date has been Excel driven and the supplier management team is looking at how to progress this work. “With the support of digital tools, we scale the practice and go beyond the top tier suppliers,” says Derickson. “Customers do not care what supplier caused a negative technology experience; they view it all as Starbucks, so it is critical for us to have the necessary holistic insights to supplier health and performance.” Return on investment is measured in both value terms as well as in risk mitigation
Share the culture, smell the coffee It was a typical January evening in Seattle, 45 degrees Fahrenheit with a little rain, but inside the Starbucks Support Center the technology organisation was kicking off its seventh annual Supplier Relationship Forum (‘SuRF’). Guests were gathered around a coffee roaster and everyone was attentively listening as the master roaster talked through the roasting of beans from Indonesia. He was sharing his craft and taking them through the roasting process; the heat, the change in colour, the first pop when the bean releases moisture, and then the second and final pop when the perfectly roasted beans are released into the cooling hopper. At that point, the smell of Sulawesi Toraja filled the air. This was the coffee they would enjoy at SuRF, and this moment was designed to help guests and partners connect through the sharing of Starbucks culture.
Illustration from Starbucks
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