Inventory improvements:
Starbucks is partnering with NomadGo to innovate its supply chain management, announcing the implementation of “AI-powered automated counting.” Through a combination of “computer vision, 3D spatial intelligence and augmented reality,” Starbucks will reduce the time spent on inventory management while ensuring that all ingredients are always in stock so no sales are missed. Though we’re a bit surprised learn such a system wasn’t already in place, it’s low-hanging fruit in CEO Brian Niccol’s turnaround. We know he’s made technology improvements a focus by bringing order sequencing to the mobile app. Now this seems to be a back of the house tech improvement that, if it works well, could deliver benefits to operations and the financials. This news comes roughly two weeks after we learned that the company will reduce U.S. production to five days a week from a 24/7 operation. The combination of the two moves should help Starbucks realize a more efficient supply chain, leading to lower costs (and in turn margin expansion), without negatively impacting the customer experience. Today’s news may well be why Starbucks is confident that it can throttle down production days without risking missed sales due to lacking inventory.
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