Starbucks grinds out savings

28 January 2010

28 January 2010 | Jake Kanter

The procurement team at coffee company Starbucks is on course to smash its 2010 savings target of $204 million (£126 million), a senior buyer has revealed.

The department has already saved $135 million (£83 million) in the US coffee giant’s first quarter (which began in October), making up more than a fifth of the company’s overall 2010 savings target of around $520 million (£320 million).

Procurement also met its 2009 cost reduction aim of $153 million (£94 million).

The cutbacks were this month credited with helping Starbucks to more than triple profits to $241.5 million (£148.8 million), compared with $64.3 million (£39.6 million) a year earlier.

John Fogerty, director of purchasing for stores and IT, said Starbucks has held a number of rounds of tough negotiations with the company’s top 200 suppliers, driving prices down to market rates.

“Vendors were making so much money out of us in the past that it was something of a rude awakening,” he told SM. “We were more on the offensive by thinking about our game, rather than being in the middle of a scrum and seeing what came out of it.”

* Read more about Starbucks’ savings efforts in the 4 February issue of SM.

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