By Kevin Meyer
Starbucks CEO Howard Schultz is one of those guys you like, even if you sometimes you may not agree with him completely. A few months ago I saw him speak at the World Business Forum in New York City, my notes here, where he expounded on the importance of authenticity in leadership and focusing on value from the perspective of the customer – concepts those of us in the lean world can related to.
He has another passion: taking control of your destiny instead of waiting for others to do it for you. As The New York Times put it last week:
Mr. Schultz, disgusted with the political standoff in Washington over raising the debt ceiling, called on business leaders to stop making donations to politicians and start doing something themselves to address the country’s woes.
Schultz's comments weren't just words.
Last month, Starbucks announced it would build a factory in Augusta, Ga., that would employ 140 people and make the company’s Via instant coffee and the ingredients for its popular Frappuccino drinks. About half of Starbucks’s new employment overall will come in the United States, the rest internationally.
“We are on the hunt for other domestic opportunities for products we sell and other things we do,” said Howard D. Schultz, chief executive of Starbucks. “There has to be a sense of urgency about action, and since we’re not likely to find it in Washington between now and the election, it’s time for companies and businesses to step up and find a balance between profitability and responsibility.”
There is some operational logic behind the decision – it's not purely altruistic.
Chinese labor has become more expensive, and Starbucks and other companies are looking at their supply chains more holistically. A Chinese supplier is also likely to require an order in the hundreds of thousands, increasing the risk that Starbucks will get stuck with inventory. And then there is the difference in shipping costs.
Schultz's comments also resonated with a supplier to Starbucks.
American Mug and Stein Company, was on the verge of closing last fall. Then Ulrich Honighausen called. Mr. Honighausen, the owner of a tableware company, Hausenware, in Sonoma County, Calif., which supplies retailers like Crate & Barrel, Pottery Barn and Fred Meyer with ceramics and glassware from producers all over the world, had a plan to revitalize American Mug and create jobs in an industry that had all but died. What if American Mug were to make mugs for Starbucks?
He [Mr. Honighausen] found American Mug last fall after having heard an interview with Mr. Schultz. “It was a good kick in the pants for me,” Mr. Honighausen said. “I thought, ‘Let’s just do it.’ ” American Mug can deliver to Starbucks in four days, while Chinese suppliers may take three months.
And thus a few more jobs were saved, and a small amount of manufacturing competency retained – in a low technology and high labor content industry no less. If it makes sense for Starbucks and American Mug, imagine how it could be for a higher technology area.
What can you do with your own supply chains? How can you directly, even in a small way, help revitalize domestic manufacturing?