It takes a lot of steps to make an Iced Caramel Macchiato.
Starbucks thinks it can do a better job.
Making a Macchiato
For an Iced Caramel Macchiato you need espresso, caramel, milk, vanilla syrup, ice, a blender, a cup. Next, a barista’s steps include going to the hot bar for the coffee, getting the milk from the refrigerator, scooping the ice from the ice container. using the blender at the cold bar and rinsing it in the sink,
And this is just the labor. In addition, the equipment and layout are dated.
It reminds me of Henry Ford.
Making a Model-T
At the beginning of the 20th century, in one place, teams of workers gradually assembled a car. At that time, the chassis took 12 hours to finish while magneto production required 15 minutes and 29 workers. (A magneto helped to start the ignition.)
Hoping to expedite the process, they experimented with conveyor belts that streamed parts to the worker. As a result, using 14 workers doing repetitive tasks, magneto assembly time plunged to five minutes. Then, with efficiency rippling further, chassis production time dropped from 12 hours to 2.3. As for the cars, output soared from 68,773 in 1912 to 170,211 the next year and 735,020 in 1917.
Our Bottom Line: Productivity
Whether looking at an early 20th century factory or a contemporary Starbucks cafe, the issues are the same. Starbucks and Henry Ford had the incentive to boost their total factor productivity (TFP). Explained below, TFP is all about getting more output from your land, labor, and capital inputs.