AI is not (yet) almighty: Starbucks returns to manual inventory

Nine months after its rollout in North American Starbucks stores, the AI-powered automated inventory tool has been abruptly halted. The reason? Frequent counting and labeling errors.

© NIELS KEHL  / UNSPLASH

Back to the old ways. "Effective today, automated counting will be discontinued," reads an internal Starbucks memo dated Monday, which Reuters reviewed and authenticated. This tool was part of CEO Brian Niccol's efforts to address the coffee chain's persistent shortages, which were blamed for declining sales.

Based on artificial intelligence, the system provided by NomadGo was supposed to be faster and more accurate than manually counting certain products: baristas used a tablet which, thanks to the camera and LIDAR data, was supposed to locate syrups, milks and other drinks on the shelves.

But the application, designed to improve the visibility of stock shortages, actually made too many counting and labeling errors, for example confusing similar types of milk or simply omitting them.

The automated counting program had been extensively tested before its nationwide rollout. Starbucks employees described to Reuters a fragmented supply chain hampered by outdated systems.