The Tech Behind Green Mountain Coffee

Ed. Note: This is the second in Nate Herzog's series of posts about Vermont companies and their creative solutions to technical challenges.

I met with Jim Prevo, the CIO of Green Mountain Coffee Roasters, at his office in Waterbury. I explained my mission — when people think of Vermont businesses they frequently think of successful brands or products. Snowboards. Ice Cream. Coffee. Ski Resorts. But I knew that any large successful brand in 2008 can only be successful if they had a kickin' IT department working behind the brand. Jim smiled widely at that, so I tossed him a nice slow ball across the plate:

"What does IT have to do with making coffee?" I asked.

(Full discloser here: While I don't work for GMCR, I am an IT Director and very interested in anything technical that might be hiding behind these Green Mountains of ours. I'm also a big coffee snob. The first thing Jim offered me after I met him was a cup of coffee and I got to pick from a dozen Green Mountain flavors. So after sipping a cup of the espresso blend, I was in pretty good spirits. Call it bribing the writer if you want. I call it research.)

"To start with," Jim began, "well, I was going to start with the roasting process. Really, to talk about coffee, you have to start with the Green..."

To start with, you have to go back to 1993 when Jim started at GMCR. At that point GMCR had about 100 employees and 6 retail stores. They had one 11,000 square foot warehouse in Waterbury, one roaster, and a completely manual workflow for making coffee. They filled roasters by hand. They stacked and sorted bags of coffee by hand. To flavor the coffee, they mixed flavoring and coffee together in a 55 gallon stainless steel drum and rolled it around the parking lot.

Today, 15 years later, GMCR employs 1200 to 1300 people and their brand is everywhere. I can remember stories of people driving to Vermont to purchase Green Mountain Coffee from gas stations because they loved the quality of the coffee. Even the stuff sold at gas stations was good.

Starting with the Green, as Jim says, means starting with Fair Trade Coffee. Fair Trade means that the coffee growers are paid a fair price for their beans, sometimes substantially above market price. GMCR has also partnered with — according to their website — Coffee Kids, Heifer International and Grounds for Health to further invest in coffee farmers and their communities around the world. Helping the growers increases the quality of the coffee.

First the coffee is tasted through a process known as "cupping." A small shipment of coffee comes from the supplier to GMCR to be sampled. Through a glass window I watched a team of coffee tasters sample the beans that had arrived. They work much like wine tasters and are just as fussy about the standards of their product. Each bean is rated on a 100 point scale by two separate tasters. If the quality is off and if the tasters compare notes and their reviews don't match, that particular batch isn't ordered.

If you're envisioning a bunch of people in white lab coats with clipboards dumping a bag of beans in the trash, don't. This team is armed with laptops working with an inventory that's already being tracked digitally in a database. That means when a bean doesn't pass, and a particular batch isn't ordered, the whole system knows in multiple offices in multiple locations.

But it wasn't always that kind of operation. One of the first processes to be automated was the coffee roasting. Before roasting anything, each roaster is calibrated for a specific bean at a specific temperature for a specific time at a specific amount for a specific purpose. That's 100 different kinds of coffee. That's 30 million pounds of beans.

If you're thinking that's a lot of details for a coffee roaster to get consistently correct, you're right. So GMCR worked with a 3rd party to develop specialized software that first queries a database for the kind of coffee bean, then automatically calibrates the roaster to all the specific conditionsfor that bean.

This software looks like something out of science fiction-meets-heavy industry, where everything smells of coffee. A long line of monitors sits at chest height in an industrial area. Two smaller roasters turned on their sides look like oversized oil barrels. Two larger roasters that are bowl-shaped, hidden from view by beige panels, roast 880 pounds of coffee per batch. Giant steel slides and chutes transport coffee beans to the roasters from dispensers on the floor above.

The roasted coffee is bagged and tagged. Some goes directly to packaging. Some gets ground. Some gets flavored. Some gets ground and flavored. Workers scan the tag with a hand-held scanner. The system displays exactly where that particular bag of beans should go, and people move them accordingly.

Over the noise of the warehouse, Jim shouted that this was not a completely automated system. People still needed to be involved in the process, for two reasons. One, if the system gets stuck there's a person who can immediately remedy the situation faster than any sensor or automated robotic arm. Two, people can change processes and distribution flow faster than machines can. If the workflow needs to be tweaked for any reason, an automated system shepherded along by people can change much faster and cheaper.

In 1995, GMCR began creating its online inventory system. They took a shot at writing their own system, but after five months decided that it was a better use of time and money to purchase one instead. So, in 1996 they selected PeopleSoft for a database and purchased it in January of 1997. It took one year to get PeopleSoft online and working with the GMCR teams and systems. Data had to be entered. Functions of the database needed to be customized. But by June of 1997, GMCR became the first company to get the PeopleSoft manufacturing module online and running within their company.

(The humbling part of this was that in 1995, I had just graduated from college. Netscape had just released its first web browser the year before. There was very little web content to look at. Google wouldn't come along for another 3 years. While email existed, few of my friends used it. This is another way of saying that information technology was anything but pervasive in daily life.)

With the inventory and distribution in an online database, GMCR was able to start selling coffee using the web. The company created its first online web commerce server using the CompuServ Mall in 1996. By 1999, it was using a PeopleSoft web frontend to handle online transactions. It's safe to say that up in Vermont, GMCR was pioneering today's technological marketplace long before anyone really knew what the web was good for.

After guiding me past massive bags of beans loaded up on pallets, Jim took me down a stairway and paused on the landing between floors. Here we could look down at the packaging equipment. Directly below me were four huge machines responsible for packing the "K-Cup" — those tiny dixie cup sized cups of ground beans that you place inside of a Keurig Coffee brewer that make one brewed cup of coffee in about 30 seconds. Although I couldn't see them in action, it was easy enough to follow the flow: the coffee poured down a chute from above, was measured into a cup, sealed, sorted, and packed. This too had to be created. "Yeah," Jim admitted. "We played our part in designing this process too."

Between 2003 and 2004 GMCR had their automated warehouse running. Imagine a four-story warehouse space with massive floor-to-ceiling racks that look like giant bookshelves. Next imagine that each shelf of the bookshelf split into shipping-palette-sized sections. On each of these sections there is a digital counter. Now imagine a database that keeps track of which kinds of coffee, which bean, which kind of bag, in which box, lives on which shelf. When an order for a palette of a particular coffee is placed, somewhere in this warehouse the appropriate digital counter lights up. Then a warehouse worker grabs the correct palette with a forklift, delivers it to the shipping dock and resets the digital display.

But what happens when a customer only wants a box or a bag of coffee? This whole operation is replicated in a smaller scale in another part of the warehouse, except instead of palettes of boxes of coffee, there are bins of coffee in various sizes. Same deal. If a customer wants two boxes of K-cups in Hazelnut, a counter under the appropriate bin lights up and a warehouse worker grabs two boxes and shoots them down a conveyor belt towards shipping.

That system was created between 2003 and 2004. How'd they do it? Jim described the planning process as locking himself in a conference room with the developers, a subject matter expert and the warehouse manager for three months until the functional spec was hammered out. They considered every possible scenario, every kind of order, every possible glitch until a workable system was in place. After that, it was 4 months of 12 hours days living in the warehouse.

But Jim and his team got it working. And today, GMCR is generating between $500 and $600 million in revenue annually — in part because of its technical systems, which give GMCR the ability to track processes and inventory so accurately. The company has come a long, long way from rolling flavored coffee in bags around and around the parking lot.

This is an awful lot to think about when making the morning pot of coffee. Then again, none of us have to think about it, because the folks at GMCR already have.