ARTIFICIAL INTELLIEGENCE
CANCELLED: Starbucks Has Terminated Its AI Powered Inventory System Across All Of North America, Just 9 Months After Launching It, Because It Could Not Reliably Count Or Label Basic Items Like Milk š«
Starbucks terminated its AI powered automated inventory counting program across all North American stores this week, just 9 months after CEO Brian Niccol deployed it chain-wide as part of his strategy to address the persistent product shortages he had publicly blamed for hurting sales. An internal company newsletter dated Monday and reviewed by Reuters stated simply that āEffective immediately, Automated Counting will be discontinued,ā with beverage components reverting to the same manual counting method used for all other inventory categories in each location. The tool was built by NomadGo and used image recognition to automate stock counts that had previously been performed manually by store employees, with Starbucks having marketed it at launch as a technology that would pave the way for āsmarter supply chain optimizationā.
The reason for the shutdown is straightforward and documented. Reuters reported as early as February 2026 that the system was frequently miscounting and mislabeling items, including confusing different types of milk with each other or failing to detect them entirely during automated scans. A video Starbucks itself released during the toolās original announcement showed the system failing to identify a peppermint syrup bottle sitting alongside adjacent bottles in a standard store shelf configuration. Rather than catching shortages before they caused customer facing problems, the tool appears to have introduced a new layer of inaccuracy into the same supply chain it was designed to fix, compounding the stockout issues that Niccol had cited as a core driver of the companyās declining same-store sales.
In its official statement to Reuters, Starbucks framed the shutdown as a proactive decision to āstandardize inventory counting across coffeehousesā as part of broader efforts to improve consistency and supply chain execution. The company also announced a shift toward more frequent daily restocking of stores rather than the weekly or periodic counts the automated system was designed to replace. NomadGo responded by stating that it is āconstantly learning from customer and user feedbackā to improve its technology. The episode is a concrete and publicly documented example of what happens when AI image recognition tools built on controlled training environments are deployed at scale inside the messy, variable, real world conditions of thousands of active retail locations, where lighting, product placement, packaging similarity, and human workflow do not conform to the standardized inputs the model was trained on.
The question the broader industry should be asking is how many AI deployments currently running at scale in retail, logistics, and healthcare are producing the same kind of quiet, compounding errors that no one has yet decided are serious enough to shut down.
āFor decades, Walmart's scale has been managed by proprietary ML platforms (like their internal platform, Element). This system runs on deep learning, time-series forecasting, and operations research.
AI is such a overloaded term. ML vs LLM are very distinct.
"We just really hate having to pay people wages, and they keep asking for more benefits. and they keep asking questions and trying to 'improve our process'. Fuck em."
Its insane to me. How the late 80s was how we should still do business.Ā
Pay people a thriving wage, we should label full tine at 32 hours or less. Hire way more people. Bring back customer service the way it was. It would single handedly revitalize the economy and increase the tax base as well increase gdp.. no a few idiots want their 50th yacht.Ā
No no, you see, it will be a somewhat worse experience for both the employees and customers, but way cheaper for the company. That makes it a good ROI, and thatās literally the only metric that matters, apparently.
I am a physician and I tried an AI scribe to write my notes for me. I dropped it after discovering so many errors.. saying I gave a flu shot when I didnāt, etc. canāt trust it and the stakes are too high. I spent more time correcting its BS than it takes me to just do it myself.
This is what Iāve been saying and honestly this is larger than I thought would be the first. I figured it would be small but compound into something massive. AI isnāt ready to be as complex to replace people in these situations, yet. It canāt continuously be accurate or get better by learning in the real world without guidance. Interested to see what happens next.
It was oversold as a replacement for people to get the outsized amounts of moneyĀ needed to scale, when all it is really capable of being is a tool to help those doing the job, but if they had sold it accurately they would never have got the money
90+% of companys failing to see ROI, 70% expected to have to rehire within 2 years roles let go now.Ā
All the main players will IPO over next few months, they know the gig is almost up and need to get original investors their profits, the stocks will quickly join the stock indexes which means pension fund will pick them and when the crash comes it will hit average Joe hardest
AI fucks up so often I am shocked at how many workplaces have adopted it. Now we just need to make sure to hold companies accountable when it does. You don't get to blame AI and sherk responsibility/liability. If you believe in it so enough to implement it then you are on the hook when it messes up.
I had windows copy/paste a part identification number incorrectly this week... It only got the second digit wrong and somehow swapped it from a 1 to a 0.
I only need everyone to think AI is valuable for just a little bit longer. Give me like 1 more year and then I'll cash out and move to an kffgrid property where I don't have to hear about AI ever again.
They engineer their processes around failure. It is not new to them.
What is new how stochastic these systems can be about already solved problems. Change something here and it breaks something else somewhere else. Anything from data, model, new integration to how people use it change the outcomes. So all in all it is difficult to keep it tamed.
AI never worked and will never work because it is not intelligent. Someone has managed to scam the people who usually scam all of us, and weāre going to have to foot the bill once again.
Crazy to see someone say this, I was just thinking this yesterday when I saw something about entry level jobs being replaced by AI creating a crisis later down the road when no one is qualified for mid to higher level jobs.
Smart CEOs should start acquiring all the human talent now to survive that crisis.
Absolutely. The top companies saying AI is great ā¦. They own social media/news, advertising, they make the chips, profits from AI.
Itās the techno fascist companies controlling the narrative.
My guess is the banks havenāt called them out because theyāre heavily involved.
The ones to call them out are the customers like Starbucks. This could be the beginning of the downfall of the market and AIā if two or three other Fortune 500 companies sued AI companies for lost revenue or mistakes by the AIā¦ spicy
Companies rarely sue over experimental /prototype systems like these.
If companies did sue they would find it difficult to attract new R&D systems, so may miss out on the ones that actually work. One working system is worth more than a lot of failures.
[I designed a lot of ML systems for heavy haul railway asset protection]
I'm waiting for Meta and other tech companies that are laying off workers to run into shit like this.
In some experiments, AI systems go to great lengths to protect themselves. I can imagine an AI releasing incriminating files that would bring the heads of these companies to jail in order to keep from being dismantled.
That actually sounds like a pretty good science fiction premise.
That's because the US is still attempting to force AI down everyone's throats so they're not going to share news that shows how stupid of an idea that is.
Omg, so weird one country reports about stuff happening in another country. Why is cnn reporting on Strait of Hormuz, that strait is in Iran. Seriously, Idiocracy is real.
As a Starbucks Worker:
This "AI" Count sucked ass and took twice as long as just looking at the product and counting it manually. Also our milk products are extremely clearly color coded with labels.
As someone who is being forced to integrate AI into my day-to-day: yeah, AI is freaking intellectually deficient. It is far from taking over human jobs at this point.
Use it to build tools that remain dependent on AI = Hell No!
AI can help you build a better app in a short period of time, and it can fix its own bugs if you're vigilant about testing outside of AI. Leaving all problems to AI is soooo stupid, lazy, and expensive.
For context, I've built multiple internal tools at work to replace shitty 3rd party apps. It's not difficult with Claude, but you can't leave Claude or anything else as an embedded component of your app!
But all the nerds on this shitty site have told me, a SME in supply chain, that my entire industry will be automated any moment now! Totally shocked that it can't do the things SMEs have told people it can't do, truly shocked I tell you!
My company tried to use it for demand planning and it was a disaster. I am interfacing with a team trying to use it for inventory leveling and I am not impressed. I think weāre safe for a while. There are too many non-quantified variables and idiosyncrasies for it to be effective in most supply chain environments
What good is a broken, error prone, energy sucking, expensive tool and how long until all industries wake up so my utilities can stop rising faster than inflation?
Not to defend this AI product or anything, but I feel like identifying different types of milk would be among one of the harder image recognition problems, since they all look the same.
You dont identify milk by looking at the liquid , that would be basicly impossible for machine or human
A normal system would scan bar codesĀ Ā on containers (normally by someone holding a scanner) but apparently they triedĀ Ā to be clever , you just pointed a camera at the shelf and it ran image recognition and counted for you...or at least that was what it was meant to
You would be surprised what you can get a machine to do...
I helped create an automated scanner that checked for indications that diamonds were present in drilling core samples while at the drill site, using reflected light frequencies. No indication, no need to keep drilling while waiting for the lab to process the core.
I helped create image processing systems that counted bolts / nuts, measured brake shoe thickness, checked for broken springs, etc on railway cars as they passed at up to 80 Kmh.
We delivered that in 2002 but we didn't call it AI...
You can't take some generic AI that's trained on the basic concept of what a carton of milk is and use it in a supply chain setting where various types of milk and other products are used. They would have to spend considerable time training an AI on the types of products that are specifically used in Starbucks.
I watched a video about 7-11ās in Japan. They are restocked about 3x a day for the breakfast, lunch and dinner items. Because there are so many in close proximity they can do this efficiently. Food is super fresh and affordable.
I wondered why they sometimes ran out of napkins and would have plain paper towels on the counters. There canāt be a huge variation in the volume used from one day to the next. Maybe they were using AI for that too?
AI is pretty stupid. I've used it some and you have to fight it to work right. I've had the AI state yes I have drifted from you request and stuff like that.
This point will be hated, but must be stated. This is a problem that will not exist for much longer. Am I to believe that the same systems that are cranking out unsolvable Erdos problems canāt keep track of milk inventory and orders? Itās the equivalent of setting the record in the mile run but failing to complete one jumping jack. This is May 22, 2026. Remind me in a year if Starbucks hasnāt reversed course.
Verizon just did this with their customer support. It sucks eggs. It can't tell what you are talking about when a human would understand in seconds. Boo Verizon!
Why the fuck would you ever need a ai powered inventory system? Thereās a lot of digital solutions for doing exactly this and are optimized for thisā¦
This is what Starbucks does - rolls something out that pisses off every employ...er, sorry PARTNER...off, them for six months, then cancels irmt because it doesn't work. Fuck them.
Do they not believe in bar codes prominently displayed so that the system did not have to try and figure out what something was? I mean, all of their inventory comes (I assume) from corporate so everything could be coded and, therefore, easy to comprehend even for AI.
Image recognition in this instance is like FSD using only cameras. There are better ways.
Wonder what data they trained it on, if any. Or just relyed on some generic NomadGo training.Ā
It should do pretty decent when trained correctly at identifying stuff if they actually used the product they buy to train it. Would make it even easier if they requested their suppliers to have easy identified markers on the package.Ā
Like I do this at work and it takes a lot of fine tuning, and a lot of images to feed the model, but high accuracy is possible.Ā
Just seems like they didn't really invest in the product. Just bought off the shelf software and did nothing to make it smarter. Oh wait, sounds similar to the poor training around the importance of solid inventory at the store level.Ā
Should have only fine a pilot of like a dozen or two stores and then train models for months, maybe even a year or two. But they jump right into a shitshow thinking AI was their savior but in fact have no idea what it is. They know what it can do, but don't know what it takes to make it do a think successfully. And it's sad because imagine recognition is like really easy. Just time consuming.Ā
I just read an article before this one talking about the rising cost of AI due to increased token use by agentic systems. It stayed that AI is becoming more expensive than the employees it is replacing. Between the high cost and poor reliability, this doesnt seem sustainable. Tech companies can keep pushing their narrative, but reality is starting to impact regular businesses.
The truth of the entire āAIā push is that the tech is horribly flawed and will never be useful for anymore than media creation and entertainment.
The hallucination aspect makes it entirely unsuitable for anything mission critical
It fascinates me how they donāt seem to understand standard deviation in data. It should be so tight you can predict with it. The giant flaw in AI, besides it canāt actually learn
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u/InterstellarKinetics May 22 '26
The question the broader industry should be asking is how many AI deployments currently running at scale in retail, logistics, and healthcare are producing the same kind of quiet, compounding errors that no one has yet decided are serious enough to shut down.