1. Supply Chain of Harris Teeter

2. 25 th largest food retailer in US HQ in Matthews, NC Owned by Ruddick Company - comprises 90% of parent’s total revenues

3. History Result of merger between Harris Super Markets (started by WT Harris in 1936) and Teeter Food Mart (started by Willis and Paul Teeter in 1939) in 1960 Joined forces to pool resources in purchasing and storage By 1963 had 25 stores in operation Bought by Ruddick in 1969

4. History Ruddick purchased Food World (Greensboro) in 1984 –Merged 52 store chain with Harris Teeter –Acquired a DC in purchase –Acquisition increased Harris Teeter’s operations to four states and made it the largest food chain in the Carolinas

5. History Ruddick purchased Big Star in 1988 –52 supermarkets –Warehouse acquired in deal Ruddick purchased Borden dairy in 1990 –Combined with Hunter Dairy to increase production Purchase/sale of various supermarket locations –Purchased stores from Bruno’s Supermarkets(1993) –Purchased A&P stores in Atlanta –Store swap with Kroger along with sales to Kroger, Bi-Lo, and Piggly Wiggly –First store in Washington DC opened in 2006

6. Stores Average size 42,000 square feet Seeks to appeal to customers that want upscale shopping experience Stocks about 35,000 SKUs

7. Manufacturing Hunter Farms Dairy –90,500 sq/ft dairy processing in High Point –Supplies grocery stores with ice cream, milk, and other dairy products –Also supplies Wendy’s and McDonalds

8. Distribution 2 corporate-owned distribution facilities –517,000 sq/ft in Indian Trail –913,000 sq/ft in Greensboro –Both contain dry and refrigerated storage –Greensboro has frozen goods storage

9. The Produce Industry Produce typically purchased by supermarket buyers through: –Grower/shippers –Produce wholesalers –General-line grocery wholesalers –Brokers –Importers

10. Industry Purchase Trends

11. Why? Buyers moving from traditional daily spot sales in favor of contractual agreements with the grower/shipper Opportunistic buying and selling is not part of long-term mission. Larger multinational companies aggressive in adopting supply-chain management practices where objective is positive long-term results

12. Benefits of cooperation through contracts To Buyers –Facilitates ad planning, sales, planting, harvesting, and packing decisions –Greater price certainty –Ensures buyers a source of produce, particularly during difficult supply conditions To Sellers –Facilitates ad planning, sales, planting, harvesting, and packing decisions –Ensures sellers an outlet

13. Challenge to cooperation through contracts: Design of contract –Usually allow for natural disasters,crop failures, and “acts of God”

14. Lead Times Don’t forget it is perishable! Produce distribution system has always had a “just-in-time” approach In fact, retailers report little or no change in cycle times for produce orders and deliveries in the last 10 years. –Order cycle time: the time between when order placement occurs and when the order arrives at the retailers’ warehouse –For most items 4 days –Promotional items 8 days

15. But there is a difference….. Difference: way orders are communicated and handled. -Retail orders placed for more frequent but smaller quantities. -Since inventories decreased in DCs and in stores, retailers often need “instant shipping” to fill in shortages.

16. But there is a difference….. Retailers making more last-minute adjustments, therefore some shippers now carry extra inventory “just-in-case” –However, shippers say sales and production easier to forecast than before, reducing risk of spoilage. In response, suppliers moving their DCs closer to their US markets.

17. Transportation Retailers arrange Accounts for about 17% of total produce costs. Trending towards full loads from suppliers and away from mixed loads

18. On-time Delivery

19. Back to Harris Teeter… Suppliers deliver to the Harris Teeter DCs Harris Teeter delivers to the individual stores, 80% of which are in NC This arrangement allows quick response This used by 34% of grocers

20. Supply Chain Members Suppliers – wholesale or local farmers Carriers – either own fleet or broker out The retail store

21. Supply Chain Suppliers deliver to the Harris Teeter DCs Harris Teeter delivers to the individual stores, 80% of which are in NC This arrangement allows quick response This used by 34% of grocers

22. Supply Chain Least expensive transportation is to arrange for supplier to send out full truckloads and deliver to Harris Teeter DCs. Negative: some of HT suppliers are smaller so send LTL and more trucks at dock.

23. Harris Teeter Supply Chain Strategies With smaller suppliers, HT sends out order and tells suppliers to send over ready-to ship info a day or two before shipment occurs. Small supplier will consolidate shipments so that it is full truck Once shipment tendered, shipper, carrier, and retailer can establish pickup and delivery appointments by logging into network (Arthur Wells Group/Nistevo)

24. Produce Suppliers Washington Fruit and Produce Co.- apples, pears Sunkist citrus growers – lemons, oranges packed in 40 lb cartons (trucks or rail cars) Farm Pak Products – NC sweet potato grower. Shipped within 24 hours of packing to maintain freshness 24 months. Exports outside US

25. What about ‘out of season’ produce? Giumarra Vineyards – California wholesaler –Supply twelve-month basis CA, Chile, Mexico, Argentina

26. Giumarra Provides…. “Trucking and intermodal transportation, consolidation, cold storage, cool chain management, e-commerce platforms, QA services and reporting, Food Safety implementation and management, RFID, marketing, category management, and materials management”

27. From October to July, production in Mexico of most consumer demand for grapes, melons, tomatoes, peppers, cucumbers, squash, and more –Harvested and packed on site –Graded, packed, pre-cooled before shipment At Giumarra DC, assemble mixed loads for shipment

28. For instance: grapes

29. Harris Teeter in the Future Following industry trends –Use of more technology –Suppliers carrying more inventory while retailer carries less –DC/store arrangement allows daily replenishment Realize there is market for vine-ripened produce –Expressed desire for more agreements with local farmers –Better response-time and better taste

30. Data Mining: The extraction of hidden predictive information from large databases.

31. Evolutionary StepBusiness QuestionEnabling TechnologiesProduct Providers Characteristics Data Collection (1960s) "What was my total revenue in the last five years?" Computers, tapes, disksIBM, CDCRetrospective, static data delivery Data Access (1980s) "What were unit sales in New England last March?" Relational databases (RDBMS), Structured Query Language (SQL), ODBC Oracle, Sybase, Informix, IBM, Microsoft Retrospective, dynamic data delivery at record level Data Warehousing & Decision Support (1990s) "What were unit sales in New England last March? Drill down to Boston." On-line analytic processing (OLAP), multidimensional databases, data warehouses Pilot, Comshare, Arbor, Cognos, Microstrategy Retrospective, dynamic data delivery at multiple levels Data Mining (Emerging Today) "What’s likely to happen to Boston unit sales next month? Why?" Advanced algorithms, multiprocessor computers, massive databases Pilot, Lockheed, IBM, SGI, numerous startups (nascent industry) Prospective, proactive information delivery Steps in the Evolution of Data Mining

32. What is data mining:

33. The scope of data mining: Automated discovery of unknown patterns Do people who buy diapers, buy beer? Automated prediction of trends and behaviors What is the need for organic items among our target demographic? Of our customers, how many are giving up carbs, is this a fad, and when will previous levels return or rebound?

34. How it is done: Every transaction is recorded and is attached to a person with an identity Commonly used algorithms: Neural networks Decision trees Genetic algorithms Nearest neighbor method Rule induction

35. What it can do: How much do families who make over $100,000/yr spend a week on groceries? What convenience items will they buy when shopping? What services are important to customer loyalty?

36. Why: