1. Examining the Supply Chain Southern Ice Cream and Specialties, Inc. Owned by the Kroger Company Beth Borchers Keedick Coulter Marc Noland Cobb Pearson

2. Grocery StoresConvenience Stores Jewelry Stores Kroger Owned Companies

3. Store Locations

4. Overview of Southern Ice Cream and Specialties, Inc.  Southern Ice Cream (SICS) is owned by and serves as a branch of the Kroger Company based in Cincinnati, Ohio.  One of Kroger’s 42 production plants.  Located in Marietta, Georgia.  SICS serves two roles: An ice cream producer of mostly Kroger brand products. A middleman ice cream buyer of labels made in other parts of the country.

5. Southern Ice Cream Raw Materials KMA Distribution Centers Product’s to KMA’s Incoming Material’s SICS Supply Chain *SICS supply network

6. Expenses  Annual sales at SICS totaled $62 million in 1999, or.14% of the $45 billion sales of the Kroger Company.  Costs are split as follows:

7. Supply Chain Issues Production Planning Production Inventory Transportation

8. Operations at SICS 3 Main Operations occur at the SICS location:  Of produced goods:88% goes to 3 KMA’s, 12% to outside customers.  Products are transferred in from other Kroger-owned plants.  SICS purchases ice cream products from non-Kroger labels, such as Breyer’s.

9. Production 1 st Floor 2 nd Floor Production Finished Product Storage Raw Material Storage

10. Inventory  Completely driven by the production planner.  Factors taken into consideration include:  Inventories of raw materials and finished products.  Sales and estimates.  Upcoming promotions. Approx. Annual Cost of Invent. = Avg. Inventory Level * Price * Cost of Capital = 5932.5 pallets * $500/pallet *.20 = $593,250.00

11. Inventory and Production

12. Specific to SICS  Seasonality of Demand  Cleanliness  Temperature  Capital  Space  Promotions

13. Capital: Needs and Sources  Kroger finances capital investments.  Kroger Goals:  Increase EPS 16-18% through sales growth, margin improvements, and deleveraging.  Need other sources of capital.  Merger creates more demand and more debt, therefore less available capital

14. Concerns  SICS does not have a solid understanding of inventory position.  Idle trucks.  Kroger sells ice cream to itself.  Communication.

15. Thanks! Any Questions?