SAFEWAY

Ingredients for Life

 Introduction
• Year of establishment : 1915
• Founder: M.B.SKAGGS
• First Store at American Falls ( A tiny grocery
store)
• Listed in NYSE in 1928
• First merger with : Selig Stores in 1926 i.e.
• SKAGGS + SELIG --------------- SAFEWAY
• Till 1930, 322 stores has been established.
First SAFEWAY store
 Basic Strategy
• Value to the Customer
• Low Margin
• Distribution without waste
• Initial Punch line : Always changing for better
• Industry Type : Retail (Grocery)
• Existing in Top Ten retailers of US
• Existing in FORTUNE 500 list
 Expansion of Safeway
• Today SAFEWAY has 1775 Stores across US &
Canada only.
• Headquarter: Pleasanton, California
• Company expended into Canada through the
acquisition of nine stores (Canada Safeway) in
1929
• Major acquisition:- John-Gardener, Pratt
supermarket, Big-beer-bazaar, Tamini Group,
Jack & Salsar chain
At a Glance
UK grocery retailing industry
 TECHNOLOGY INNOVATIONS
• Introduced POS in 80’s
• POS is a computerized system for item
identification, price determination, sales
receipt and sales data maintenance.
• Benefits:-
• Handles data efficiently
• Avoids overstocking
• Better inventory management
 Cont….
• Centralized communication in 90’s
• $ 600 million telecommunications link
• First stage- Stores to central computer system
• Second stage- Central computer system to
supplier’s
• Benefits:-
• Direct reordering & co-ordination
• Lesser money in inventory
• Lower manufacturing cost
 Cont….
• Bar code History & RFID
• Bar code came into being in 70’s
• Development of UPC (universal product code)
• RFID- Radio frequency identification devices
• Benefits:-
• One stop information
• Control on physical movement
• Lesser time to find
 Cont….
• UCCnet
• Non profit subsidiary of uniform code council
• Provide data registry services for SCM
• Collaboration b/w suppliers and marketers
• Benefits:-
• Product details made available electronically
• Reduces product data entry time
 Safeway Six steps for Success
• Customer segmentation
• Category management
• Enhanced supply-chain efficiencies
• Private label products
• Health and wellness initiatives
• branding
 SAFEWAY SCM
• ONGOING SHELF MAINTENANCE
• SCHEMATIC DEVELOPMENT & NEW ITEM
PLACEMENT
• MANUFACTURER’S COUPON PROCEDURE
• CATEGORY REVIEW/ RESET CALENDER
• PRODUCT RECALL/ PRODUCT WITHDRAWAL
• PRODUCT RECOVERY CENTRE
• WAREHOUSE RECEIVING & BUYING PROCEDURE
 Main Problem of SAFEWAY
• Faced in 1990 due to recession.
• Decreased Profitability
• Transportation
• Fresh food availability and freshness
• Fresh food was the main section from which
representing 1/3rd of the of total sales. So it
could not be ignored.
 SAFEWAY Strategy
• Safeway recognized that key to rebuilding the
lost profitability was to increase in the yield of
the existing store base relying than adding
more stores to its portfolio.
• Key reason was the fresh food offered was
weak in comparison with safeway’s main
rivals.
• Food was not fresh as it could be and
availability was not reliable.
 CONT….
• SAFEWAY set a target of target of getting the
fresh product from the factory production line
to the store in under 24 hours, less than half
the current response time.
• It was implemented to maintain freshness of
the food.
• Suppliers ability to respond was limited by
SAFEWAY’S internal practice that had enabled
it to achieve lowest cost status in the industry.
 First move of SAFEWAY
• Reengineering its replenishment system and
warehousing methods together with completely
changing the transportation schedules.
• The implication was that logistics costs would
rise to secure the broader supply chain goals.
• Being a bigger fleet operators, SAFEWAY was
able to offer a range of transport options such as
backhauling and consolidation to allow suppliers
to meet the increased frequency of delivery cost
effectively.
 Cont….
• Line managers found that they needed to get
much closer to their daily operations and try
to anticipate the problems.
• The outcome was successful, providing the
fresher food and greater availability.
• The methods were adopted to limit and even
eliminate the rising cost pressures that this
approach had initially implied.
• The venture was successful because every
party in the supply chain was prepared to
make difficult changes to provide a more
effective offer to the end customer.
Safeway links trucks to base and stocks to
stores in real time
• Britain's Safeway supermarket chain is simultaneously introducing radio-
based technologies to provide communications and tracking in its delivery
fleet and to reduce in-store restocking times. The two developments,
although not explicitly connected, reflect what Mike Sturt, head of
logistics development for the company, describes as "a commitment to
develop new and innovative functionality".
• Safeway is adding EutelTRACS to its own integrated transport
management system. It says the addition of real-time capability will
enable it to manage its distribution resources more efficiently. It is hoping
that this, combined with close scrutiny of vehicle and driver performance,
will improve vehicle utilization, reducing unproductive mileage, and will
aid safety and reduce environmental impact.
 On-Demand Delivery Services and E-
Grocers
• E-grocer: A grocer that will take orders online
and provide deliveries on a daily or other
regular schedule or will deliver items within a
very short period of time
• On-demand delivery service: Express delivery
made fairly quickly after an online order is
received
 Example
• Grocery shopping in the palm of your hand
– Safeway implemented its Easi-Order services using
a Palm handheld device (PDA) to allow customers
to point and click their grocery lists and send them
to Safeway via phone
– Part of the company’s “Collect & Go” service
 Safeway (cont.)
– Valued customers are given handheld devices that
are loaded with an application that contains a list
of thousands of grocery items, including
descriptions and prices
– Customers review the items and make their
grocery lists off-line when time permits
– Estimated time savings is 60 to 90 minutes each
week
 Safeway (cont.)
– Device is plugged into a standard phone socket,
and it dials up the Collect & Go server
– Shopping list is downloaded to the server, and
next week’s suggested list along with suggestions
and promotions are uploaded to the device
– Data collected by Safeway allow the company to
offer outstanding customer service
 Safeway (cont.)
– Order is picked and packed by the store and set
aside for the customer to pick up at their
specified, convenient time
– Collection at dedicated checkout counters—Easi-
Pay terminals, which allow customers to avoid
check-out lines altogether
– Home delivery may also be available
 Safeway (cont.)
– Customers download their orders directly to the
Collect & Go intranet through the Internet
– In the future, Safeway plans to have screen
phones, digital TV, and speech processing devices
assist grocery shoppers in making their shopping
experiences as easy as verbally telling the
program what they want
Collaborative supply chain