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2,11%Nlliwtlmmltiwm M NlliwtlmmltiW 2,11% "‘0 '5‘“. O ' .1 .\ A. q LI ‘ f '. g‘, A‘ - “ ‘.. \ 5 I X e. O I 4 s: . a 'L% 4.. IJ‘ .. I -‘ I ‘ O O a - ’q" 1 o :.’;‘ .. O . C b I‘- a; A 1‘. C .'. J. l \ .5 9’. ' :1 g " ’CQN.‘.~"$... - ' '3 2". ~ X ‘“' . .' i. a3 '\ I on A ..o M. “s FACTORS AFFECTING TILE DZILI'J.~m”-.Y OF IERCIL’GIDISE IN TEE FOOD CHAR! INDUSTRY By Robert Han}; De Tieese A THESIS Submitted to the School of Ch‘aduate Studies of 1.103;}. 9‘ ‘1 State College of A-jriC'Jle‘e and Alieplied Science in partial fulfillment of the requirements for the dcgrce cu. f‘ LESTER OF ARTS Dolmmnt of General Business Curriculum in Food Distribution 1952 111‘! [[[[.l|||l\1.l ACE-3011.1) CEL‘TS The writer wishes to express his sincere appreciation to Dr. Kenneth Wilson, Director of the Gmieulum in Food Distribution at Michigan State College, for his nterest, guidance, and valuable assistance during the preparation of this study. Grateful acknowledgement is due those companies referred to in this thesis, and in particular to Mr. K. G. Birdseye, Director of Research of the Grand Union Comm, Mr. L. D. Smith, Warehouse Operating Lismger of the Jewel Tea. Company, Incorporated, and Er. W. R. Rosenberger, Assistant Treasurer of the First National Stores, Incorporated, for their ampera- tion and help. Finally, I would also like to agrees my sincere thanks to Er. lensing P. Shield, Resident, and w. Iloyd ‘u’l. Malay, Secretazy, of the (band Union We, and to all other persons who provided the author with the opportunity to attend lflchigan State College . TABLE OF cum-r23 CHAPI‘ER I. 3"lltCDUCrIONIOOOOQOOQOO0000000co EECpensoCmnperison.......o........ li’iethods of Allocating Delivery Eirense . o o o . Purposeofthestudyoa0-9....oooooo ’a'fartim Emrgency Iroblems . 9 o o c e o o . o SouroesofData .o...o........... II. THE E‘Il-“mTAE-ICE OF hEiRCIiAl-IDI SE DBLIVZBIES . Dependence of Store Operations upon Deliveries . Staple Grocery Deliveries . o . ProduceDelivcries..............o. LizatDsliveries ........._§....... Changes in Available Facilities . Refrigeration .oooo'............. PalletLosdingandmloadmg...oo...... Px'oblems Encountered During; tortime Period . hileoizeQuote 000.000.000.000... Fewer Staple Grocer};r Deliveries . Edbfi Check List for Lbasuring 1813321113,},r to Meet Possible Regulations and Restrictions in the Current Entirgfincy'cococoooeoeooooooooo III. mEEODS OF DELIVERY 0 o o 0’ I c o o o o e o o o o e= lupin Beta Stores -- Comsnyhommd Tnzclclng . o e . AdvantagesofleaaingTrucksoo.ooo.ooo. CHAPTEI PAGE Jewel Tea Company, Incorporated - Ieased Trucking . 23 Ilational'l'ea Company's Preventive mintenz-moe 3351593 oooocoucoooooooooooooo. 25 DirectStoreDeliverieS..........o.... 33 IV. 021'"; VARU.TI~"‘-=E?S 0'1"“ TZZE TOEHEEE mi;w m7 101} O? ALIC- CATIE‘IG DELIVERY 314131-132: O I O O I O O O O C O . O O O O O 0 3h WMOnCOmpmy........o 35 First National Stores, Incorporated . 39 ' Colonial Stores, Incorporated 0 0 1:8 Female for Distributing the Delivery EJQJense Stems OCOOOCOCOOOOOQOODOIOO V. T233 I333. CLET‘]?-TO—-SA.LES MID TTZZ IECS‘I-JLIJfiCATIOEE LETIIOTJS OF ACCOUITEING FOR THE DELIVE‘J‘IY 11.141913 . o o o c o o 0 Factor of Comany Size 0 1 a Per Gent-«baseless Method Jewel. Tea 00:11pm, Incorporated . o Non-Allocation of Delivery Expense . Size Of Corporation o o o a Central EEI'GhOUSing . o c a VI. Smallfiil' MID CONCLUSION o o o BEHUQWHY . o o o o o c o o o o ‘1' [[[l[[[[ {I [[ 4[ {ll ll 0 h I l . n a 1 . u n A a 5. u ' A. a _ o v s a f 0 Q r a w . U . d O i l 9 a v A . 0 U a s A o v n o . o a n o o . ~ g e I. : K v A o r LIST or means FIGIH’E PACE 1. One Thousand tile maintenance Inspection Check-Off list . 27 2. Individuanehicle huleage Report. o. .. ... 28 3. The Driver's Report in Three Parts 0 c o . o o . o o o . 29 h. Ding-am Showing Zonal Arrangemnt by Mr Eiles from the ZOHOWlI‘ehOU—SE?coco-900.00.000.90... 1L2 [ [[[[[{.[ llll'l CIL’Lm I BJTRCD UCTIOII In the retail food hidustry today the delivery of mercl'mdise to the store units is a very important elezznerrt in the cost of doing business. Tho total annual expenditures for this purpose in many food chain can- panies amount to several millions of dollars and account for a substanc tial percentage of the total operating costs. For sample, the Jewel Tea Company, Incorporated, of Chicago, Illinois, which is comprised of approthtely 350 retail units all located in the Chicago area and within four counties, bad a transportation cost in distributing merchaniise to their stores for 1951 totalling a little over one million dollars. This transportation emense accounted for 6 per cent of the total expense dollar. In this Operation no one store is. located more than fifty miles from the warehouse.- In mam; companies, warehouses are often located hundreds of miles from some retail units which they supply. Fwthemore, all meat is delivered to the retail units of this corrqnem directly from the supplier. The Grand Union Company of East Patersm, New Jersey, having 320 retail units, has some stores which are Sit'cttltcd over one hundred miles from the warehouse. It delivers approz'iintol: 30 per cent of all meet from its own warehouses. This company attributes approximately 6} per cent of tire eJqJen-se dollar for the tramportation expense. It would seem that since the Grand Union Company has stores located a greater distance from the warehmzses, and also delivers 30 per cent of its most supply from its own warehouses, its transpor- tation expense should represent a much greater per cent of the expense dollar than that of the Jewel Tea Conpany, Incorporated. When comparing delivery expenses of various chains, however, it is necessary to take into consideration a coworism of the per cent of merciwndise they buy on a delivered or direct delivery basis. The higher the per cent of "delivered cost" merchandise involved, the lower the inflatable trucking apnoea are liable to be. Delivered cost merchandise is that merchandise delivered to the stores or warehouses one delivered basis in which the cost of delivery- the momt which it costs the supplier to ship this mrchandiso to the warehouse or stereo «unmet be reflected in the price the cmpany pays for the merchandise if the suppliers are to stay in business. To deter- mine those probable truohng expenses would be an involved aocmmting task far beyond the powers of the food chain companies. Also, some companies have route divisions in which the cost of delivering morehmdiso to branch warehouses fight be included or ex- eluded. hese are just two minus factors which would have to be reckoned with in making accurate com-risotto. This only helps to point out that it is not practical to compare percentages or oven actual cost figures of one company with another. [III-[.[ll[ [[[ ({‘[ I'll host retail units receive at least we and quite often two or three staple grocery deliveries per week. Since the dollar value of the average inventory left on hand in any one store at closing time on Saturday night seldom exceeds a one week's supply, it is relatively sim- ple to understand what would happen shwld the warehouse delivery of this type merchandise be disrupted for me week. The important point to understand is that though much of the mrchandise (the slaw-movers) might be loept in sufficnent quantity on the shelves to last for sev- eral weeks, there are many items such as soap ponders, cereals, cer- tain canned vegetables, baby foods, and the weekly specials which are often in very low supply on Saturday. It is not uncommon, in fact, for a retail store to be completely out of certain staple merchandise at closing time cu Saturday night. Praduce (fresh fruits and vegetables) is considered to be the most perishable merchandise sold in a retail food store. For this reason more frequent deliveries are necessary. In nmy food chain canpanies produce is delivered daily to the retail units. Since the stores oper- ate on a day to day basis, it is necessary to have only a mall inven- tory on hand at the close of each day's business. For this reason the operation of the produce department is even more dependent upm warehouse deliveries than is the grocery department. In com concussion mat is delivered to the stores from compamr—oimed warehouses. In other operations meat is delivered to the stores directly Iran the warehouses of the supplier. In still other canpanies meat is delivered to the retail units from both conpany warehouses and directly from supplier Muses. 3 The food chain cosmzmies have several different mthods of allo— eating the cameras of delivering merchandise from their warehouses to the individual store units. Of these, there are three methods which are most coxmorfly used. These are (l) a percentage—trsfles basis 3 (2) s mileage basis by hmxdredweight; and (3) as an overall Operating expense in w‘rfioh the companies do not attempt to break deem the de- livery costs on a store or departmental basis. Purpose of the Stucbr The purpose of this study is (1) to point out the inportance of the delivery function as compared with other Operations; (2) to examine sm of the methods of accounting for delivery expenses which are in soot comm use today in the food chain industry, and to substantiate those methods with actual case studies of system in use by specific food chain conpsnies; (3) to “plain why the delivery Operation in the food chain industry varies in cost and mthod; and (h) to point out objectively the advantages and disadvantages of the various methods as applied by ampules of different since and locations.
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