Kroger 2008 Annual Report Download - page 38

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The Kroger Co. Page 37
TECHNOLOGY
Kroger has refreshed a significant portion of our overall technology
infrastructure – including data centers, core network, store and distribution
center communications – to improve the overall availability and
sustainability of our technology platforms. The technology focus has
shifted to accelerated delivery of solutions that affect the customer
experience in our stores in several areas covering interaction with our
associates, product delivery, and other services that we offer.
Research and Development
Kroger is committed to internally-driven innovation. We carefully consider
opportunities that have the potential to redefine existing operating
processes while materially improving the shopping experience of our
customers. We are currently testing several retail innovations that we will
validate in our stores. We are optimistic about our ability to create a
superior shopping experience for our customers while delivering improved
operating efficiencies for our business.
LOGISTICS
Kroger’s logistics network includes 34 distribution centers (“DCs”). An
important part of our Customer 1st strategy involves investing in our
logistics infrastructure to improve operational efficiency, lower costs, and
upgrade product freshness, quality, and safety. Over the past several
years, Kroger has made significant investments in leading edge distribution
technology – including warehouse, transportation, and advanced
automation systems. Our DCs contain state-of-the-art product handling
systems, refrigeration, temperature and lighting controls. These
technologies have allowed us to significantly reduce our energy use in the
DCs, saving costs and reducing Kroger’s carbon footprint.
Kroger employs a rigorous program of lean process engineering to
continuously improve the efficiency of the supply chain. The program
examines each step – from suppliers to the stores – streamlining
processes, driving out waste, and reducing costs to enable continued
investment in our Customer 1st strategy.
Many of Kroger’s distribution centers and store delivery fleets have been
outsourced to third-party logistics providers, giving the Company access to
evolving approaches in distribution and more flexibility to implement them.
The ongoing consolidation reduces the capital needed to maintain and