EXPERIENCE CASE STUDY

So many customers came into Vernon Carter Rudolph’s shop in Winston-Salem, NC, shop asking for doughnuts hot out of the fryer that it was hard for him to balance kitchen and customer responsibilities. So in 1937 the entrepreneur cut a hole in the kitchen wall out to the street to streamline the process of getting doughnuts from kitchen to customer. Warm doughnuts became Rudolph’s hallmark, building his Krispy-Kreme Doughnut shop into an enduring, highly successful business with a legion of loyal customers.

Today demand is as hot as ever for Krispy-Kreme doughnuts. The company has grown from a Southeastern icon to an international franchise with stores in 41 states and six countries. Since 2001 alone, Krispy-Kreme has more than doubled its retail locations, to more than 360, and has opened its first stores outside of North America. The rapid expansion created challenges to making sure products are always fresh and available, challenges that no longer could be solved by cutting a hole in a wall. Instead, Krispy-Kreme now relies on a route automation system from Intermec Technologies Corp. and Velocitor Solutions to streamline deliveries from kitchen to customer.

“The savings we’re gaining from the mobile system allow us the ability to better utilize or sometimes mitigate the need to add additional resources that we may need to support our expansion,” said Krispy Kreme CIO Frank Hood.

Krispy Kreme operates over 140 company stores that are independent of its franchise locations. In addition to serving walk-in customers, the company stores prepare and deliver doughnuts sold at other retail outlets. Route drivers operating from the company stores make daily doughnut deliveries to supermarkets, convenience stores, service stations and other retail locations. Mobile computers, printers and route management software are being rolled out to all the company stores primarily to streamline end-of-day processing and back office operations. The system - custom software developed by Velocitor and Intermec’s award-winning 740 Color mobile computers and PW40 mobile printers - also saves time for route drivers and improves convenience at customer sites.

“We are admittedly a late adopter of handheld technology,” Hood said. “We were not going to implement handheld computers until the technology was mature and stable enough for us to be able to support them with a small IT staff. We needed the system to be as fault-tolerant as paper. Unless maybe you break your pencil, paper is not going to fail in the field. Paper doesn’t run out of batteries or stop working because a system goes down. It’s great for disaster recovery.”

The Morning Routine
The new system provides the reliability of paper without the burden of paperwork. Krispy Kreme’s self-written demand planning and forecasting system at its Winston-Salemheadquarters calculates a suggested order for every retail customer, every night. The orders are transferred to an IBM AS/400 computer at the company store that supports each customer. Orders for each route, the six-week sales history for each customer, plus notes or special instructions for the driver are downloaded to the 740 Color before route drivers arrive in the morning. Drivers pick up their computers and then begin their daily deliveries. Krispy Kreme delivers fresh to every customer every day, so routes stay consistent and drivers know them well, which led Krispy Kreme to rule out the use of wireless dispatch for route operations.

Route drivers arrive at retail locations and review orders with customers. Customers use the 740 to preview invoices before approving them. To accept, the customer signs on the 740 Color screen using a pen stylus. The route driver then produces a signed invoice for the customer with the PW40 workboard printer and begins unloading the order. Drivers use the integrated bar code reader in the 740 Color to scan each item as it is unloaded, which updates Krispy Kreme’s inventory record. Drivers also pick up unsold items from the previous day and record them by scanning the bar code. All transactions are stored in a secure memory card in addition to the computer memory to provide backup.

Drivers previously had to fill out invoices, record product codes for returns and write quantities by hand. The process was time-consuming and created opportunities for errors to enter records when information was recorded and when it was entered into the computer system at the company store. Now, bar code scanning provides fast, accurate data entry, and the color computers help drivers quickly navigate through screens and data entry fields.

Rapid Reconciliation
The major time savings occurs when drivers return to the store after completing delivery. Each store supports between three and 25 routes, which are reviewed and reconciled daily. The process took between 15 and 30 minutes per route before the system was automated, so returning drivers often faced a lengthy wait until an accounting clerk could check them out. “Our goal was to save time in labor in our back offices throughout the country, and we’re doing that,” Hood said.

“Drivers came in at the end of the day with paper tickets from all their customers. Someone would have to key data in from all the route drivers’ tickets,” he said. The process was about as popular as day-old doughnuts. While the driver waited, the clerk would enter order and return information from the tickets into the AS/400 and produce a settlement report. Route drivers couldn’t leave for the day until they reviewed and signed their settlement reports, so the end-of-day process often led to impatience and rushed clerical work.

In response, Velocitor developed an application for Intermec mobile computers that allows drivers to generate their own sales and return reports. When deliveries are complete, drivers print their own reports on the mobile printer and submit them to the clerk. The computer then is placed in a docking cradle that interfaces directly with the AS/400 system through an Ethernet connection to upload activity data.

Settlement sheets now are calculated and printed in about 20 seconds. The entire check-out process can be completed in about two minutes, a stunning improvement over the previous 15- to 30-minute cycle.

“Our drivers love it,” said Dr. Ken Goehle, Krispy Kreme senior systems analyst, who worked extensively on the mobile project and developed most of the infrastructure applications. “They get paid on commission and can do their jobs more efficiently if they don’t have to hang around for a half hour at the end of the day.”

Clerks also love the system because it makes their jobs easier. For a store supporting only three routes, the system saves more than a half hour a day. Stores that have converted to the route automation system have experienced enough time and labor savings to reassign support staff to other duties and have not had to add administrative staff even as sales and retail customers have surged.

Customer service report requirements also have been reduced. Customers frequently lose invoices, but they no longer have to call Krispy Kreme customer service to find the original and send a replacement copy. Using a self-service Web site, customers can view invoices online and print them on demand, complete with the digital signature. “That’s been a real time-saver for us,” Hood said.

Third Time’s a Charm
The system has required little IT support, which was an absolute requirement for implementation. Krispy Kreme previously conducted two route automation pilots and decided against deployment each time. When Hood joined the company in 1997, he put a stop to a mobile deployment that was in progress because of concerns about ease of use and support requirements. The new system has met and exceeded his tough standards.

“I did not expect to see our stores adopt the system and troubleshoot it as well as they did,” Hood said. “The first 90 routes were rolled out in only three months. The intuitive design of the Velocitor software and the reliability of the Intermec equipment make it all possible.”

Krispy Kreme is on schedule to complete rollout to all company-owned stores, more than 500 routes, by the third quarter of 2004 and also is encouraging its franchisees to implement the system. Currently, Velocitor is translating the application software into French so it can be used in Quebec, and the system may also be deployed to other international locations.

“Velocitor has done a wonderful job of developing and supporting this application,” Goehle said. “We talked to several potential providers, and Velocitor was the only one who really seemed to know about our business requirements and who didn’t try to sell us something we didn’t want. We’ve run two pilots in the past and we knew that off-the-shelf software wouldn’t work for us.”

A major reason the project has been so successful is because the Krispy Kreme project team did an extensive analysis of route operations and determined exactly what it needed from its hardware and software.

“We analyzed the top five things that could go wrong with the mobile computing device, and evaluated providers based on how they did on those criteria,” Hood said. “These were things like how easy is it for a driver to replace a memory card, and how is the battery life. Intermec came out on top as the best device to use in the field. The cradles communicate at a higher speed than the competitors’, which saves time at the end of the day. There were a lot of things like that that made Intermec the best choice.”

The 740 Color is part of Intermec’s award-winning 700 Series family of mobile computers, which was named the Best Industrial Class PDA in 2003 by Pen Computing Magazine and was also ranked the number one industrial PDA used in field service and manufacturing operations by Venture Development Corp. (VDC), a market research and consulting company. The 700 Series features the Pocket PC operating system, large screens, easy-to-use keypads and integrated scanners and many other useful features.

Most important to Krispy Kreme, the mobile computers and printers are as reliable as they are powerful. After two unsuccessful pilots and a strategy for late adoption, the new technology has been welcomed and is recognized as a key component to the company’s continued growth.

Krispy Kreme has come a long way since Vernon Carter Rudolph first cut a hole in his kitchen wall, but it is still finding innovative ways to deliver hot, fresh products to its customers.


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