Supply Scan

Supervalu To Consolidate Network In The East

Supervalu Inc. plans to enhance its logistics network in the eastern United States by consolidating distribution centers. The retailer will merge its Easton, PA, Harrisburg, PA, and Perryman, MD, operations into its Lancaster, PA, facility.

In conjunction with this effort, Supervalu, Minneapolis, has identified the Lancaster distribution center as the newest location for automated technology.

By consolidating warehouse volume and incorporating automation technology into the seven year old, 1.4 million-square-foot Lancaster facility, Supervalu says it will be positioned to optimize its distribution network and leverage technology for improved efficiencies.

"Our overall vision is to deliver the best supply chain services to our corporate and independent retailers. Leveraging the efficiencies of the combined company is one of the inherent benefits of our expanded network," says Janel Haugarth, Supervalu executive vice president, and president and COO of the company's supply chain services group.

Start-up costs associated with implementing the supply chain automation technology are expected to be minimal in fiscal 2008 and are not included in the one-time transaction costs. Capital costs associated with the technology installation are included in Supervalu's total $1.2 billion fiscal 2008 capital program.

Supervalu expects the entire project will take approximately three years to complete. During this time, customers will be serviced from existing facilities while the Lancaster facility is modified, which will include system standardization and technology installation and testing.

Commenting on this important initiative, Jeff Noddle, Supervalu chairman and chief executive officer, says "One of our publicly stated milestones of the acquisition is to optimize our expanded supply chain infrastructure. The decision to combine the consolidation with the installation of the supply chain automation technology represents an additional opportunity to deliver long-term strategic benefits.

"Supply chain optimization is a component of our overall synergy range identified with the acquisition. We still expect our total synergies of $150 to $175 million pretax, to be at their full run rate by the end of the third full year following the acquisition or fiscal 2010.

A&P To Acquire Pathmark

The Great Atlantic & Pacific Tea Co. Inc. (A&P) and Pathmark Stores Inc. have reached a definitive merger agreement.

A&P, Montvale, NJ, will acquire Pathmark, Carteret, NJ, for $1.3 billion in cash, stock and debt assumption or retirement, creating a 550-store, $11 billion supermarket chain operating in the New York, New Jersey and Philadelphia metro areas, as well as in Baltimore/Washington, Michigan and Louisiana.

The transaction is expected to be completed during the second half of A&P's fiscal 2007 year.

Under the terms of the transaction, The Tengelmann Group, currently A&P's majority shareholder, will remain the largest single shareholder of the combined entity. Christian Haub, executive chairman of A&P, will continue as executive chairman of the combined company; Eric Claus, president and CEO of A&P, will also maintain the same position in the combined company.

A&P summarized the key benefits of the transaction as follows:

  • Ability to better serve customers in the New York, New Jersey and Philadelphia metro areas.
  • Annual integration synergies of approximately $150 million within two years, through cost reductions in overhead, greater efficiencies, increased utilization of support facilities and the adoption of mutual best practices between the two companies.
  • Retention of the Pathmark banner, format, customer appeal and sales productivity.
  • Combined information systems integration into A&P's modern technology platform.
  • Corporate management/administrative consolidation of A&P and Pathmark employees in Montvale.
  • Platform for investment in existing and new stores to better compete in the Northeast retail food industry.
  • Benefits to the customer through the breadth of offerings available from the combined companies, and the continuation of community outreach efforts.

"This transaction is the latest step in A&P's strategic transformation, which began approximately 18 months ago in 2005 with the successful sale of A&P Canada and its U.S. executive leadership change," says Haub.

PepsiAmericas To Deploy GXS Managed Services

PepsiAmericas has selected GXS Managed Services to power its next generation business-to-business strategy.

GXS, Gaithersburg, MD, is providing a outsourcing solution that can support the bottler's current and future B2B requirements. Through GXS Managed Services, Minneapolis-based PepsiAmericas will be able to provide improved service to its retail customer base and will be able to respond more quickly to new business opportunities.

PepsiAmericas selected the GXS B2B outsourcing solution because of GXS' ability to support retailers' preferred e-commerce standards and protocols. Through GXS, PepsiAmericas can communicate with larger retailers using multiple Internet-based protocols such as AS2 and FTP, as well as with smaller retailers via e-mail, electronic data interchange (EDI) or web portals.

PepsiAmericas conducts business with hundreds of retailers that have a wide variety of B2B processes and capabilities, ranging from fully automated B2B integration platforms to manual processes such as telephone and fax.

With e-commerce- enabled partners, the bottler exchanges a variety of transaction types including purchase orders, invoices and electronic payments. GXS will maintain PepsiAmericas' existing e-commerce program and will enable the company to expand its electronic trading network to additional retail customers, product suppliers, logistics providers, financial institutions and brand owners.

GXS also will assist PepsiAmericas in adding new transaction types, such as advanced ship notices, price catalog entries, product movement and item/price synchronization. By selecting GXS Managed Services, PepsiAmericas will be able to easily support this expansion while entrusting the management of its B2B e-commerce network to GXS.

"The selection of GXS Managed Services is a key component of our multi- year initiative to transform our B2B order processing capabilities," says David Van Volkenburg, director of business solutions at PepsiAmericas.

"In the past, we treated our B2B transaction processing simply as a necessary function of our business. We realized we could drive revenue and reduce costs by deploying a more efficient and advanced solution, as well as provide new offerings to our customers such as item/price synchronization and advanced ship notice.

"We now view our new B2B network as a tool for growth and opportunity, all while improving and adding new services to our customer base. Thus far, we are pleased and impressed with the solution GXS is deploying and ultimately, we expect GXS Managed Services to be a major asset to our business and to that of our customers."

Many of the smaller retailers that sell Pepsi products have limited IT staffs and B2B capabilities. To aid them in supporting B2B e-commerce transactions and to ensure orders for Pepsi products are filled as quickly as possible, PepsiAmericas will be using GXS Intelligent Web Forms to create a Web portal for use by these retailers.

Penn Traffic Gets A Supply Chain Tune-Up

The Penn Traffic Co. has selected One Network's Multi-Enterprise Retail Network to manage transportation and supply chain operations.

The Syracuse, NY-based supermarket retailer says the One Network solution will be able to dynamically optimize, monitor and execute its supply chain across the company and its partners.

"A key factor in selecting One Network was that its transportation and appointment scheduling solution was not a stand-alone solution, but an integrated supply chain solution that ties together our transportation, replenishment and distribution operations," says Tim Cipiti, Penn Traffic's vice president of distribution and manufacturing.

"With One Network, we receive a complete network-based supply chain solution that connects our employees, supply chain partners, DCs, stores and processes," says Cipiti.

Penn Traffic operates 108 supermarkets in Pennsylvania, upstate New York, Vermont and New Hampshire under the BiLo, P&C and Quality trade names. The company also operates a wholesale food distribution business serving 43 Big M stores, 29 associate stores and 48 independent operators.

One Network's advanced and widely used retail network includes more than 1,800 food industry vendors, carriers and retailers.

Cipiti says. "During our initial selection process, we identified that over 70 percent of our vendors and carriers were members of One Network. Their food industry penetration and experience will greatly expedite our deployment and deliver immediate value to Penn Traffic and our trading partners.