Running head: METHODS FOR QUALITY, SUSTAINABILITY AND IMPROVEMENT

The Kroger Company:

Methods for Quality, Sustainability and Improvement

Bridgotte Ybarra, George Mess, Christopher Attanasio

Florida State College at Jacksonville

Author Note

This paper was prepared for Business Communications, GEB3213.

Methods for Quality, Sustainability and Improvement

Table of Contents

i. Title Page…1ii. Table of Contents………………………………………………………………………………2

iii. Sample Letter of Authorization…………………..……………………………………………3

Summary..................................................................................................................................... 4

Commitment to Quality............................................................................................................... 5

Food Safety............................................................................................................................... 5

Staff……………………………………………………………………………….

…………….6Vendors & Suppliers…………………………………………………….

………………………7

Safety Auditing………………………………………………….………………………………7

Commitment to Sustainability…………………………………………………………………….8

Social…………………………………………………………………………………………….

8

Environmental……………………………………………………………………………….…11

Economic………………………………………………………………………………………14

Bibliography……………………………………………………………………………………..15

Appendix…………………………………………………………………………………………17

Methods for Quality, Sustainability and Improvement

Methods for Quality, Sustainability and Improvement

Sample Letter of Authorization

Mr. David DillonThe Kroger Co.1014 Vine StreetCincinnati, Ohio 45202-1100

August 9, 2013

Mr. Victor Sander2330 Keaton Chase Drive Lexington, Virginia, 24450

We, the Board of Directors, hereby give you legal access to our files and procedures of maintaining positive quality control within The Kroger Co. You are to act on our behalf to compile documented findings and execute a strategy for improvement.

This authorization is valid until you receive cancellation by written notice from the Board of Directors of The Kroger Co.

Sincerely,

David DillonCEO, The Kroger Co.

Methods for Quality, Sustainability and Improvement

Summary

As one of the largest grocery retailers in the world, The Kroger Company’s family of stores

encompasses a wide variety of formats. Aside from their chain of grocery stores, those formats

include multi-department stores, convenience stores and jewelry stores. Operating under nearly

two dozen banners, Kroger has strong ties with their local communities. Those ties are very

important to the company; giving them a since of responsibility and commitment. As such, they

pride themselves on making a positive impact on the communities they serve. They believe that

innovation is at the heart of their efforts, aimed at sustainability and “improving today to protect

tomorrow.” (The Kroger Co. 2013)

Methods for Quality, Sustainability and Improvement

The intent of this report is to review and outline quality improvement efforts by The Kroger Company (NYSE:KR), to include their focus on promoting sustainability. With more than 2,400 stores in 31 states, The Kroger Co. believes they have an opportunity to make a difference. Their large footprint, coupled with the fact that they manufacture and process some of their own food, uniquely positions them to do just that. Kroger firmly believes that by doing good works, they will prosper as a result. According to Dillon (2013), the company’s Chairman and CEO, they actively do so by “engaging in the communities they serve, minimizing their impact on the environment where they can, and by creating positive economic value” (p. 3).

Commitment to Quality

Food Safety

Kroger currently has 37 manufacturing plants around the country producing and

distributing its company brand dairy, bakery and grocery products. According to John Kolenski

(2009), the company’s Director of Food Safety & Regulatory Compliance, “protecting their

customers is their first priority” (p. 11). CDC estimates show that foodborne illnesses account

for 128,000 hospitalizations each year in the United States with as many as 3,000 deaths. (CDC,

2013)

Methods for Quality, Sustainability and Improvement

Figure 1 FoodNet: Report Card for Food Safety1 Source: http://www.cdc.gov/features/dsfoodnet2012/index.html (April 2013)

In order to ensure the highest quality in food safety standards, The Kroger Co. has a multi-

disciplinary approach that involves their staff and store management, as well as their suppliers

and vendors.

Staff

The company employs quality professionals and inspectors to ensure that standards are

consistently met; investigating causes and implementing corrective actions as needed. Upon

entering the company’s application portal, applicants are reminded of the company’s

1 Each year, FoodNet reports on the changes in the number of people sickened with foodborne infections. The data collected lets CDC, its partners, and policy makers know how much progress has been made in reaching goals.

Methods for Quality, Sustainability and Improvement

commitment to quality before applying. According to Evans (2013) quality assurance inspectors

are employed to determine whether products should be accepted or rejected. Products are rated

for quality and processed accordingly (p.137). Quality manuals assist inspection staff in

determining standards for each product. Front-line staff receive computer aided training in basic

food safety, temperature control, cross contamination, and personal hygiene. Store Managers

must take the same basic training as well as advanced training. Store Managers must also get

certified via a nationally accredited exam; making them “Certified Food Safety Managers”.

Vendors & Suppliers

Suppliers are required to meet data standards; insuring the accuracy and correctness of

their product information through the use of Global Data Synchronization (GDSN) technology

and a Global Trade Identification Number (GTIN). (The Kroger Co., 2013)

Merchandise must meet compliance and regulatory guidelines such as The Consumer

Product Safety Improvement Act (CPSIA). Kroger expects its vendors to issue certificates

attesting to their product’s safety and adequate testing. Suppliers are also expected to meet or

exceed the Food Marketing Institute’s Animal Welfare Standards. (The Kroger Co., 2013)

Vendors are also required to use Kroger EDI, a vendor maintenance, purchase ordering and

invoicing system. Cooperative efforts have resulted in increased accuracy, improved timeliness,

and reduced operating expenses. (The Kroger Co., 2013)

Safety Auditing

Kroger’s auditing approach consists of monitoring through the use of data supplied by

third-party, internal and regulatory agency audits. Performance is also measured by comments

received via their toll-free number and emails. According to the company their goal is to

“reduce the number of comments per million units of products and services sold” (The Kroger

Methods for Quality, Sustainability and Improvement

Co., 2013 CSR, p.24). The company measures and rewards progress using four attributes as

their gage; food safety training, temperature logging, critical repeats, and store follow-up to

audits. Best performers are recognized by receiving a Food Safety Award from the company’s

CEO. (Kolenski. 2009)

Commitment to Sustainability

The Kroger Company has made a commitment to social, environmental and economic

sustainability. “Kroger continues to make significant strides as a more sustainable retailer. Our

efforts reduce Kroger’s impact on the environment and reduce business operating costs“(The

Kroger Co. 2013).

Social

The Kroger Company believes their social responsibility extends to the community, their

customers, and their associates. They’ve contributed 200 million meals to local food banks

through a partnership with Feeding America. Their Perishable Donations Partnership program is

a company-wide program that donates safe, nutritious, perishable food to food banks with the

capacity to safely handle and distribute fresh food. Kroger was the first company in the United

States to develop a process for donations of this kind. (The Kroger Co., CSR 2013, p. 9)

Methods for Quality, Sustainability and Improvement

Figure 2 Community Engagement: Fighting HungerSource: Kroger 2013 CSR

Kroger supports more than 30,000 schools and local organizations and have given away

some $49 million through a Community Rewards Program. Another $3.3 million has been

given to the USO in support of the troops and their families. Like most companies, Kroger also

supports women’s breast health for which they’ve spent $5.9 million. Their social

responsibility to staff includes the $1.5 billion spent on health benefits, as well as their

commitment to associate safety; reducing accidents by 76%.

Kroger believes in enabling customer sustainability through choice which has driven their

product offerings. Through Kroger’s company brand, customers can choose products that are

natural, organic and eco-friendly. Kroger (2013) is one of the largest natural food retailers in the

U.S. by sales volume (CSR, p. 16). Most notably, Kroger works with local farmers and

suppliers to bring in products labeled “locally grown” and “”locally provided”. High impact

commodities like seafood sourced responsibly to ensure variety and availability in the future.

Kroger partners with the World Wildlife Fund to help make determinations regarding the

Methods for Quality, Sustainability and Improvement

sustainability of fisheries. They work with WWF in improvement projects and have set

measureable goals for themselves in this area.

Figure 3 High Impact Commodities: Fishery Improvement Projects Source: Kroger 2013 CSR (p. 19)

Kroger’s improvement and sustainability efforts regarding high impact commodities are

not just socially responsible, but environmentally responsible. One way to show their

commitment to sustainability is by selecting suppliers who share that commitment. One of

Kroger’s fish suppliers, Regal Springs Tilapia, has been a leader in addressing the impacts of

working aquaculture farms. After filleting the fish, the carcasses are transported to their bioplant,

where fish oil is extracted and processed into biofuel. (The Kroger Co. 2013 CSR, p.20)

Methods for Quality, Sustainability and Improvement

Figure 4 High Impact Commodities: Aquaculture (Farm Raised) Source: Kroger 2013 CSR (p.21)

One of Kroger’s partners in dairy farming, Fair Oaks, is also doing their part in the way of

mike transportation. Fair Oaks began powering its vehicles using compressed natural gas.

Compressed natural gas is generated from cow manure already produced on their farm.

Partnering with Fair Oaks is just one of the ways Kroger is addressing environmental impacts

throughout the supply chain. (The Kroger Co. 2013)

Figure 5 High Impact Commodities: Dairy Source: Kroger 2013 CSR (p. 22)

Methods for Quality, Sustainability and Improvement

Examples of social responsibility and improvement efforts can be found in their other

service lines as well. With 1,900 pharmacies and more than 90 walk-in clinics, Kroger fills a

community healthcare need. Among other things, they provide discounted generic drugs, face to

face counseling sessions in diabetes, fitness, and smoking cessation. Being Joint Commission

Accredited as they are means, a focus on quality patient outcomes; displaying continuous

improvement and survey readiness.

Environmental

Kroger does its part in reducing their energy and carbon footprint in all areas of their

business. Their new and remodeled stores use the latest energy efficient technology, which also

helps to reduce operating costs. Compared to 2011, Kroger reduced their carbon footprint by

4.85% in 2012. (The Kroger Co. CSR 2013, pg.41)

Figure 6 Energy & Carbon Footprint How We Reduce Energy Source: Kroger 2013 CSR (p. 39)

Kroger is also investing in renewable energy; operating wind energy turbines at their

dairies and installing solar systems on top of four stores. At Kroger’s Recovery System in

Methods for Quality, Sustainability and Improvement

California, they utilize anaerobic digestion, a naturally occurring process that transforms food

waste into renewable biogas. 150 tons of food waste is processed per day.

Figure 7 Energy & Carbon Footprint: Food Power Source: Kroger 2013 CSR (p.43)

Other efforts include the installation of electric vehicle charging stations, water

conservation, and reducing landfill waste. Combined, many of the previously mentioned

programs help to aid in the company’s waste reduction goals.

Figure 8 Zero Waste: Food Waste Recovery Source: Kroger 2013 CSR (p.47)

Methods for Quality, Sustainability and Improvement

Economic

Kroger works to improve access to healthy foods by partnering with local groups and

cities to build stores in underserved areas. They also actively seek diversity among their vendor

partners.

Methods for Quality, Sustainability and Improvement

Bibliography

CDC. (2013) FoodNet: Report Card for Food Safety

Retrieved from: http://www.cdc.gov/features/dsfoodnet2012/index.html

Dillon, D. (2013) Sustainability Report 2013 [Letter from Chairman/CEO] Retrieved from:

http://sustainability.kroger.com/pdf/kroger_2013_CSR.pdf

Evans, J. (2013). Quality and Performance Excellence 7e. © Cengage Learning May 13, 2013

[Google Book] Retrieved form: http://books.google.com/books?

id=IRBGBLZINysC&pg=PA137&lpg=PA137&dq=kroger+quality+control&source=bl&ot

s=t4Ifp9_5VQ&sig=Fj4WRnDU22qkM85qezh4IV8RIec&hl=en&sa=X&ei=3jEEUu7IIIL

M9QSY9IHgCQ&ved=0CD8Q6AEwBTgU#v=onepage&q=kroger%20quality

%20control&f=false

Kolenski, J. (2009). Retail Food Safety Program [Internal Slide Presentation]

Retrieved from: http://www.qualityassuranceassociation.org/MemberCenter/kroger.pdf

Reuters. (2013) Kroger Co (K.N) Company Overview

Retrieved August 9, 2013 from: http://www.reuters.com/finance/stocks/companyProfile?

symbol=KR.N

The Kroger Co. (2012). About Kroger

Retrieved from: http://www.thekrogerco.com/about-kroger

The Kroger Co. (2012) 2012 Fact Book

Retrieved from: http://thomson.mobular.net/thomson/7/3304/4785/

The Kroger Co. (2012). History of Kroger

Retrieved from: http://www.thekrogerco.com/about-kroger/history-of-kroger

Bibliography

Methods for Quality, Sustainability and Improvement

The Kroger Co. (2012) Merchandise Compliance

Retrieved from: http://www.thekrogerco.com/vendors-suppliers/merchandise-compliance

The Kroger Co. (2012) Supplier Data Responsibilities

Retrieved from: http://www.thekrogerco.com/vendors-suppliers/supplier-data-

responsibilities

The Kroger Co. (2013) Sustainability Report 2013

Retrieved from: http://sustainability.kroger.com/pdf/kroger_2013_CSR.pdf

Methods for Quality, Sustainability and Improvement

Appendix A

The Kroger Co. - By the Numbers 2012

Figure 9: By the Numbers Source: The Kroger Co. 2012 Fact Book

Methods for Quality, Sustainability and Improvement

Appendix B

Example of rating system for grapes on the quality scale at Kroger

Rating Definition

9 Bloom on berry surface intact; pedicles green and fresh looking. Sweet and crisp/turgid texture.

7 Slight shriveling of pedicels and smearing of bloom. Still mostly turgid flesh.

5 Bloom lost and pedicels shriveled and starting to turn brown; berries slightly flaccid.

3 Pedicels shrunken and brown; may be slight decay visible on individual berries; berries flaccid and watery.

1 Water-soaked tissue and objectionable decay.

Figure 10: Tools and Techniques for Quality Design and Control Source: Quality & Performance Excellence (Chapter 3, p.137)

Methods for Quality, Sustainability and Improvement

Reflection

Upon reflection, I’m disappointed in the time invested in this paper. I would have

preferred an earlier start, but time is something I never seem to have enough of. Nor did I have

the benefit of a team to bring out the diversity of ideas. Apparently, there is a “me” in “team.

There was more I would’ve liked to touch on but just couldn’t. I’m again reminded of my

dislike for the APA format as well.

I was impressed by the projects Kroger is involved in and the fact that they document it all

so well in their Sustainability Report. Sometimes companies do a lot of great things or have a

lot of data and just neglect to show it properly. Working in a department that hosts the

regulatory agency that comes to inspect the hospital has given me a first-hand account of that.

The surveyor will ask for proof of improvement projects and the graphs to go with it and

managers freeze up and forget all the great stuff they did.

The few things that stood out to me the most about Kroger: 1.) They sell produce

purchased from local farmers, 2.) They have in-house medical clinics, 3.) Their stores up north

are like a super Wal-Mart but with high end name brands, and 4.) Their overall dedication to

sustainability. I already liked the store and preferred to shop there when in Georgia but now I

have a new perspective.