Turning Dough into Dough
Krispy Kreme is an American icon. It is a slice of life that represents what is simple and good about the lifestyle of today’s discerning customer. Krispy Kreme offers many delicious pastries but is best known for their signature hot glazed doughnuts. Krispy Kreme has been around for more than 70 years and follows a business model that has allowed it to grow from a single mom and pop style store to an international corporation with a world renowned product. Krispy Kreme was founded by Vernon Carver Rudolph in 1933. The first permanent Krispy Kreme opened in Winston-Salem, North Carolina in 1937 (IVSI 2009). Krispy Kreme has gone through several expansions since then. In the 1950’s and 60’s Krispy Kreme expanded across the entire southeastern United States. In the 1990’s expansion continued until every region of the country was accounted for in Krispy Kreme’s footprint. The first international store was opened in 2001 in Canada. Since 2004 Krispy Kreme has rapidly expanded to over 350 stores encompassing 20 different countries. Krispy Kreme started out as strictly as a wholesale operation. The continued interest of the public coming into the store and asking to buy Rudolph’s doughnuts convinced him that he should expand the business to encompass the retail market selling direct to customer (Kazanjian).
Krispy Kreme’s supply chain was originally handled completely by the company itself. Rudolph started out hand delivering his doughnuts by bicycle to individual customers (Kazanjian). Since then the supply chain has experienced a huge growth in size and extensive implementation of technology. Krispy Kreme quickly realized that because of the ongoing expansion and growth of the company, they were going to have to outsource some of their supply chain functions to third party companies. Krispy Kreme has now outsourced the entirety of both their domestic and international distribution networks (Acquire Media). The first step in outsourcing the distribution network came when Krispy Kreme signed a contract to allow all distribution for their stores in the western United States to be carried out by a third party distributor. The latest outsourcing came in March 2011 when Krispy Kreme signed a contract with Sysco. Under the contract, Sygma, which is a subsidiary of Sysco, is responsible for the distribution of supplies, equipment, etc. to Krispy Kreme stores in the eastern United States. Meanwhile, IFG, also owned by Sysco, will handle all of Krispy Kreme’s international distribution (Acquire Media). The domestic distribution centers for Krispy Kreme are located in North Carolina, Illinois, and California (IVSI 2009).
Krispy Kreme has a completely integrated supply chain. They have a hybrid mix of both an efficient and a responsive supply chain. They need to have the capacity and labor force necessary to fulfill the daily demands of their store customers as well as the demands of their wholesale customers. Krispy Kreme runs on the idea of utilizing the excess capacity that its stores possess. Manufacturers have peak and off peak hours and being idle comes at a cost to the company (Kazanjian). Krispy Kreme turns the off peak hours at their stores into profit by making doughnuts to sell to wholesale retailers.
Krispy Kreme is responsible for supplying their franchise stores with the ingredients and raw material used to make their world famous doughnuts. However they also provide the equipment such as ovens, pans, glazers, etc. used in making the doughnuts. This makes Krispy Kreme’s supply network even more complicated because the parent company must not only be sure that each store is getting enough ingredients to fulfill demand, they also must be sure that each store’s baking equipment is working efficiently and is well maintained (Kazanjian). Krispy Kreme makes over seven million doughnuts on a daily basis (IVSI 2009). This amount of demand for their...