Integrated Visual Systems

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Krispy Kreme Doughnut

case study

Purchasing a secret yeast-raised doughnut recipe from a French chef in New Orleans, Vernon Rudolf
opened the first Krispy Kreme in Winston-Salem, NC in July of 1937. The plan was to supply doughnuts
to local grocery stores, but customers soon started inquiring about purchasing hot doughnuts. A hole was
cut in a wall of the store and he started selling “Hot Original Glazed” doughnuts directly to customers.

Currently, Krispy Kreme produces more than 7 million doughnuts a day. There are 357 retail stores in the
US and Canada. All the ambient temperature ingredients and store supplies are shipped from the
company’s distribution warehouses in NC, IL, and CA. In October 2002, they shipped their first load of
mix to Australia and have added locations in the UK, Korea and Mexico.

The original project, installed in March of 1999, automated what was at that time the lone distribution
warehouse in Winston-Salem, NC. The goal was to eliminate the manual/paper-based system and go to a
real-time, RF-based pick and ship process. Krispy Kreme runs the Macola Progression Series ERP system
and needed a WMS that would interface directly to it and provide updates on a real-time basis for
inventory, order status, etc. To accomplish the task, IVS developed a Macola interface module that posts
transactions to Macola as they occur in the warehouse.

““We have seen an ROI in labor reductions, freight savings and the fact that we don’t have to
special ship orders due to picking errors. Previously, 86% of the orders we shipped were
complete. Since the system was implemented we’ve never had less than 99.5% complete.”

- Joe Pennell, Vice President - Distribution and Logistics , Krispy Kreme

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“We don’t have paper, and we don’t lose paperwork anymore. That’s probably the
biggest thing this system has done for us.”
- Joe Pennell, Vice President - Distribution and Logistics , Krispy Kreme
The Krispy Kreme distribution center supplies all of the products needed to operate a retail store. The
DC carries approximately 10,000 SKU’s which range from doughnut ingredients (mix, filling, glaze,
sprinkles, etc.) to cleaning supplies and uniforms. Most items are received into the WMS through
Purchase Orders and the system automatically generates barcodes as part of the process.
Once the goods are verified and labeled, the operator utilizes the Directed Put-away function to
determine the optimum stock location. The system takes into account any bin restrictions (product or
category), FIFO date requirements, existing inventory of the same product, proximity to the pick slot,
etc. to make a location recommendation. A system configuration option determines whether the operator
can override the suggestion or not.
The highest volume product is the company’s special mix which is produced and bagged at the Winston-
Salem, NC and Effingham, IL locations. Combined, the two facilities produce approximately 6 million
bags of mix annually. An inkjet encoder, controlled by the WMS, prints a unique barcode number on
each bag as it is conveyed from the production area to the palletizer. This unique number will be used to
track the bag from creation to shipment.
Orders are picked and loaded onto company trucks for delivery at the designated retail locations.
Utilizing the Route Code Assignment functionality available in IVS.Warehousing, the individual store
orders are assigned a route code and sequence that defines the “stop order” for the deliveries. Based on
the route sequence, orders are assigned to be picked and loaded in the reverse sequence to insure that the
last stop is loaded in the nose of the trailer.
Integrated Visual Systems
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Picking is performed by operators using both motorized floor jacks and forklift trucks. Their system is
configured to allow “buddy picking” which means that the order is assigned to a lead picker who in turn
can utilize one or more buddy pickers to pull and stage an order. Most orders are pulled by a two person
team. A lead who picks the partial pallet goods from the floor level pick bins and builds a shipping pallet
and a buddy who picks the full pallet items (mostly mix) from stock locations. Orders are picked on third
shift and then loaded the next morning and it is important that the system directs the pickers to the
appropriate stage location so that all pallets picked for the order are staged together.

The system directed load function insures that the orders are loaded in the reverse sequence that they will
be delivered and that all of the items picked for an order are loaded before the operator can proceed to the
next order. A system error message will alert the operator if he tries to manifest the trailer before all of
the items for every order on the route code is loaded. Once the trailer is loaded complete and the
manifest is printed, a Ship Confirm transaction is sent to Macola for every order on the route with the
actual ship quantity for each line. Also, a system generated email notification is sent to the retail stores
letting them know that their order has been shipped and a detail breakdown of the pallets and contents.

“We want to have on our truck what we say we have on the truck. This system lets us do
that.”
- Joe Pennell, Vice President - Distribution and Logistics , Krispy Kreme

Krispy Kreme utilizes the MX3 terminal from LXE and Cisco 1200 industrial access points as the wireless
backbone. The MX3 is termed a “horizontal handheld” and serves double duty as a forklift mounted and
handheld terminal. Approximately seventy (70) MX3 terminals are deployed at the three distribution
centers.
Krispy Kreme’s WMS continues to be enhanced to meet their changing demands. Recently Krispy Kreme
purchased a coffee company and began roasting coffee in-house. The WMS was enhanced to serialize the
cases of coffee and to pick for warehouse transfers of coffee on a LIFO rather than FIFO basis.
Integrated Visual Systems
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Macola ERP Interface Summary

Now users of the Macola Progression Series ERP system can benefit from true warehouse management functionality.
Utilizing IVS.Warehousing in conjunction with their Macola software, companies can realize the benefit of real-time
RF transaction validation while maintaining the integrity of their Macola inventory and accounting database.

IVS.Warehousing offers field proven interfaces for multiple versions of Macola ERP. Integrated Visual Systems,
Inc. installed its first real-time Macola interface in 1998. Since that time, the interface module has been enhanced to
include all transactions supported by the WMS. Those transactions include (but are not limited to): Purchase order
receiving, Stock labeling, Inspection, Customer order processing, Transfers, Work order consumption and production,
Cycle count, Adjustments, Issues and Return to stock.

The Macola interface module also automates the maintenance of all required WMS system tables. Macola acts as the
“master” system and all database updates (i.e. new products, customer orders, purchase orders, etc.) are entered into
and maintained in Macola. There is no operator maintenance required for the WMS system.

The system is truly scalable to meet the customer’s requirements. IVS has installed Macola sites starting with as few
as six (6) handheld terminals to sites with more than ninety (90) handheld terminals. The system can process in
excess of 4,000 transactions per day and the “queue time” is normally less than thirty seconds.

Included with the interface module are user-friendly GUI screens for error look-up and transaction re-submittal. A
date/time stamped transaction history and error log are maintained and the transaction history detail data is only a
mouse click away. Post-transaction processing can be configured as well as event driven email notification.

About Integrated Visual Systems

Integrated Visual System’s sole focus is to deliver world class solutions to meet our clients warehouse management
and automated data collection (ADC) requirements. To meet these specific requirements, we maintain a full
development staff in-house. Having a standard package provides a cost-effective solution for most functions while
custom designed applications are written and supported as well.
IVS provides a resource for companies who wish to implement integrated ADC systems without the expense of
having a specialist on staff. With our years of experience in the design, installation, and support of ADC systems, we
can help companies realize the full potential of the data collection equipment available on the market today and in the
future. IVS supports ADC systems in a variety of industries including distribution, manufacturing, textiles, apparel
and furniture.

Integrated Visual Systems

1207-E Crews Road
Matthews, NC 28105-7582
Phone: 704-847-3379
Fax: 704-847-4655
www.ivsi.com