American Stores
Self-Consolidation & Information Technology Initiatives
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Self-Consolidation
In order to leverage the size of the Company and generate economies of scale, the Company began an internal consolidation of its distribution and administrative functions in 1994. As of year-end 1997, all support functions with the exception of the newly formed central marketing group, were centralized in the Company's corporate headquarters in Salt Lake City. This consolidation will allow for greater efficiencies, cost savings and elimination of many redundant functions.
Functions that have been consolidated include: information technology, procurement, logistics management, real estate, finance, treasury, accounting, risk management, legal, labor relations and human resources.
The Company is close to completing the consolidation of four general merchandise warehouses in southern California into one. This is another major accomplishment as it will save significant costs and help to keep inventory at optimal levels. Trucks from this warehouse will service stores throughout California, Nevada, Arizona and New Mexico. Through consolidation and new computer systems the Company is driving distribution costs lower.
American Stores Company is currently in the process of forming a centralized marketing group. This department will ensure a central focus on marketing, promotional and advertising activities without sacrificing the specific local preferences in its markets. Certain marketing functions are common across all divisions and the re-alignment of the reporting structure to the corporate headquarters streamlines the communication and coordination efforts between marketing and procurement and all other related Company functions.
The Company believes that the economic and operational benefits of its self-consolidation will grow over the next several years.
Information Technology Initiatives
In connection with the Company's re-engineering of its supply-chain processes and systems, it has been aggressively upgrading its technology infrastructure. The Company has completed many new system implementations in its effort to convert its technology base to common platforms and common applications.
Many of the supply-chain systems were custom-made for American Stores. They were carefully designed around the most effective business process for each area. The Company generally did not conform business practices to software limitations. Rather, the software was designed to meet the needs of the business and the best business practices.
The following tables summarize the Company's key technology initiatives:
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