TO CUT OR NOT TO CUT? Centralized vs. Traditional Meat Distribution System

Abstract: ICA AB started in 2004 a new system for distributing the meat products to its stores. The system offered ICA retailers an alternative way to obtain meat products for their stores directly in readyto- consume cuts. This meant the possibility to eliminate the meat cutting areas from the stores with all the implied costs. ICA Kvantum Lerum (IKL) keeps considering personalized service as an asset that attracts many of its customers through the usage of a traditional system where the meat is cut and packed in the store. The goal of this thesis will be to study both systems, compare them, analyze the processes performed in each of them and conclude with possible improvements. Starting from the study of IKL´s customer demand profile the meat department performance will be assessed based on the service level provided to them and the processes’ efficiency. The study will show that it is advisable to use both systems to address different segments although there are, from a supply chain management perspective, inefficiencies and incorrect service levels offered. Finally, strategies to improve the channel’s performance are provided.