Kudler Fine Foods Operations Management

Kudler Fine Foods (KFF) was founded by Kathy Kudler in the San Diego metropolitan area in 1998. Kathy developed a business plan for the store due to a need for an upscale specialty food store in La Jolla. After opening KFF on June 18, 1998 and concluding a profitable year, she opened a second and third store (Kudler Fine Foods, 2008).

KFF has seen strong success and now must ensure continued growth by expanding services, improving the efficiency of operations, and increasing the consumer purchase cycle (Kudler Fine Foods, 2008). Each member of the organization must play a key role in achieving these objectives. Special attention must be paid to the supply chain and business processes, especially when developing a new product offering.

KFF plans to start selling organic produce in the three stores. This produce will be contracted from local growers. Operational changes will need to be made to ensure efficiency and productivity. The operations that will see change will be forecasting, purchasing, inventory management, and even advertising of the new products.

Currently KFF forecasts how much of each item to carry based on historical data. No historical data exists for the new organic produce, so determining how much and how often to order will be a challenge. The three different store managers will need to work together and make use of trial an error for the first couple of months. Spikes are bound to happen during different seasons and holidays. These patterns must be recorded and applied to future orders. These forecasts will then be reviewed in the monthly operations meetings. Developing a flowchart for the contracting process will be beneficial. It is important to consider how activities associated with the process affect one another. A flowchart is a diagram that lays out the basic elements of a process Ð'- tasks, flows, and storage areas (Chase, Jacobs, & Aquilano, 2006). Flowcharts can be created through Microsoft Office applications such as Excel.

Kathy's goal for the company is to provide new produce on a regular basis because customers always appear to be demanding something new (Kudler Fine Foods, 2008). The organic foods from local suppliers will be just that. The objective will be to ensure the produce is fresh and meets the standards of KFF. Retrieving feedback from the customers during the initial weeks of conception is important. This information will give KFF management the feedback they need to tweak the selection, price and display of the new products.

Another operational function that may need to be changed will be inventory for the organic foods. KFF wants to cut down excess inventory to avoid waste. Fresh produce, like organic foods, have a short shelf life. In the early weeks the stores may over or under order due to a lack of historical sales knowledge. Depending on customer acceptance and demand the products may not sell as quickly as expected.

To alleviate excess inventory KFF could implement a make-to-order process (Chase, Jacobs, & Aquilano, 2006). Customers could call in orders a few days in advance. This could gauge the need for the new products in the stores. The ordering process would have to be hassle free and free of charge. Customers would also have to pick the orders up from the store in order to cut out shipping or delivery costs. The cost of delivery could be more than the actual cost of the produce. A key trend in retail is enhancing the in-store experience by using new technologies, including virtualization, mobile devices, and "contextual" information to impress consumers, make them feel special, and provide better product information. The only way a make-to-order process could be successful is if the concept was advertised correctly in the stores and the price was right.

The most important function in the KFF supply chain that will need to be changed when contracting with local growers of organic produce is the purchasing process. Currently, each store purchases its products separately. Purchase orders are placed directly from each store manager. The Department Manager obtains the best price, quality and delivery possible (Kudler Fine Foods, 2008). The three departments managers are encouraged to check with the managers of the other stores to make sure the company is receiving the best price. They should combine their efforts when ordering from the organic produce suppliers. The more produce that KFF buys as a total the better the wholesale price will be. There will be more room to negotiate with larger orders and less time will be spent developing a contract and forecasting inventory.

A supply chain solution to ordering would be to invest in purchasing software set up on a network for KFF management and store managers to access at anytime. This software would allow all stores to place orders cohesively. Each store manager can see how much product is being sold in each store and compare sales. If there is an overstock in one store, managers can move inventory to another store by looking at the data on the network. Kathy can implement a Just-in-Time (JIT) system. This is the concept behind creating the firm's product in the least amount of time (Gomez-Mejia & Balkin, 2002). Kathy and the management team will develop a smooth and integrated production process. Possibly in the future KFF can use the same type of JIT inventory