Operations Management Kudler Fine Foods

As described in the Kuder Fine Foods Simulation, Kudler Fine Foods is a local upscale specialty food store located in the San Diego metropolitan area. The company has three locations (La Jolla, Del Mar and Encinitas). Each store has approximately 16,000 square feet of retail space located in a fashionable shopping center (University of Phoenix, 2004). The stores are stocked with the very best domestic and imported foodstuffs and divided into five departments consisting of a fresh bakery and pastries, fresh produce, fresh meat and seafood, condiments and packaged foods and lastly cheese's and specialty dairy products. Kudler Fine Food's mission is to provide their customers with the finest in selected foodstuffs, wines, and related needs in an unparalleled consumer environment (University of Phoenix, 2004). In order to develop this mission, Kudler Fine Foods has decided to enter into contracts with local organic farmers to provide fresh organic produce to Kudler's stores. The success of this initiative depends greatly on the careful analysis of each affected business process, supply chain activity, and quality control performance standard. Failing to do so may hinder the efficiency of the company's operations.

Affected Business Processes

A process is a part of an organization that receives an input which then converts it into an anticipated output. The output should be regarded as a superior value to the organization. Several business processes will be affected as Kudler Fine Foods begins to engage into business endeavors offering customers organic produce purchased from local growers. Purchasing, quality, inventory, delivery planning and packaging are a few that will require attention. Kudler's current purchasing process will transform from an independent store inventory/purchasing process, separated between the three stores that allow each individual store to manage his or her own purchasing needs, to a consolidated process order that will now warrant discussions between the three stores to ensure that the most efficient and effective order is being placed. Future purchasing processes should be tailored to transform the current purchasing process away from one allowing individual store managers to place orders with local organic growers separately to a purchasing process that will consolidate the three store produce departments into a single department that contracts all future organic needs. The responsibility to obtain the best price, quality and delivery possible will now rest with the purchasing department. Once the purchasing department is created, a quality control process should be established to ensure Kudler Fine Foods retains the quality produce the customers have grown to trust. The organization has been in business long enough to include quality control benchmarks. The distribution/delivery of this produce will require a process change as well. The produce should be delivered initially to a single location so it can be expected for quality and packaging. Because of store's regional differences, refrigeration trucks may now be required to prevent waste and spoilage. These processes enhancements should result in heightened efficiency, cost savings, and reduced waste.

Kudler's Supply Chain

The supply chain encompasses the infrastructure of facilities, transportation networks, systems and people who enable and facilitate (or impede) material flow from source to consumption (Sterling, 2007). Today, American industry is spending well over $1 trillion annually or almost $.09 of each sales dollar on the supply chain, with half of that amount attributable to transportation costs (Establish, 2006). The supply chain at Kudler will need to adapt to begin purchasing directly from local producers. This will require an evaluation of the current supply chain to ensure that current practices in effect now will continue to support future purchasing and delivery activities. One positive aspect to Kudler's supply chain is that local organic growers are based closer than previous sources of produce. Kudler should expect a reduced delivery delay to get the organic products into the stores, potentially providing fresher produce, and reduced transportation costs. Providing a steady supply of fresh organic produce will be a challenging task. An inherent risk of not managing the supply chain correctly is food spoilage or out of stock issues which lead to disgruntled customers. Although Kudler already strives to maintain a zero out of stock policy, KFF will need to implement a supply chain strategy that includes operational efficiency at all levels if long-term success is expected.

Quality Control Tools and Performance Standards

An organic product is defined as a raw or processed agricultural product sold, labeled, or represented as "100 percent organic" containing (by weight or fluid volume, excluding water and salt) 100% organically produced ingredients (USDA, 2007).