Operations Management : Kudler Fine Foods

Operations Management: Kudler Fine Foods

A process is defined as “any part of an organization that takes inputs and transforms them into outputs that, it is hoped, are of greater value to the organization than the original inputs” (Chase, Jacobs and Aquilano, 2005, p. 176). Acquiring inputs is the first of three stages of operations management. The second stage entails converting materials into products. The third stage involves delivering the output, or product (Gomez-Mejia and Balkin, 2002, p. 368). As business processes need strategic implementation, operations management is needed to oversee the execution of the processes. Specifically, operations management “focuses on carefully managing the processes to produce and distribute products and services (McNamara, C. 2007).

As Kudler Fine Foods plans to contract growers of organic produce, the current operations system will need to be updated to accommodate the expansion. The gourmet retailer now carries organic fare in limited quantities. In benchmarking a similar retailer, information technology was revealed as a critical component in augmenting the efficiency of the supply chain. Just as Kudler has maintained old fashioned methods in selected areas, Organic Family Farms (OFF) specializes in organic dairy products. The company once used spreadsheets to handle its planning. As the company experienced a shift in growth, information technology was necessary for survival. The production of organic fare is sometimes affected by a variation of elements. Such elements include product quality, seasonal conditions, availability and shelf life. Having very time sensitive details, OFF chose Infor, a technology solution that has been successful in increasing the company’s efficiency. The supply chain planning capabilities of Infor have enabled OFF to meet necessary criteria including production, ordering, finances and inventory management. In the case of Organic Family Farms, the company now has “visibility across the supply chain.” The company credits the use of an integrated support system for improving its business processes (Got Best Practices? 2007).

Kudler faces competition from larger retailers as well as companies with advanced business methods. Kudler has thus far taken pride in excellent business practices, but is in need of progressing through the use of technology. The organization now has an opportunity to increase efficiency and maintain a competitive advantage.

Business Processes of Kudler Fine Foods

Business processes are responsible for a variety of operations and flow within a company. Among such processes are ordering products from suppliers, planning store promotions and customer transactions. The increase in organic produce will cause a shift that will affect the current business processes of Kudler. The company will need to consider methods of efficiency and quality control.

Within the operations are categories of specific processes which satisfy the exchange of product between retailer and customer. A single-stage process is very simple with only a single cycle. For instance, if Kudler sold one item, that one item would be exchanged for money from the customer. Kudler has several departments which not only sell items, but also create specialty items. Some foods may be prepared in a ready to serve fashion. A made-to-order process is used in baking specialty items or catering meals. An example of make-to-stock at Kudler is a birthday cake that only needs to have a name added before being sold. Since Kudler uses several processes, the system would best be described as a hybrid process. The hybrid process is describes as combing the “features of both make-to-order and make-to-stock (Chase, Jacobs and Aquilano, 2005, p. 160).

Kudler may on occasion use an assembly line system, which would require timing or pacing. Chase, Jacobs and Aquilano (2005, p. 162) describe pacing as “the fixed timing of the movement of items through the process.” Pacing would be utilized in instances of Kudler having awareness of how many customers are anticipated to purchase a specific food item. The delicatessen department may prepare twelve egg salad sandwiches on Fridays at lunch as opposed to six egg salad sandwiches sold on Saturdays during the lunch hour. A review of statistical data whether written or recorded electronically would gauge this information. Kudler may also use pacing during the peak store hours and holidays when items are heavily in demand and should be available to customers.

Kudler’s Supply Chain

The processes of Kudler’s supply chain are currently non-competitive in comparison to how it will need to shift once organic produce is added as a mainstay. From contracting organic growers, quality control to considerations for the shelf life of product, Kudler will have additional details to manage. The current purchase procedure at Kudler involves three department managers from each store placing orders with suppliers. The process is relatively involved since there is both paperwork and communication that needs to take place among the managers, often before placing the order. The system should be updated by creating a centralized department to be responsible for facilitating orders with suppliers. The department would replace the notion of suppliers being contacted by several department managers. A new system would prevent overlaps and would aid in being able to efficiently track orders. Operational processes in the supply chain to be impacted include inventory management, advertising, forecasting, along with merchandise selection and pricing.

Excess produce is a concern for Kudler, as it would be for any retailer. It is sometimes difficult to ensure food will not go to waste. Due to the complexity of the organic produce there if often a much higher cost incurred to the retailer. The retailer must charge a higher price to the consumer in order to make a profit. Kudler must have the capacity to forecast the demand of their customer. The buyers must also consider the selection of the produce at a price that would attract and retain a loyal customer. Advertising along with marketing would play a key role in ensuring success in the organic venture.

With an intention of expanding, Kudler must develop an efficient supply chain that would be cost efficient, strategic and technologically sound. “Going forward, supply chain management needs to draw on the capabilities of all the organization’s functions-accounting, finance, engineering, and marketing as well as the traditional procurement and operating functions (Lummus, Melny, Vokurka, Burns, & Sandor,

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