Kudler Operations Management

Operations Management

In today’s market companies are searching for a competitive edge. Society today consumers are asking for healthier, more environmentally friendly foods. Kudler Fine Foods has responded by deciding to contract produce out to local growers of organic foods. However, in order to implement such a change, Kudler has to re-evaluate business processes and make corrective changes. This paper will discuss what business processes are affected, how the supply chain is changed, what quality control tools are needed, and what performance standards are measured.

Business Processes at Kudler

Chase, Jacobs, & Aquilano (2006), defines a process as any part of an organization that takes inputs and transforms them into outputs. Kudler Fine Foods is starting to contract local growers of organic produce. By doing this, Kudler will have to evaluate current business processes and make necessary corrective changes. One process that Kudler will need to correct is Inventory Management.

The process of inventory management can be considered as a “make-to-stock” process. According to Chase, Jacobs, & Aquilano (2006), Make-to-stock process produces products that can be delivered quickly to the customer. For instance, Kudler department managers evaluate current demand for produce and place orders to keep inventory at the proper level.

Inventory Management for a gourmet food store like Kudler is crucial in order to provide the customer with the quality and quantity they demand. At Kudler department managers are responsible to ensure that the levels of inventory are high enough to meet the demands of customers. The current process requires Kudler to forecast future needs in order to keep levels of stock high. Department managers have to factor in shipping time, and inventory turnover.

Contracting with local growers Kudler can provide produce that is of higher quality of freshness. Since the produce will be ordered from local growers, the process of Inventory Management becomes simplified. Inventory can be calculated and ordered at close of business, then delivered the nest day. Kathy Kudler strives for a 95% customer service level, which means that customers will find products 95% of the time in stock.

Kudler’s Supply Chain

Chase, Jacobs, & Aquilano (2006), describe a “supply chain” as a picture of how organizations are linked together as viewed from a particular company. Kudler’s supply chain currently starts with the farm; raw materials then proceed to a manufacturing plant, where they are processed and prepared; next, finished goods continue to a regional distribution center and finally enter the stores, where they come in contact with the customers. However, the supply chain will change when Kudler contracts with local growers for produce.

The new supply chain for Kudler would start with the farm; raw materials then precede to local distribution centers and finally enter the stores, where they come in contact with the customers. Two ways to evaluate supply chain efficiency are inventory turnover and weeks-of-supply. In Kudler’s case, inventory turnover would be the most accurate measure. Produce does not hold up to time so having week’s worth of inventory is not practical.

There are four types of supply chains; efficient, risk-hedging, responsive, and agile. Currently Kudler has multiple suppliers of produce which minimizes the risk of supply disruption. By contracting with local growers, Kudler is going to have to deal with seasonal constraints on produce. The type of supply chain that Kudler will have is “risk-hedging”. To minimize risk, Kudler can share inventory among the stores.

Quality Control tools and Performance Standards

“Total quality management (TQM) is based on the belief that all of an organization’s activities need to be focused on improving its product” (Gomez -Mejia & Balkin, 2002). There are four steps that make up TQM; plan, do, check, and act. Management,