Operations Management at Kudler Fine Foods

Kudler Fine Foods is a profitable upscale specialty and gourmet food store with three locations in La Jolla, Del Mar and Encinitas, California. Kudler’s mission is to provide customers with the finest in selected foodstuffs, wines, and related needs in an unparalleled consumer environment (Apollo Group, Inc., 2006). Customers visiting Kudler stores demand specialty and fresh organic foods. To keep customers satisfied, Kudler must offer excellent quality products and ensure product availability.

The company, founded by owner Kathy Kudler, realizes the need to offer an increased organic product line because consumers are demanding organic products. According to the Associated Press, “Growth in sales of organic foods has been 15% to 21% each year, compared with 2% to 4% for total food sales” (2006, p. 1). By making changes, Kathy has an opportunity to increase operational efficiency and retail sales in its three stores by changing its supply chain to contract with local growers of organic produce. The impact of a change in the supply chain will force Kudler to examine the possible risks and opportunities, and make changes to its operations to ensure it can provide quality products to satisfy customers. By having the right quality control tools and performance measurement standards, Kudler can continually move forward to improve operations, develop supplier relationships, offer new products, expand the business and customer base to maximize profits, and satisfy loyal customers.

To ensure the competitiveness of a company the company has to understand how processes work and the processes have to match the needs of the firm. This paper will identify Kudler’s current business processes and how its processes may be affected by a change to contract with organic suppliers. The paper will examine what the impact would be with Kudler’s existing supply chain and the how Kudler should reevaluate and make changes to its quality control tools and performance standards to ensure the effectiveness of these changes match the needs of the firm.

The Business Process at Kudler Fine Foods

Kudler Fine Foods currently uses standard purchasing procedures where each store manager determines the requirements for the items each department sells and places purchases orders directly with suppliers (Apollo Group, Inc., 2006). Kudler does not have a purchasing department and each manager is responsible for placing orders using a standard purchase order form to procure products. This purchasing business process would be affected by Kudler’s decision to contract with local suppliers.

According to Aquilano, Chase, and Jacobs, “a process is any part of an organization that takes inputs and transforms them into outputs that, it is hoped, are of greater value to the organization that the original inputs” (2005, p. 154). Having a business process can generate profit for Kudler. By Kudler having new suppliers and an expanded organic product line, the company will have to establish new business processes. The new processes include ordering, defining the quality and integrity of the product, determining price, and establishing timeliness for product delivery. Additionally, inventory management would be affected by this decision to expand the organic food line since processes would have to change in order to have the needed inventory on-hand. With Kudler’s increased line of organic products, processes need to be established for inventory turnover because excess inventory represents monies being tied up in merchandise that is not generating sales. Stock-outs result in lost opportunity sales and dissatisfied customers. Kudler needs a process to forecast sales because excessive inventory leads to spoilage and discounted products. Inaccurate forecasting leads to obsolete products. Kudler’s current process of forecasting uses historical data trends but significant errors has occurred. Kudler must first analyze its existing processes and then analyze the impact of process changes and how business operations can be performed in the future. According to Aquilano, Chase, and Jacobs, “A good way to start analyzing a process is with a diagram showing the basic elements of a process – typically tasks, flows, and storage areas” (2005, p. 157). A diagram showing all the operational elements and how they fit together will assist Kudler management to review the existing internal and external operational processes and make the necessary changes needed to adapt to the new processes.

The advertising process may affect customer demand of organic products. Advertising is currently performed by Kathy Kudler. The company will want to change the advertising process to enhance their advertising campaign by promoting to customers the new expanded line of organic products provided by locally grown farmers. With advertising, Kudler’s