Raw material Procurement and Inventory Management - Term Paper Example

 «Raw material Procurement and Inventory Management» Service description I have taken a hypothetical Restaurant named as ‘The Diners Park’. It is a restaurant which has goodwill of producing quality food at an economical cost with a High class service being provided to the consumer. We say- Come to the Diners Park and Feel the difference!! Dining at its Best... We at Diners Park believe in internal customer’s satisfaction and external customer satisfaction as well; internal customers being the human resource of the organization and external customers being the person who is actually buying our product a service. So in order to attain it we have implemented Total Quality Management (TQM), and its eight key elements: 1. Ethics 2. Integrity 3. Trust 4. Training 5. Teamwork 6. Leadership 7. Recognition 8. Communication For any restaurant or food industry the raw material procurement becomes the vital and the crucial activity. In order to buy the raw materials like fruits, vegetables, milk products and other eatables we have three main reliable suppliers from the local village area; where the cost is less and production is more. For managing the inventory we have used big storing refrigerators and containers so that their freshness is not lost. Service objectives Our objective is to gain Customer satisfaction and then attaining the largest market share in the restaurant industry. We are expecting Total Revenue in FY08-09 = $ 847,200 Thus, The Diners Park is expected to perform a healthy business of 17.16% in FY08-09. Situation analysis: We (me and one of my close friends) opened a fast food restaurant named ‘The Diners Park’ in the outer part of the city and have invested a major chunk of capital for this venture. Since the restaurant is placed in an outer location, so the only people who were coming to our restaurant were those who use to pass by the area. With the fixed costs, it was getting really hard for us to generate substantial profit. We found that the customers that turned up to the place were often passerby and the first timers to the restaurant. People do not have much information about the restaurant. Also, we never thought about any particular target customer. The customers very often like quality of food and even the pricing of the food items seems economical to them. Earlier, with the fixed costs, it was getting really hard to generate substantial profit. The customers very often like the quality of food and ambience of our restaurant but it was the price of the food items which was the main concern of our customers and of ours as well. We earlier took product/service-quality leader as an objective and thus set the prices higher than our competitors but provided a high –class premium quality food and services. But after analyzing the whole case we found that though consumers wanted a good service and nice ambience but charging heavily for that was not accepted by them, so me and my friend decided to cut the fixed costs and variable costs and took maximize the market share as an objective. This does not mean we compromised with the quality, but we used to cut some of the extra costs from the logistics, human resources and lot of show offs. We now hope to do a successful business. Service target market The target market we initially focused on were the food lovers and family but, later on we would like to expand the market share and would target The Diners Park to youngsters between 14-25 yrs i.e. the college and school goers. Market Research (Primary Research): Before entering into the market a Primary marketing research has to be done in order to know the likes and dislikes of the consumer. So we also did Primary Research which is collected for the first time. It should be original and collected for a specific purpose, or to solve a specific problem and our purpose was to enter lavishly in the market of food. We considered taking interview the most proper and interacted primary research. We organized, Telephone Interview- it can be geographically spread and the setup and the conduction of a telephone interview can be relatively cheap also random samples can be selected out of the target market. But we found that while conducting a telephone research many of the respondents simply hung up the call or we have to make our questions and the interview very short. Moreover visual aids could not be provided to the respondents and they even cannot see our body language and vice-versa. So we also conducted Face to face Interview. We appointed some of the market researchers; mostly they were college students and gave them our target market list. They then contacted them and took their appointment to conduct the face to face interview. We made several questions; some were open ended questions and some were close ended questions and based on that made questionnaire: Have you ever gone to a restaurant? a) Yes b) No If yes, how often do you go? a) Once in a week b) Twice in a week c) Very less With whom do you go to a restaurant? a) Family b) Friends c) Boyfriend/Girlfriend d) Colleagues Do you like continental food? a) Yes b) No What type of services do you expect in a restaurant? Ans-------------------------------------------------------- Name- Age- Gender- Occupation- We also conducted Interview on the Internet by pop up windows and flashes. We also thought of launching a website so will ask the visitors to complete the electronic questionnaire. Internet being relatively economical and easy to access could definitely help us in future also. The Visuals of our products (eatables), ambience i.e. furniture and other USPs can be very easily shown through the internet. Service Strategies Promotion and making aware of what is available to the customers and what the offerings are is the important and an essential part of any marketing strategy; keeping this in mind we at The Diners Park restaurant, promoted the Unique Selling Proposition (USP) i.e. good quality at an affordable price with great ambience to the customers. We made Logo- And the Punch line- Come to the Diners Park and Feel the difference!! Dining at its Best... Also, We made attractive pamphlets and distributed through the volunteers to our target customers. Published & telecasted a print or an electronic advertisement of ‘The Diners Park’. Offered some food vouchers through contests or college fests. Offered free gifts like soft toy or a coffee mug to food lovers especially to kids. Most importantly, made them feel great through ambience and aroma of the food so that a good word of mouth can be spread. Also, a very popular young chef who has recently been a finalist on a television cooking program has been chosen by us as our Chief Chef. He has written and self- published a cookery book and is very famous among housewives, so in order to attract them we opened an open Kitchen Restaurant. You can see through a glass, the making of your delicious, mouth watering food. We also thought of launching a website named as thedinerspark.com as we know that technology plays a very important role in the delivery of service today. Internet being the revolution is the easiest way for the customer to order for breakfast, lunch dinner or for just a Pizza. We would prepare menu cards including today’s special on the website and promote it through Pop-Up screens. In order to promote our brand and products made by us we thought of providing Visi coolers to canteens and pubs which will display our range of several snacks with the Brand name DP. Customers can have a look and choose which type of snack they want. But providing Visi coolers need an extra capital and an investment. Also the pubs, Canteens, mess and other restaurants must assure us to take a good care of our Visi coolers. VISI COOLER: Physical Evidence The major challenge is that most service offerings and innovations are easily copied. But the company that continuously introduces innovations will gain a succession over temporary advantages over competitors. And here comes the role of physical evidence which is the most important attribute in positioning the service and communicating the service quality. We at The Diners Park made the ambience full of toys and entertainers so that kids coming with their parents would enjoy the place and would ask their parents to let them bring here whenever they want. Furniture- furnishing the interior of our restaurant ’The Diners Park’ took an extra time and cost as we hired Interior designer and Architect to design it but at the end what counts is Customer delight, and that we can see by the increasing number of customers coming in. Packaging of our food items- Packaging again plays an important role in positioning your service in a proper manner. For Parcels we take an extra care and double pack them so that the freshness and the aroma are not lost. We are offering free gifts like soft toy or a coffee mug to food lovers especially to kids so that a special attraction and attention is given to them; they will ask their parents to always bring them to ‘The Diners Park.’ People- At ‘The Diners Park’, we have 20 people working day and night including the three managers, one accountant, one chief chef and 15 other employees. They have been trained for a month on how to treat the customers and have formal etiquettes and command over language. They have pleasing personality and they are treated as the important asset of our organization. Service Financials Financial Analysis of the restaurant ‘The Diners Park’ Expected Revenue FY09-10:- The seating capacity of Diner’s Park is 80 people at a time. The restaurant is open for 5 hours in the evening from 7 p.m. to 12 p.m. and 3 hours is in afternoon 12 a.m. to 3 p.m. In the evening of any weekend, the restaurant is most of the times completely packed for four hours and is occupied by around 25 people in the last hour. On an average a group spend around 1 hour on dinner. The bill generated is approx. 10$ per person at any given point in time. In the afternoon of the weekends generally 25 people can be seen in any particular hour. For the normal days the occupancy is around 25 people in the evening at any point in time and around 10 people in the afternoon. So the estimated revenue in FY08-09 is:- Estimated Expected Revenue = (Revenue in a week in the evenings + Revenue in a week in the afternoon) * 4 *12 (as there are 4 weeks in a month and 12 months in an year) Expected Revenue in a week in the evenings = (80*4*2*10$ + 25*1*2*10$ + 5*25*5*10$) Expected Revenue in a week in the afternoon= (50*3*2*10$ + 5*10*3*10$) Expected Total Revenue in FY08-09 = $ 847,200 Estimated Cost: Each price will lead to a different level of demand and therefore have a different impact on a company’s marketing objectives. Demand and price are inversely related: higher the price, lower the demand. On an average ‘The Diners Park’ employees around 20 employees in a month and the salary cost of all employees is around 20,000$ every month. The cost of raw material is around 9000$ per month and the water and electricity bill cost around 2000$ per month. Apart from this, the miscellaneous cost is around 1000$ per month. The cost capital employed for the project is around 2000,000 USD. Taking the rate of interest to be around 6% per annum, the interest cost is around 120,000$ per annum. Therefore, Total Estimated Cost = 32,000$ * 12 + 120000$ Total Estimated Cost = $ 504,000 Estimated Net Profit and ROCE:- Estimated Net Profit = Estimated Total Revenue – Estimated Total Cost Estimated Net Profit = USD 847200 – USD 504000 Estimated Net Profit = $ 343200 per annum ROCE = 343200/ 2000000 * 100 Expected ROCE = 17.16% Thus, Diner’s Park is expected to perform a healthy business of 17.16% in FY08-09. Monitoring and controlling For Monitoring and Controlling of the services so that it is smoothly and without any hassles provided to the customer, we have engaged three On the floor Managers who make sure of delivering more than what is required. Apart from this a quality check test is performed and a Feed back form is made to be filled by our customers so as to know our Strengths to be celebrated and the weakness to be improved. Home Delivery Service- At Diners Park, we added more drivers to increase the speed of delivery. Even more importantly, we have introduced specially insulated, heat retaining, containers to ensure that the order is still hot when it arrives at the door of the customer. Technology for Database maintenance- The making of new customers and retention of the old one; maintaining their database as their DOB, Address, Occupation etc. is really a Herculean task. But because of technology, we can maintain the database of our customers and the software even reminds us of the coming event to congratulate them. Thus, the use of technology to enable or facilitate the delivery of services has the potential to benefit customers and service providers as well which in turn helps in making profit to the service provider. At the end I would like to write an appropriate quotation: "People will forget what you said, people will forget what you did, but people will never forget how you made them feel." - Bonnie Jean Wasmund And that is what we at Diners Park do and say… Come to the Diners Park and Feel the difference!! Dining at its Best... References: Kotler, Philip. 11th ed. (2003) Marketing Management. New Delhi: Pearson Education (Singapore). Make Cherry Hills your home! Cherry Hills Lodge & Golf Course. [Accessed 12 February 2009]. Padhi, Nayantara. (2002, December 30). The Eight Elements Of TQM. iSixSigma.com. Available from [Accessed February 4, 2009]. Primary Marketing Research. Marketing Teacher. [Accessed 13 February2009]. Wirth, Ross A., Ph. D. Integrated Marketing Communication. Last modified- September 23, 2008 Available from: Entarga.com, < http://www.entarga.com/mktgplan/imc.htm> [Accessed 11 January 2009]. Read More