Operations and Logistics Management - Kudler Fine Foods - Case Study Example

Kudler Find Foods Introduction The case study that has been selected to study the operations and logistics management of the company is on Kudler Fine Foods. Kudler Fine Foods is a company that was created by Kathy Kudler to offer the people fresh food and the packed items to make meals in short time. The company is offering different products including fresh produce, fresh meat, bakery products and pastries, dairy products and seafood. The company is seeking to offer best quality products and customer services however, it is still unable to achieve target level of operational efficiencies. There are various reasons because of which the company is facing problems in its logistics and operations management. The aim of this report is to highlight the major problems identified in the operations and logistics functions of the company. There are four sections of this report. In the first section, the relationship between the corporate strategy and operations management of Kudler Food has been highlighted. In the second section, the operations of the company in five areas including operations strategy, process types and layout design, facility design, capacity and process design has been discussed. In the third section, the ways through which Kudler Food’s operations add value to the delivery of goods and services have been identified. Finally, the areas of operations management have been identified in the case study of Kudler Fine Food, which need improvement. Relationship between corporate strategy and operations management The relationship between corporate strategy and Kudler Food operations management will be discussed in three phases. According to University of Phoenix (2008), mission statement of Kudler Fine Foods is as follows: “Kudler Fine Foods is committed to providing our customers with the finest selection of the very best foods and wines so that your culinary visions can come true (Oppapers, 2008).” The mission statement of Kudler Food shows that the company aims to provide best quality food to its customers. Therefore, the core values evident from mission statement are quality products to satisfy customers. The ways through which company is striving to achieve this aim is by offering guaranteed fresh products to customers. The finest selection is offered by providing the customers with the freshest of organic meets and seafood (Duncan, 2008). The company is currently focusing on generic strategy to grow and expand however, it still has more potential to utilise resources more effectively and to diversify and grow at much faster pace (Academon, 2008). Relationship between Corporate Strategy and Operations Management Source: Operations and quality management by Samuel K. M. Ho The case study also highlights the operation management practices that match the corporate strategy of the company. To ensure quality of products, standard purchasing procedures are in place. It is mentioned in the case study, that the manager is responsible to ensure best price, quality, and timely delivery to customers. The department managers are also responsible to verify that all products are of desirable quality and available in undamaged conditions. Furthermore, the managers of other departments may also check with their counterparts on the quality of products. Therefore, the available information on company highlights a significant relationship between corporate strategy and operations management. Kudler Food Operations in Selected Areas Operations strategy Kudler Fine Food operations strategy is in harmony with the perception that this strategy is a top down reflection, which means that it is based on what the whole business or group wants to do (Nigel, p.7). It is evident from the fact that operations strategy of Kudler seems to emerge from the mission statement of company and designed by the top management. Process types and layout design The process types define the frequency with which the products are produced by a company (Waters & Water, 1999, p. 63) and the process type of Kudler Fine Food is ‘Job Shop’ as the company produces variety of product in small numbers. The layout design is the physical placement of the resources of a company (Greasley, 2007) and the layout design of Kudler Fine Food is ‘Process Layout’. The reason because of which company had adopted this layout strategy is the nature of the products it is offering. The process types allows the product to go to pass through different processes such as cleaning of raw material takes place in one section, preparation of food takes place in the other section. Facility design The products of Kudler Fine Food are available at is stores, which independently operate however, the sales record are stored with the company. The department manager is responsible to ensure the timely availability and quality of products on stores. However, the company does not have any systematic approach when it comes to the amount of distribution, measurement and capacity of items. Because of lack of communication and lack of intelligent supply chain decisions, the company has been unable to achieve operations efficiency because of the mentioned drawbacks. Capacity Capacity of a process is important because it shows the maximum amount of products produced by the company under normal conditions (Waters & Water, 1999, p. 86). The information given on Kudler Fine Food shows that currently the company is not achieving its potential capacity and it is operating below capacity. The company is maintaining excess inventory, which means that it is has built huge capacity but the capacity is spare because the demand level is below its capacity. It is actually a loophole in the operations of Kudler because it is contributing to the extra costs of underused resources. Process design For an organisation to become efficient in operations and logistics, it needs to become a process-centred organisation. Since the customers are more interested in the end result of the product therefore, various organisations do not give much attention towards processes. Kudler Food is also concentrating more on its customer services end rather than on its whole process. Various points mentioned in the case study support this point. Although company has divided the process into number of tasks however, the tasks of labour are still overlapping as the department manager has to look after inventory management. The company is incurring excess inventory in an attempt to meet customers demand regardless of the cost of inventory management. On the other hand, a process-centred organisation makes inventory management an important part of supply chain management. Therefore, Kudler Fine Food is incurring operational problems because of loopholes in its process design. Contribution of Organisation’s Operations to Value Addition The ways which are actually contributing to the value addition to the delivery of goods and services are as follows: The value addition process starts right from the purchasing process. The company has set standard purchasing procedures, so that the delivered goods may have the promised quality. The purchases are placed directly with the suppliers which also help to ensure the desired level of standard of delivered goods. The items can be delivered from one store to the other store, so that the one facing high demand may not face shortages. It is one of the reasons because of which Kudler Fine Food is not facing problems in fulfilling the demand of customers. The company is seeking to maintain the customer service level of 95%, which helps the company to reduce product shortages at stores. The company is also maintaining a forecasting method based on historical method, which is not very accurate but at least allowing Kudler Fine Food to predict the demand for its products. Since the demand of products changes very rapidly therefore, it is ensured that a variety of gourmet foods can be offered at the outlets of the company. Therefore, from purchasing of the inventory to the delivery of products, Kudler Fine Food is seeking to provide best value to its customers, however, there are various loopholes identified in the operations management of the company, which will be discussed in the following section. Operations Management Areas where Kudler Needs Improvement The case study highlights that although Kudler has been trying its best to offer quality products however, still it has not been able to achieve operational efficiencies. Therefore, it is recommended to the company that it needs improvements in the following weak areas, identified in the case study. Excess Inventory The case study shows that company aims to keep sufficient level of inventory to reduce stock-puts, which results in excess inventory, thereby, resulting in write-downs and high management costs. Therefore, the management is seeking to generate higher income by keeping excess inventory however; cash available to the company is less. Forecasting Another identified problem of Kudler Food Company is its poor forecasting because of which company has been facing unexpected variations in demand of inventory. The current method that is being used by the company tin forecasting is historical forecasting method such as moving average method. The historical forecasting method is actually not appropriate for Kudler because season variations and economic changes are disrupting the forecasts. The company will not be able to achieve the significant level of operational efficiency unless its forecasting matches with the real demand of its products. Value Chain Links A lack of teamwork has been also identified between the suppliers and the functional departments of the company. Therefore, it is very important for Kudler Food to give special attention towards creating value chain links. Business Unit Interrelationships The overall image of the company is being deteriorated by the lack of business unit interrelationships. It is also one of the major issues resulting in the poor inventory management at Kudler Food. Moreover, the company strives and aims to develop strong interrelations between departments however, the departments are not cooperative in this regard. Lack of Communication The lack of communication within the departments is also contributing to the operational deficiencies of Kudler Food and resulting in demand uncertainties. Moreover, no regular meetings are conducted through which the staff can give their input for the improvement of the supply chain management and logistics. Manual Records The data is collected through the cash registers of each department and the sales records of the three departments of the company are not shared with each other. All record is manually maintained and there is shared database throughout which one department can follow up the performance of the other department. Lack of Consistent Strategies Currently the company is aiming to ‘satisfy its customers’ and the operational efficiency of the company is not letting it to achieve its vague aim. Moreover, it is also evident from the case study that company is not focusing on any operation or logistics practice to improve the overall performance of the company. Delegation of Authority The tasks and duties have not been properly assigned to the staff in the company for example, the department managers ensure the smooth operations of the stores and are also considered responsible to check the correct items and quantities. Poor Market Research Focus Another problem identified in the operations management of Kudler Food is the poor market research focus of the company. Company is not pursuing on product innovation and offers what is being offered on the stores, websites and magazines. Therefore, the company has been unable to develop a proactive approach to fulfil the demand of its customers. Recommendations Following are the recommendations given for the identified problems in the operations management of Kudler Fine Food. Ro avoid excess inventory the company should maintain a database, which will be shared between the suppliers and the departments. To improve the forecasting method, cause and effect diagrams, process flow analysis and other techniques should be used, in addition to historical forecasting method. Open communication should be encouraged and departments should cooperate more to fulfil the demands of the customers collectively. A database should be maintained to keep a computerised record of sales data and this information should be shared so that performance of each department can be followed up. The tasks should be assigned properly or the delegation of tasks should be made clearer. Company should give more focus towards proactive approach such as product innovation to achieve competitive advantage. Bibliography Academon. (2008) Kudler Fine Foods. [Online] Available at: http://www.academon.com/Case-Study-Kudler-Fine-Foods/102844 [Accessed on 20th June 2010] Duncan. (2008) Kudler Fine Foods-Strategy. [Online] Available at: http://www.gettingoin.com/files/33124946.doc [Accessed on 20th June 2010] Greasley, A. (2007) Operations management. SAGE. [Online] Available at: http://books.google.com.pk/books?id=7m8VJP0I_ksC&dq=layout+design%2Boperations+management&source=gbs_navlinks_s [Accessed on 20th June 2010] Ho, K. M. S. (1999) Operations and quality management. Cengage Learning EMEA. [Online] Available at: http://books.google.com.pk/books?id=bTUtd2R5LeYC&dq=Relationship+between+corporate+strategy+and+operations+management&source=gbs_navlinks_s [Accessed on 20th June 2010] Oppapers. (2008) Kudler Fine Foods. [Online] Available at: http://www.oppapers.com/essays/Kudler-Fine-Foods/261623 [Accessed on 20th June 2010] Nigel, S. (n.d.) Operations Strategy. Pearson Education India. [Online] Available at: http://books.google.com.pk/books?id=W-0IOqX0Kc8C&dq=Operations+strategy&source=gbs_navlinks_s [Accessed on 20th June 2010] Waters, J. D. C. & Waters, D. (1999) Operations management. Kogan Page Publishers. [Online] Available at: http://books.google.com.pk/books?id=pY9pMcACHjIC&dq=process+types%2Boperations+management&source=gbs_navlinks_s [Accessed on 20th June 2010] Read More