Integrating Contracting Efforts at Kudler Fine Foods - Case Study Example

Assessment of Addition of Local Suppliers of Produce at Kudler Foods In order to improve the variety offered to s, and also benefit the localcommunity, Kudler has decided to contract local growers to supply organic produce. This will allow Kudler to perhaps get fresher produce, possibly delivered the same morning as harvested, and have the added benefit of contributing to the local community. Several adjustments will have to be made in order to effect the change. The business processes which will be affected include the ordering and fulfillment process, the stocking process, sales, accounting and marketing. These processes or diagram has suggested in Chapter 5 of the chase text. (Chase, Richard B., Jacobs, F. Robert, Aquilano, Nicholas J. 2006 ) 1 Careful planning will have to be done in order to assure a successful transition to using new suppliers. Using the chart created for the flow of the ordering process, the three operations processes, as described by Gomez, can be clearly seen. The ordering process at the end of the day, plus the delivery in the morning is equivalent to stage one, the input stage or materials are acquired. The second stage actually begins once the orders are accepted, and his transitions to the third stage as the delivery materials, fresh produce, are used to restock the produce department before opening the store. The third stage, or the product is delivered to the customer begins when the doors are open. Sales personnel stalkers and any other available personnel on the retail floor can then answer questions from customers to keep them informed. This delivery stage ends at the cash register with the customers purchase and the information from the point of sale system being sent to the various destinations. The changes that will be necessary in the ordering and fulfillment process will include reducing borders to current suppliers adding the new suppliers to the ordering process. New suppliers will have to be contacted and assessed to ascertain the amount and quality of product they can deliver our regular basis. The credentials of the local growers will have to be checked in order to assure that they are legally allowed to label their product as organic. The quality of the produce must be assessed and a proper contract will have to be drawn up which includes a description of the quality currently assessed and an agreement to maintain that quality, a detailed list of products with the amounts kept available for Kudler foods and an agreement between Kudler and the grower concerning minimum orders and times of delivery. Kudler needs to guarantee that there will be sufficient local produce available for customers once customers are made aware that it will be there. Once a contract is signed with the local grower, and deliveries begin, adjustments will need to be made to the orders from other growers. First orders should be small and balanced by a reduction in orders from current suppliers. Even if the strategy of using local suppliers attracts new customers, any sales made of produce from the new suppliers will directly affect sales from current suppliers of organic foods. This process needs to be monitored carefully so that adequate produce is always available, while ensuring that you the surpluses do not increase. Kudler also needs to look at the current contracts with other growers to be sure that they are not contracted for more produce than they can sell. It is probable that orders from current suppliers will need to be reduced gradually as local growers are added to the supplier list. It would not be a good idea to make this transition all at once, in case there are problems with any of the local suppliers. The stocking process will have to be adjusted in order to keep produce supplied by local growers separate from produce supplied by current suppliers. Shelves will have to be rearranged in order to accommodate the new local organic produce, both on the retail floor and in back were deliveries are excepted. Signs will have to be created in order to describe the new produce and display the price. These should emphasize that this produce is fresh each morning from local growers. Depending upon delivery times, employee timetables may have to be adjusted. Due to the extra inspection which will be needed it may take longer to accept deliveries in the morning. Extra staffing might need to be added for a short time to the morning schedule so that the process of accepting deliveries does not overlap the process of stocking the shelves. All fresh produce delivered must be arranged and ready for sale by the time the store opens. Deliveries can be monitored to make sure that adequate staff are on hand and adjustments can be made as needed. However, one additional person on hand when a new supplier begins to deliver is a good idea, and it is probable that that person should be the manager of the produce department. In this way, the manager will have direct input to the process, educating the supplier and controlling the quality. Little actual change will be required to the usual stocking process for the produce to apartment because of the new suppliers. In looking at the chart, Kudler1 in appendix A, we can see the process, beginning with the acceptance of the delivery through the assessment at the end of the day as to how much needs to be ordered for the next day. Included in this process is the assessment of inventory at the end of each day in order to prepare for making orders. Inventory sheets will have to be made up for the new suppliers to streamline the ordering process. Employees must be made aware of the new local organic produce available so that they can be ready to point this out to customers. They should be made aware of the benefits of using local growers so that they can pass this information on to the customers. In addition, they need to know exactly what organic means and that the company has checked to make sure that the local growers contracted with meet this definition. In this way, the staff will be ready to make adjustments to their sales behavior and conversations with customers to accommodate the change. It is likely that the cost of acquiring fresh local organic produce will be slightly higher than that from current suppliers, even including the delivery from local suppliers requires less transportation. Small growers have higher overhead. Therefore, they must get higher prices for their produce. Retail prices will change as a result. It is expected that the price of local organic produce will be slightly higher than that acquired from current suppliers. This difference needs to be explained to the customer in order to stimulate sales of local produce. The accounting department will need to add the new suppliers to its list, especially if Kudler wishes to collect information for efficiency studies. The payment process to suppliers will have to be adjusted to include the new local suppliers. Changes may have to be made to the cash register and inventory programs, adding codes for the new suppliers. The marketing department must be made aware of the change, and of the factors which contributed to this decision. They need to be aware of the benefits inherent in using local growers in order to leverage the public-relations benefits. A complete description of exactly what organic means should also be made available to them, because this is something they can use in their marketing programs. They will likely want to make a whole campaign, which focuses on this change, as this could attract new business, merely because of the social implications. This proposed change will affect both current suppliers and new suppliers. Adjustments to the supply chain should be made on a gradual basis. Contracts with current suppliers need to be examined to make sure that Kudler does not break any of these agreements. Depending upon how the local growers will be delivering their produce schedules will have to be modified. Every step in this process needs to be followed closely to assure smooth transition. As each new local supplier is added adjustments will have to be made to orders from current suppliers. The only real way to success of adding these suppliers can be measured using inventory turnover, a method suggested in Chapter 10 of Chase. (Chase, Richard B., Jacobs, F. Robert, Aquilano, Nicholas J. 2006 ) Careful tracking of inventory and charting of the changes will allow the operations manager to judge the efficiency of the transition. Deliveries from local suppliers should be inspected much more carefully at first to establish an understanding between Kudler and the suppliers as to the quality expected. The marketing department can use the information from the point of sale system to make adjustments in their advertising campaigns, so that the benefits of social consciousness in using local suppliers, and therefore feeding money back into the local economy, can be maximized. Individual local suppliers might be added to the advertising campaign as they come on board. In addition, the advertising campaign should also include information concerning the benefits of using organic produce. A third addition to the advertising campaign would be the idea of how fresh local produce is with daily delivery. Adding local suppliers of organic produce to the supply chain for Kudler foods is completely in line with company philosophy, as shown on the website homepage. This allows Kudler to provide the freshest, organic produce to its customers, while also contributing economically to the local environment. If properly controlled so that shortages do not occur, this is a win-win situation. The customer base of Kudler foods is not accustomed to buying the cheapest available food. Therefore, the slightly higher prices of local organic produce should not affect the bottom line. The process of this change should be gradual and carefully monitored and customers and the public kept informed. It should be highly successful. Appendix A Kudler1 References Chase, Richard B., Jacobs, F. Robert, Aquilano, Nicholas J. 2006 . Operations Management for Competitive Advantage, 11eChapter 5: Process and Chapter 10: Why having an effective supply chain matters, The McGraw-Hill Companies Gomez-Mejia 2002, Management (8th ed.). Chapter 15 -. New York: McGraw-Hill. Read More