Kudler Fine Foods plans to contract with local growers, which requires updated process analysis, supply chain evaluation, performance metrics measurement and quality control assessments. The approach of this paper is to familiarize the reader with operations management terminology, while focusing on suggested focal points for Kudler Fine Foods. Operational effectiveness must be accomplished for management to manifest strategic objectives.Process AnalysisPlanning to buy organic produce from local growers will need special attention, just as any business activity does. Ideally the company hopes to reap the benefit of conveniences such as lower shipping cost, fresher perishable goods and lower merchandise surplus.
Additionally, Kudler Fine Foods expects to nurture supplier/department manager relationships that might optimize strategy and inventory management. Thanks to the positive vision that Mrs. Kudler has, organizational processes have a chance to re-structure and flourish. “A process that does not match the needs of the firm will punish the firm every minute that the firm operates” (Chase et al.
, Chapter 5, pg 3).When analyzing process, it helps to have a clear design of how tasks, flows and storage areas work together. For example, since excess inventory potentially costs money, the local suppliers must be aware of management’s need for Just In time product flows (J.
I.T.-goods arriving as needed).
The J.I.T. technique can help reduce surplus, and this goal should be communicated to all participants in the supply chain. Employees need to understand how and why each function exists, along with consistent shared reminders of the need for stability regarding the interrelatedness of business activities.Considering the stages of process for ordering gourmet foods, there will never be available time in between shipments and stocking. Dealing mostly in perishables, the produce departments will have to take advantage of the proximity of suppliers, while trusting Mrs. Kudler’s inventory forecasting.
The refocusing of operations must be a unified experience for the new local produce relationship to work. This means that every level of the organization needs particular performance metrics to achieve function efficiency. “Efficiency is a ratio of the actual output of a process relative to some standard” (Chase et al., Chapter 5, pg 16). As mentioned earlier, frequent reminders of strategic objectives must be ongoing within the company to achieve valuable productivity measurements.Supply chainLogistics are very important to the success of any enterprise.
Thus goals of maximum efficiency and minimum inventory are part of the outcome of a thriving supply chain. To achieve optimal inventory turnover, Kudler Fine Foods should outline a simple procedure manual that explains the new local supplier/management chain operation. Previously in the company, the common procedure involving suppliers and distribution entailed uncertainties that developed expected variation.
This was due to the weak links between merchandise sources and department mangers. Hopefully, direct purchasing will help eliminate past defects and create a relationship similar to the trusting relationship Mrs. Kudler maintains with the organization and consumers (Chase et al., Chapter 10, pg 4).In evaluating supply chain efficiency, two main formulas are generally used: inventory turnover ratio and weeks of supply. “ In many situations, particularly when inventory is dominant, weeks of supply is the preferred measure” (Chase et al., Chapter 10, pg 5).
Weeks of supply is calculated by dividing average aggregate inventory value (total inventory value at cost) by Cost of Goods Sold (AKA-Cost of Revenue-annual cost for goods) multiplied by 52 weeks. Inventory turnover is obtained by dividing Cost of Goods Sold by Average Aggregate Inventory Value. These quantitative tools are indicators of how well a business stocks and sells goods, and can be used to forecast future inventory.In Michael E Porter’s Competitive Advantage, he discusses the importance of strategy, value chain links, cost advantage, business unit interrelationships and differentiation, to name a few (Porter, Competitive Advantage, pgs 470, 48, 112, 392, 162). These concepts are applicable to any business attempting to improve supply chain performance. Kudler Fine Foods management needs to be consistent when measuring results by referring to standard checkpoints that are based in the marriage of Porter’s main principles.
For example, gourmet organic products that have salient qualities in the market (differentiation), encouraging supplier/produce department teamwork (value chain links), unifying processes by communication (business unit interrelationships), saving money through buying direct (cost advantage) and a strong product mix based on market analysis (competitive strategy) are strengths for the company. These elements are essential to the sustainability of Kudler Fine Foods.The new agile supply chain involving local farmers will allow the company a chance to take advantage of a quicker response to merchandise issues, however, every staff member needs to be cognizant. Research shows that short product life cycles, demand unpredictability, unbalanced product mix and variation can be dealt with through open communication. This will continuously update key process drivers, and ideally develop ongoing supply/demand data to reduce the presence of non-value added activities (Chase et al., Chapter 10, pg 8-9).
Operational EffectivenessWith the plan for the new Kudler Fine Foods supply chain in effect, protecting the success of the refreshed strategy will be necessary. As Porter often mentions, consistency between activities makes business work or fail. Not only should standards and controls guide operations, points of what not to do should be addressed. Trade offs exist in a company that require critical thinking at every level of the organization.Kathy Kudler must clearly communicate to all employees that the business will only prosper through a unified vision of efficient/strategic operations supported by careful analysis, defined problems, informed alternatives and well designed solutions. “Operations management is a continuous function” (Gomez-Mejia et al., Chapter 15, pg 10).
Monitoring operations entails a pro-active approach that produces better results if organized through process diagrams for reference. Many different controls exist such as Check Sheets, Process Flow Analysis and Process Capability Measures, to name a few (Gomez-Mejia et al., Chapter 15, pg 10). Cause and Effect diagrams (AKA-Ishikawa Charts) are useful for finding variations by evaluating operations interrelationships to locate a problem.Maintaining the strategic objectives of an organization involves ongoing attention to operations activities. The two main approaches selected form the course readings are TQM (Total Quality Management) and Kaizen. “TQM has been described as a total commitment to quality and attitude expressed by everybody’s involvement in the process of continuous improvement of products and services, through the use of innovative scientific methods” (Gomez-Mejia, Chapter 15, pg 13).
TQM includes the famous plan, do, check, act. This cyclical process is supported by unpredictability minimization (through less variation from efficiency), quality circles (employee groups) and encouraged production process focus.Kaizen is translated as “continuous improvement” in Japanese. The three main parts of this approach include maintenance (details), Kaizen (identification of incremental improvement) and innovation (adjustments needed). This philosophy of business is centered on honest assessments, re-evaluation, unlimited potential for improvement, positive attitude, consensus and effective solutions. Employees will most benefit from Kaizen by opening themselves to the concepts that appeal to them, and building the understanding around it.ConclusionAn opportunity for a more optimal operations management is inherent with the plan to contract with local growers. Achieving sustainable growth within the company depends on how well Mrs.
Kudler communicates an overarching strategy that inspires a commitment orientation producing real operational effectiveness. Management meetings should always focus on how to update procedures that are based in proven business practices. Teamwork from all levels of the organization will be the only way to unify the company towards an improving and profitable entity.