Operation and Logistic Issues for Kudler Fine Foods
Kudler Fine Foods Background
Kudler Fine Foods is an upscale specialty food store consisting of three locations in La Jolla, Del Mar, and Encinitas, which are in the San Diego, California metropolitan area (Apollo, 2007). Kathy Kudler founded Kudler Fine Foods in June 1998 at the La Jolla location. The retail food store proved to be a successful venture, so Kudler expanded. Del Mar was opened in 2000, and Encinitas opened in 2003 (Apollo, 2007). Each store contains about 16,000 square feet stocked with the finest imported and domestic foods in departments such as, Bakery and Pastries, Produce, Meat and Seafood, Condiments and Packaged Foods, and Cheese’s and Specialty Dairy Products (Apollo, 2007). Kudler Fine Foods must have a loyal customer base as demonstrated by a $2.3 million gross profit in 2003 (Apollo, 2007). According to Kudler’s growth strategy, they plan to increase their profit margin in the next year by adding high-margin services and reducing costs by providing more efficient operations (Apollo, 2007). Kudler Fine Foods’ continued success will stem from more efficient operation and logistic systems. Current Operation and Logistic Systems
Kudler Fine Foods’ original business plan accounted for $50,000 to hire a consulting firm, Smith Systems Consulting, to install a Retail Enterprise Management System (REMS) in the initial store (REMS) (Apollo, 2007). A REMS allows system administrators to manage devises at different data centers (Kakadia, 2002). A scalable Retail Management System (RMS) was chosen to manage operational devises communicate to the server which contains the accounting software (Apollo, 2007). The following two stores also use the Retail Management System. The three stores are networked, so sales and accounting information can be seen and utilized from a central location. The accounting information is collected by the cash registers called point-of-sale (POS) terminals (Apollo, 2007). The POS terminals record and transmit the daily sales transaction activity through the RMS to Finance and Accounting Modules. Once in the modules the accounting data is used to produce financial reports and budgets, pay vendors, manage credit and debit transactions, and reconcile bank accounts. Purchasing
Kudler Fine Foods purchasing is done by the owner and store managers (Apollo, 2007). Individually, the store managers determine purchasing requirements for each of their respective stores (Apollo, 2007). It is up to each store manager to obtain the best price, quality, and delivery possible; however, they are encouraged to communicate with each other in order to find the best deals (Apollo, 2007). The mangers may even order in bulk and split the inventory among the store to take advantage of discount pricing (Apollo, 2007). The primary instrument used for purchases is a standard Purchase Order (PO) form. Once a Purchase Order is prepared it may be submitted to vendors in a variety of ways, such as, mailed, emailed, hand-delivered, or faxed (Apollo, 2007). Kudler Fine Foods’ Purchase Order system is the key tracking and financial document used for each order (Apollo, 2007). Inventory Management
Kudler Fine Foods’ inventory management system consists of multiple components. They use the POS terminals to track out-going inventory (Apollo, 2007). In-coming inventory is received manually by the store managers. Verification of the in-coming inventory is done by comparing the Purchase Order to the shipment received. Existing inventory is tracked using spreadsheets and a Microsoft Access database, which is not connected to the RMS. (Apollo, 2007). Once in a while an inventory audit must be done by physically counting each item in inventory. Kudler Fine Foods must maintain a balance between having enough inventory to meet customer demand – avoiding stock-outs – and...