Kudler Fine Foods is a local upscale specialty food store located in the San Diego Metropolitan area. Kudler Fine Foods was established in La Jolla in 1998, when Kathy Kudler left her job as the vice-president of marketing for a large defense contractor to fulfill her vision of establishing her own gourmet food store. Kathy had a passion for gourmet food and realized there was an opportunity for such a specialty shop in La Jolla. Kathy did not have any experience in the gourmet food business, but believed a one stop shop would be successful. Kathy’s vision was to create one store that would stock a wide selection of the freshest ingredients as well as all the tools a gourmet cook could ever want (University of Phoenix, 2007). Kathy’s vision proved to be profitable generating sales and enough cash flow to enable her to open additional stores in Del Mar and Encinitas.
Situation
Since the beginning, Kathy has handled the purchasing the inventory for the stores. With each new store opening, this has become a very time consuming process resulting in lost revenue from left over inventory, less customer interaction for Kathy, and it takes Kathy away from overseeing the daily operations of the business and strategic planning.
Currently the ordering for all three stores is done in bulk, regardless of the buying patterns in each store. Kudler Fine Foods mainly deals with perishable goods that need to be rotated every couple of days to ensure freshness. The left over inventory is either thrown away or donated to local charities (University of Phoenix, 2003). The costs that are associated with the left over inventory are included in the cost of goods sold on Kudler Fine Food’s financial statements, and simply throwing this food away or giving it away impacts the bottom line.
The process that Kudler Fine Foods has in place for inventory control is a manual process that Kathy is responsible for. Kathy is charged with purchasing the inventory and monitoring the...