Problem Statement
Despite the fact that Kudler Fine Foods is a fast growing gourmet grocery store showing potential expansion in supply of fine produce (cheese, meat and wine) to customers, there are a lot of issues and challenges accompanying its growth. Development of other branches of Kudler Fine Foods can only be of benefit if the branches are making profits.
In this case, the development of branches of Kudler Fine Foods in Del Mar and Encinitas occurs quickly basing on the fact that the first establishment in La Jolla was critically successful. Due to this, it is certainly realized that the branch opened in Del Mar is not making profits thus leading to reduction in cash flow. Here, the issue is to close this non profit making branch.
The problem is how to absorb the already hired work force in this branch into other branches and efficiently incorporate the remaining inventory into other stores. If the management focuses on this problem statement, then the company is likely to reduce the losses that may accompany the closing of the branch. The end state and goal is to increase the overall cash flow.
The second issue is concerning inventory control. The store is composed of goods that are perishable with short shelf life. The stores are also said to have a lot of perishables of several varieties some of which are not required. This means that the inventory can be easily lost. Loss of inventory is very costly to the company. Therefore, control of inventory is a very vital issue. The problem is identifying the right inventory for the right store.
Every store needs to keep the inventory that can be disposed off to the customers at appropriate time. It needs to have the right variety of inventory that can be sold to customers.
Any other variety need to be removed and taken to the right store. This is what is called reduction of inventory. The end state and goal of reducing inventory is to reduce loss of inventory since every store will only be having what it requires. This increases cash flow in the long run.
Another issue is concerning management. The current management is smaller than expected for a growing organization. There is need to increase the number of managers and delegate various responsibilities to them to increase efficiency. This means that Kudler’s attention will shift from the normal day to day operation to engagement in customer service and general growth of the company.
The problem is that expanding management calls for more expenditure to cater for the expenses for these managers. Therefore, a balance has to be obtained between hiring extra managers and the benefit expected so that loss is not realized. The end goal is to achieve a full running organization even in absence of the owner (Kudler).
The last issue is on the elevated payroll of skilled salespeople. In order to reduce this, the company has to train its workforce to be able to fit in every department. This will save a lot on the cost of hiring skilled workers. Incase of shortage in one department, the excess personnel in the other department can easily be fitted to resolve the shortage.
However, the problem is the cost associated with training these personnel into all round workers. As much as the end results are positive, the process may be costly, time consuming and may fail in some cases where by some people may not adhere to the training. If managed, the end goal is to save on the costs incurred by the company on salaries for hired staff (Leone, 2001).
Reference
Leone, W. (2001). Problem statement development and analysis. Cambridge: MIT Press.