In this paper I explain what opportunities Kudler Fine Foods has in terms of information technology, and describe how the company might benefit from implementing enterprise-wide computer information system. Computer information system brief Kudler Fine Foods (KFF) is a local chain of gourmet food stores with annual sales of more than 10M offering specialized products to targeted customers. The company has three locations in the San Diego metropolitan area (La Jolla, Del Mar and Encinitas) and plans to add more stores soon (Kudler Fine Foods, 2008).
As a typical mid-size food retailer KFF has following key accounting information system needs: •Inventory management and optimization •Customer and sales management •Revenue management (including bank reconciliations and cash ) •Reports and inquiries •Employees and payroll •Security Kudler currently has an individual point-of-sale (POS) computer system in every store. The elements of each store POS are connected through Ethernet. 56K modem provides an internet access. All Kudler’s hardware and software are outdated.
Each store keeps data on a separate server, store’s systems are not connected and don’t share POS information. KFF computerized most strategically important operations, but didn’t integrate them in enterprise-wide information system. The reliance on manual processes for such important areas as cost management, inventory replenishes, and financial statements, as well as the lack of integration between store locations show significant room for improvements. The main disadvantages of a current Kudler’s information system are luck of integration between all stores and outdated hardware and software.
Current Kudler’s system should be replaced with new and effective enterprise-wide information system. Until such system is in place and fully functioning it is highly advisable for the company to not seek out new locations. Inventory management and optimization Inventory management is the most important part of a retail business. To satisfy customers supermarkets have to have big variety of perishable and not perishable items. Retail industry is very competitive. Storage place in a supermarket is limited and must be used as effectively as possible.
If a retail store does not carry enough of a product, then there is a loss of potential customers. On the other hand, if a store is overloaded with perishable goods that are not selling, the business loses money. Keeping up with large quantities and varieties of goods can be difficult, even with the help of an automated system. Kudler doesn’t have a purchasing department and relies on each store manager to order inventory. Purchase order is the main document in replenishing an inventory for Kudler. Prepared purchase order forms are mailed, handed to supplier salesmen, faxed, or sent by e-mail.
Each store manager has to perform manual work to prepare purchase orders, to check with counterparts at the other stores on the pricing, quality, and delivery. Store managers are encouraged to combine orders between their stores if they feel they can save from ordering a larger quantity of a particular item or multiple items. Current Kudler’s inventory system is vulnerable to human errors and is inefficient. Store managers have to perform theirs managing duties and at the same time to work as purchase agents. The company is not benefiting from it.
The inventory management should be done through integrated computer system for all three stores and delegated to several individuals or a department who would take care about the entire chain. The whole process can be paperless by utilizing intranet and internet. Customers and sales management Price is not the primary differentiating factor for Kudler consumers; they are focused on quality and variety of specialized items. Customer satisfaction is directly related to inventories and quality of customer service.
Current Kudler’s information system limits company’s ability to track customer purchase behavior. KFF tracks information such as dollar value and profit margin per transaction, dollar sales and profit levels by day, and dollar sales and profit margins by item (Kudler Fine Foods, 2008). However, in an effort to leverage the information to create a more intimate relationship with their customers, the firm is developing a system to track customer purchase behavior over time. Basically KFF is wasting recourses creating one more stand-alone module that is not integrated in nterprise-wide inventory system. It would be more cost efficient for Kudler to do some customization of inventory management to obtain information about customer behavior. Company’s web site doesn’t provide customers with an opportunity to place online orders. The company would benefit from installing e-commerce software and connecting it to merchandise database. It would be beneficial for Kudler to run a blog on company’s web site where customers can give a feedback and learn about in-store events, cooking classes, gourmet recipes, etc.
Revenue management POS system in every store provides daily sales report. This report is a starting point for each store manager to forecast future sales and cash flows. Sometimes stores have difficulties with cash purchases of large amounts of fresh locally grown produce, because of not sufficient cash on store’s bank account. If stores were able to have one consolidated bank account it would be easier to accumulate cash for purchases. The main obstacle to it is an absence of integrated computer information system for all stores.
Cash deposits and bank reconciliations procedures are performed manually by comparing deposits slips with bank’s recorded activity. Special employee has duties to perform daily and monthly reconciliations. The reconciliation process can be computerized and save the company’s recourses. Reports and inquiries Financial reports and inquiries are the most important documents for business decision making. KFF management has no ability to create a company-wide view of operations. There is no enterprise-wide approach to standard cost reporting, inventory management, cash and revenue management, financial reporting, and security.
In essence KFF information system consists of stand-alone separate modules that need to be integrated to ensure a long term growth of the company. Lack of integration makes it difficult for management to get critical for business decision making information such as inventory turnover, return on assets, return on invested capital, cash flows forecast. Employees and payroll Kudler uses QuickBooks and outsources payroll to Intuit for annual cost of $8,500. At the same time the company has to do a lot of manual work related to payroll (Kudler Fine Foods, 2008): •Employees fill out time sheets manually each week These time sheets are faxed to accounting, where the data is entered for payroll purposes •Managers are responsible for tracking any requests for time off and vacation •Workers’ compensation is managed by a third party provider, which keeps its own records Kudler would benefit from updating its old version of QuickBooks to QuickBooks Enterprise Solutions and Time Clock Plus. Time Clock hardware is not expensive and can be installed in every store. Employees will not have to fill out time sheets manually, they only will need to clock in at the beginning of a shift and clock out at the end.
If all three stores are connected, employee information can be automatically transferred into QuickBooks timesheets. Accounting clerk can process payroll on site. QuickBooks Enterprise Solutions payroll module is easy to use and can take care about all payroll needs including quarterly and yearly reports, W-2s, Workers’ compensation fees, etc. The entire process can be done automatically and save company’s recourses. Security Enterprise-wide information system must be protected from unauthorized use and fraud. This can be accomplished by incorporating password protection, firewall, daily backups, and proper employee training.
Although a hacker attack is a very real threat to information systems, employees might be culprits in the destruction or alteration of company information. Former or disgruntled workers who want revenge on their employer or supervisor have been known to resort to computer crime. To prevent such damages to the company’s databases, employees need to have restrictive access based on their duties. Terminated employees must have their accounts removed immediately. All Kudler’s employees have to go through training how to use company’s computers. Conclusion
Current KFF information system consists of stand-alone separate modules. The company computerized most strategically important operations, but didn’t integrate them in enterprise-wide information system. The reliance on manual processes for such important areas as cost management, inventory replenishment, financial statements, and the lack of integration between store locations show significant room for improvements. Investment in new hardware, software and network infrastructure between stores are essential to the future growth of the company.
Until such systems are in place and fully functioning it is highly advisable for the company to not add new locations.
References Kudler Fine Foods. (2008). Kudler Fine Foods. Retrieved from https://ecampus. phoenix. edu/secure/aapd/cist/vop/business/Kudler/KudlerHome002. htm Kudler Fine Foods . (2008). Finance & Accounting. Retrieved from https://ecampus. phoenix. edu/secure/aapd/cist/vop/business/Kudler/Finance/KudlerFinanc eProcPOS001. htm Kudler Fine Foods. (2008). Finance & Accounting. Retrieved from https://ecampus. phoenix. edu/secure/aapd/cist/vop/business/Kudler/Finance/KudlerFinanc eProcPay001. htm