Success of the Garden of Freshness Stores Operating in Boucherville - Case Study Example

Introduction Widespread use of technology and changing expectations has resulted in increased business complexity. The wait time for product availability at retail stores has declined and so does the importance of logistics function for retailers has increased. In this respect, this paper examines the logistics issues faced by The Garden of Freshness- a fruits and vegetables retailer. Solutions are also recommended to its Director of Supplies and co-owner, Marc Pineault to tackle the issues. Background Quality and responsiveness have been the cornerstones of success for the Garden of Freshness Stores operating in Boucherville and Sainte-Julie locations. However, recent instances of customers complaining of stock-outs of specific fruits and vegetables and lack of fresh products have caught the attention of management and the owners of this family business. Garden of Freshness was established as a fruits, grocery, deli and bakery company with special attention on quality and availability of fresh products every time. Very soon the company opened up two more stores with 120 employees currently working for it. While the supplies department is looked after by Marc Pineault, the administration is in the hands of his brother- Sylvain Pineault. There are managers for each store who directly report to the supervisor and every store has two kinds of employees- production employees for logistics functions of loading and unloading the trucks and frontline employees to assist and advice the customers. Issues faced by Marc Pineault Currently, Marc Pineault is facing serious nightmares on the issue of shortage of perishable products every afternoon and also the quality proposition which is their unique selling proposition. Most of the vegetables and other products do not remain fresh after the second partial delivery is made to the stores, thereby leaving the customers dissatisfied. Going through the facts of the case reveal the following issues and challenges: Planning and Forecasting No arrangement to identify and select key suppliers on the basis of cost, vicinity and quality. Shortage of skilled and competent workforce at three stores. No incorporation of technology in integrating the processes over the stores. No strategic efforts to gather data on customer buying trends and demand of different products in different seasons. Communications Lengthy and time consuming process of store managers updating on inventory status every evening. Lack of proper and effective information flow between stores and management. Storage Absence of storage facilities like cooling, air conditioning and others to keep the freshness of products intact. Procurement Wasting time over visiting every supplier at the Central market. Transportation Wrong scheduling of transportation with repetitive locations in between. Wrong timing of partial deliveries to the Boucherville and Sainte-Julie stores. Analysis Superficially, the issues faced by Marc Pineault seem of operational level but an in-depth analysis of the entire scenario reveals some major strategic loopholes. Shortcomings in the strategic and operational planning of Garden of Freshness are: Strategic hiccups Strategically, the business has expanded but arrangements to sustain the growth have not been accounted for. The selection of suppliers is the biggest loophole which is damaging the logistics of the business. Every evening the purchasers visit the Central market and every single supplier to assess the price and quality. This is in fact very time consuming and repetitive also because suppliers can be judged after a certain period of time. Garden of Freshness has been operating for the last 5 years and as such, it should be aware of the fact as to which supplier supplies products with both quality and price effectiveness intact. The failure to identify potential suppliers and eliminating the unprofitable ones is the key reason behind delays in purchases and their deliveries to stores. Secondly, once key suppliers are identified and established collaborative relationship with, Marc Pineault can carry on shared forecasting where garden of freshness will supply customer expectations, sales and trends data to the supplier and supplier will provide requisite quantities on right time and right price. This will reduce time lags and increase responsiveness (Christopher 1998). Also, Marc Pineault opened three stores but did not recruit appropriate number of employees at these stores to look at major functions. Technological incorporation into business processes has been the talk of the town but Garden of Freshness is still distant from this. Obvious example is the manual information of inventory and stocks given by store manager to purchasers every day. Because of absence of technical infrastructure, many processes are being hampered. First is the collection of trends and buying patterns of customers which can help in future forecasting. Second is the flow of information between stores and management which is causing delays in shipments and deliveries and third is the complete absence of information flow between Marc Pineault and its suppliers (Figure 1). Fig. 1 Operational hiccups Strategic hiccups are getting translated into operational inefficiencies. No planning and lack of supplier partnership results in wasting a lot of time spending at the Central market which could have been avoided if partnered with suppliers. Secondly, for second partial deliveries, the products are first sent to the Varennes warehouse and then transported to the two stores which unnecessarily lengthen the scheduling function. As already said in the case, most of the shortages occur during afternoon. Thus routing the products purchases through Varennes seem illogical when they are only sorted out there. It can be done at the Central market also and directly transported to the stores. This will not only avoid delays and shortages, but also result in saving transportation cost. Also, there seems to be no arrangement of cold storage or air conditioning facility at the two stores due to which products do not remain fresh. It is given that the trucks carrying the purchases from the Central market are equipped with air conditioning facilities but lack of these facilities at the stores account for fruits and vegetables getting stale and look old (Nahmias 1982). Shortage of employees adds to the operational inefficiencies as if there is sufficient work force, they can assess the demand of the customers every day and judges any stark change in it. Thus, immediate reporting can be done and purchases can be made accordingly. They can also help the management in providing the data on seasonal trends and buying patterns of customers which will aid in demand forecasting of products. Recommendations One essential thing which is to be kept in mind by Marc Pineault is that they are operating in perishable goods market where assessing demand in advance is of utmost importance. While shortage can lead to customer dissatisfaction, overstocking will result in excessive transportation, storage and handling costs. Thus, achieving a balance between supply and demand is crucial. Keeping this factor of success in mind, following recommendations are being made to Marc Pineault to tackle with the problems. The recommendations are segregated in short term and long term categories to gather the necessary resources and implement them accordingly. Short term solutions Currently, the problem of shortages of products is giving nightmares to Marc Pineault. For this, it is recommended that the scheduling of transportation for second partial delivery should be modified and purchases from the Central Market should directly be transported to the Boucherville and Sainte-Julie stores. The picking and sorting should be done at the Central market itself as purchasers have the individual stores requirements with them. Secondly, better cooling and air conditioning equipments according to individual product temperature and humidity requirement should be installed at the two stores so that fruits and vegetables can be kept fresh for a longer duration of time (Fernie 1990). Cooling arrangements should be done in a way that vegetables and fruits are displayed while being cooled. This will make the products seem fresh. Long term solutions Majority of solutions for Marc Pineault come from long term perspective. First and foremost is the identification of key suppliers which can provide quality products to it at competitive prices (Figure 2). This applies to both regular and foreign or seasonal products. This arrangement will solve the problem of delays in purchasing and visiting Central market every day. Fig. 2 Secondly, introducing automated system in the business processes is now necessary for Marc Pineault to sustain the growth and make room for further expansion. Point of sales software and EDI (Electronic Data Interchange) should be installed (Influx Connect n.d). This will serve three purposes: first, information flow between stores and management can be streamlined and real time inventory status will be made available to the management. Secondly, POS will record every single sale and thus, buying patterns and demand forecasting can be done on the basis of data gathered. Third and the most important, this data will be used to collaborate with the suppliers and inform them of the regular and seasonal demand of various products in required quantities. Thereby, suppliers will arrange for availability of the products as and when required and purchasers would not have to go to the Central Market every day. Rather, information will flow from stores to management and from management to the suppliers (Ferguson and Ketzenberg 2006). The distribution and transportation system of supplier will also help Marc Pineault in achieving efficiency (Figure 1). Last but not the least, Marc Pineault is advised to introduce cold chain logistics in his business (Figure 3). Elaborating on this initiative, Marc Pineault is advised to develop contractual agreements with the farmers and harvesters for the supply of fruits and vegetables. They should be provided pre-cooling and cold storage facilities and assured that a specific portion of their produce will be bought by the Garden of Freshness store at reasonable rates. This will allow access to fresh produce without the involvement of any distributor or middlemen and Marc Pineault will also not face any shortage as supply will be made directly from the producer. Though it is an expensive and a very strategic move, yet it will deliver optimum utilization of resources and add value to the quality proposition of his business. In this arrangement, partnership will be done with the farmers to ensure ideal transporting and storage condition right from the harvest to the consumption point (Viswanadham n.d). This will reduce extra costs of suppliers, wholesalers and other middle men in between and result in a cost efficient logistics system for Garden of Freshness. If technological and partnership arrangements are made in time, this will give exceedingly better results to Marc Pineault. Fig. 3 Works Cited Christopher, M. Logistics and Supply Chain Management. London: FT/Prentice Hall, 1998 Ferguson, M. and Ketzenberg, M. E. “Information Sharing to Improve Retail Product Freshness of Perishables”. Production and Operations Management 2006, 15(1), 57-73. Fernie, J. Retail Distribution Management. London: Kogan Page, 1990 “How has an inventory management system for perishable goods using bar codes?” Influx Connect. 9 Dec 2010 . Nahmias, S. “Perishable Inventory Theory: A Review” Operations Research 1982, 30(4) July-August, 680-708. Viswanadham, M. Can India be the Food Basket for the World? Working Paper Series, Indian School of Business. Read More