Module 3 SLP S lean six

OPM 500

Dr. Leichter

20 Feb 16

Trina’s Gourmet Hot Dogs is a family start up business. The business has been selling Gourmet hot dogs since its commencement that is it main line of argument. The business has only one outlet which acts as the point of sale as well as preparation of the ones that are distributed. Business sells to outside clients that is, those that do not really need to visit the physical premises in order for them to get the hotdogs. Such customers make their orders online or via a call after which, the delivery guys do the delivery with the use of motorbikes. The business has Trina and Bernice as the management. In addition to that, it has three chefs who prepare the gourmet hotdogs, delivery guys who distribute the hotdogs with the motorbikes and finally, two service persons who deliver services within the physical premises that is, at the restaurant. The business targets children who are above two years of age and those in their fifties. The business has mainly three types of inventories that is, ingredients, ready gourmet hotdogs and maintenance and operating inventories.

The raw materials are the primary components which are used in the making of gourmet hotdogs. Ingredients are thus vital in the preparation. Such ingredients include the hotdogs, buns, bacon bits, variety of sauces (steak, pizza, salsa), vegetables (cucumber, tomatoes, onions etc.). All these will be stored within the restaurant. There is a store section behind the kitchen in the restaurant where such raw materials will be kept. The store has the specialized equipment such as racks, refrigeration service among others. Such equipment helps to keep the ingredients fresh and ready to use at any time when needed. The ingredients are supplied twice per week since most of them are perishable and ae supposed to be used when still fresh. This type of inventory is bought from the outside suppliers hence do not come from the business itself. The second type of inventory is the ready gourmet hotdogs. These have been already prepared and ready to be sold. The preparation of the hotdogs does not always happen on a daily basis. The hotdogs are prepared twice per week by the chefs. The ready ones are kept at the storage as sold as the demand comes around. With the presence of refrigeration services, the ready ones can last up to seven days since the day or preparation. There are also microwaves that are used to warm them in case a client requires them hot. The last type of inventory is the maintained and operation one. As mentioned earlier, the business supplies the gourmet hotdogs to clients’ premises. As a result, there is need to have packing materials such as foils, plastic wraps depending on the when the client is going to eat it. Such materials are usually bought in huge quantity and stored hence packaging takes place when the customer requests for the hotdogs. The average total cost of the $100,000 p.a. The total value maintained by the restaurant is compared to the annual gross income in that, the inventory forms part of the cost of goods sold. The cost of goods sold is normally a part of the computation in order to obtain the gross income (Wild, 2002). That means, cost of goods sold is a primary component in the calculation and the more the inventory, the more costs of maintaining hence reducing gross income. That happens as the cost of goods sold is usually subtracted from the gross income.

Some of the key issues with inventory are inventory records, quality from suppliers and effective delivery (Muller, 2011). The business is centered around food industry hence there is frequent demand on daily basis. The business thus has issue of records of the inventory records where not all inventory in and out is accounted for effectively. Such aspects are leading to delay or adjusts to the monthly budget. For instance, a record can show the presence of vegetables but when demand arises from the kitchen, they are nowhere to be found. That aspect has further led to withdrawal of customers when their needs are not met. The next issue is on quality from suppliers, the inventory supplied is not taking the expected number of days due to perishability issue. The supply happens not be as fresh for the vegetables as required which in turn is making the taste of gourmet hotdogs not as desired. Further, there is increased waste as even some of the stored inventory is not lasting the required number of days. The last but not least issue is the concept of deliveries, there is lack of effective communication with suppliers. The issue has led to late deliveries of the inventory. Lateness of the ingredients being the primary stage in the whole hotdog making process has really affected the smooth flow of activities within the business.

The key method that is being used to track inventory is the tag system. The restaurant tags every inventory that comes into the store at the point of entry. By tagging, its able to keep track of the inventory that is available within the restaurant premises. At the time the inventory is being removed from the store, the tag is removed thus making the tracking process effective. Tagging is usually done twice per week which are days when the supply is brought to the restaurant premises. The restaurant is further doing trials on radio frequency identification (Relph, 2015). The is a scanner that has been put at the entrance of the inventory area. Every time an item is removed from the area, scanner scans hence ensuring tracking. The system has not been installed it’s still being used besides tagging. There are a number of ways that the business is trying to solve the inventory issues. The first one is having personnel in charge of the inventory. the management which is run by Trina and Bernice are the sole persons who have access to the inventory. All the records are thus maintained by the two thus eliminating issues of missing records. The two further devote a number of hours per day to go through the records and enter them into the computer for storage. On the issue of quality, the business has set out standards that every inventory should meet. For instance, all vegetables should be fresh on arrival hence supplier should make sure they are as such. The standards set are assisting the business eliminate the question quality. The third issue of delivery is being solved by having access to a number of suppliers. The business has employed a policy of payment on delivery hence that aspect has enhanced effective delivery by suppliers.

References

Muller, M. (2011). Essentials of Inventory Management. NY: Amacom Publishers

Relph, G. (2015). Inventory Management: Advanced Methods for Managing Inventory within Business Systems. London: Kogan Page Ltd

Wild, A. (2002). Best Practice in Inventory Management. London: Routledge