Kudler Fine Foods
ACC/542
February 6, 2012

Kudler Fine Foods Kudler Fine Foods (KFF) was founded in 1998 by Kathy Kudler with the opening of the La Jolla, California store. Due to that stores’ success, KFF was able to open a second store in 2000 in Del Mar, California and a third store in 2003 in Encinitas, California. Since its inception in 1998, KFF has proven to be a successful company with continued growth. Resulting from this growth, the need has arisen to evaluate KFF’s current accounting operations as well as how computer systems could be more integrated into the day to day business operations of KFF. As a member of the accounting firm retained by KFF, I will use this brief to assess your current systems, discuss possible technology options, and evaluate potential threats related to your current business model.
Business and Accounting Needs of KFF In looking at the business and accounting needs of KFF, I determined you currently use a comprehensive Retail Enterprise Management System (REMS) that has the following financial modules: • General Ledger – Used for financial reporting, budgeting and chart of accounts • Accounts Payable – Used for check printing, cash purchases and tax and freight allocations • Point of Sale (POS) – Captures and reports all retail sales • Bank Reconciliation – Reconciles checks, account deposits, and account balances
The REMS has imbedded security features such as passwords, dollar limits, and limited access features and any disbursements over $1,000 must be approved by either the CFO or President while disbursements over $5,000 must be approved by both. Additionally, KFF installed auxiliary generators at each store and the company headquarters to protect against power outages 24/7. In addition to the above needs supported by REMS, it is my observation that KFF needs a new system to handle inventory and purchasing as well as improved security features.
Analysis of Current Computer Systems of KFF To run the REMS, the La Jolla and Del Mar locations each have a Novell 4.11 server and four POS terminals running WIN9x software. These terminals are networked via an Ethernet to two workstation computers. One of these workstations only has 64mg of RAM which is low by today’s standards. This could cause the computer to run out of memory, run slowly or even freeze at times and should be upgraded to at least 1GB. This workstation does have an external CD burner which is good for backing up files but the bubble jet printer associated with it should also be upgraded to improve productivity at a lower cost. The second workstation has a built in modem and CD Rom reader which is good for installing new software. The Encinitas store has the same Novell server and four POS terminals but does not have the two workstations. This makes it difficult for the Encinitas location to access important inventory data and needs to be addressed in order to improve efficiency at this location. All three stores have a 56K modem and an uninterruptable power source. The power source is an invaluable asset to protect the company 24 hours a day, 7 days a week from the often occurring power outages in California. The 56K modem should be upgraded to improve the upload/download times as this is an outdated product. Lastly, the WIN9x software in use on the POS terminals and workstation computers is an outdated system and should be upgraded to a more current operating system such as Windows XP, Windows Vista, or Windows 7.
Technology Options and Suggestions The current REMS used by KFF has worked well in the past at handling the day to day accounting tasks associated with this type of business. This system has limitations, however, and would have difficulty in supporting the KFF long range growth goals associated with online ordering as well as the expansion of the catering side of the business. Additionally, there is room for improvement on the current inventory system and purchasing system used by KFF. Most major grocery stores use a bar code system for inventory which is linked directly to their purchasing system. Currently, KFF has no central inventory system or purchasing system as each of these functions is handled independently by the department managers of each store. As a result, there is no way to guarantee the best pricing for these individual purchases. A bar code system would record each inventory item starting with its purchase and ending with its sale to a consumer. This system could be centralize at the KFF headquarters and would allow a purchasing agent to obtain pricing for all three stores combined instead of individually. This would also provide much needed flexibility for the sales expansion into online sales. Additionally, a bar code system would eliminate any possible transposition errors associated with the current spreadsheets used to track inventory at the separate stores. The bar code system would enable the inventory tracking and purchasing functions to become automated and free up some of Kathy’s time to concentrate more on the catering side of the business.
Threat Evaluation Taking into account the above observations, I have determined three possible threats to KFF and its’ current business model. First, the company needs to invest in time lock safes for each store location. The current practice of placing each shift’s money into a locked bag, while waiting for the bank courier is a theft waiting to happen. A time lock safe will allow the managers to place the cash in a safe, inaccessible place thereby limiting options for a theft to occur. Second, KFF lacks written policies regarding security of its’ accounting information. Although the REMS does have password protections and dollar limits, KFF needs to create and implement a written policy detailing the password requirements, dollar limit requirements, and authorized personnel. This policy should also explain where the passwords are kept and describe the audit procedures in the event of a system breach. Third, the company needs to operate more efficiently by updating the current servers, POS terminals, and workstations to newer software versions. Additionally, the Encinitas location needs to be upgraded with workstation computers like the other two stores to allow access to company and inventory information. These hardware and software upgrades will enable KFF to improve their efficiency by using a bar code system to streamline inventory tracking and purchasing.
Conclusion
For over 13 years, Kudler Fine Foods has been a successful supplier of gourmet foods and experienced significant growth. By implementing the ideas and suggestions contained in this brief, KFF will continue to prosper and be able to expand their sales base into online sales as well as the catering industry. These changes will increase the profit of KFF and allow them to recognize another part of their growth strategy which is additional stores.

References

Kudler Fine Foods. (2011). Retrieved from https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Kudler2/intranet/index.asp