Previously on “Reality Check”: When we last ran entrepreneur Matias Zeledon’s column on Nov. 17, we left him worrying about how to handle the fulfillment problems posed by the rapid growth of Down to Earth, his Costa-Rica based coffee and gifts mail order company. Eager to bump up operational efficiency, Zeledon brought in IT folks from Costa Rica’s Tech Institute to help him revamp his systems. Are they succeeding? Will Zeledon ever realize his dream of establishing a “model” operation? The story continues . . .
As I presented it in my first column, reality has been tough to us. We have discovered that operations and fulfillment are not as easy as I thought.
So, our first action is to set up a single inventory software system that will address the very complex inventory needs of our entire operation: promotion, production, packaging, and finished product inventory for our stores.
The challenge in the creation of this system is to be able to integrate the different order/reorder time periods, ranging from 12 hours to two months. The critical point in our operation is the 12-hour period prior to shipping the gourmet coffee where there is no room for mistakes. The process includes the use of foil bags and resealers, the back label, personalized main labels with the names of the buyers, a beans/ground identifier label, and a sealing label with the roasting date and the name of the buyer.
Even though we ship only full pounds to consumers in the U.S., we also supply other organizations and our own stores that require a full range of sizes. The total gourmet coffee operation includes four different roasts in two presentations and six different sizes: 32 oz, 16 oz, 12 oz, 8 oz, 2 oz, and 1 oz.
The software system that we are designing needs to also keep track of the promotional materials and the packaging materials. The promotional materials are currently produced by a mail order software system and the inventory is kept there. The average warehouse life of the promotional materials is three months, but besides the mailing of straight promotions, some of these pieces are also included in the shipments.
Then we have a separate inventory system for the packaging and shipping materials, which include the foil bags for our coffee and chocolate-covered coffee beans, plus the bottles and caps for our body care lotion. Coffee liqueur is outsourced, but we still have to produce and affix its labels.
Last but not least, the inventory for our stores includes about 250 products that have a shelf life ranging from seven to 60 days. Some of them are mass-produced, but most are handcrafted items with a re-order level of 30 days.
We estimate the first test of the inventory system to take place in 90 days. We will keep you posted on the process and would like to hear your suggestions on the topic.
Keep checking back, reality is setting in.
Got any advice for Matias? Send your comments to email@example.com.