Walden Farms is a food manufacturing company that specializes in the production of healthy foods for dieters, bodybuilders, and diabetics. It pays much attention to its inventory management in order to ensure the production of high-quality outputs. It adheres to the standard of five types of inventory categorization style, where the items are divided into raw materials, work-in-progress/process (WIP), finished goods, packaging, and consumables. In the case of ABC analysis, the assessment of the company’s ketchup shows that A is comprised of tomatoes, B is salt, and C is plastic bottles. They vary in their level of importance and control measures, where A is the most tightly and accurately managed, and C is the least regulated. In addition, Walden Farms approaches the finished products by ensuring that it follows the FIFO method, where the items with the lowest expiration time are shipped or transported first.
Walden Farms is a food production company that specializes in manufacturing healthy food alternatives. The company was founded in 1972 with its headquarters in Linden, NJ (“About Walden Farms,” 2020). It provides sugar-free and gluten-free as well as low-calorie sauces, salad dressing, and peanut spreads. Walden Farms targets a unique market segment, which is mostly comprised of bodybuilders, dieters, and diabetics. The main objective is to become a dominant market leader in the healthy foods market.
One should be aware that there are a number of inventory types, which need to be categorized and handled accordingly. These include raw materials, work in progress/process (WIP), finished goods, packing materials, and maintenance, repairs, and operating (MRO) or consumables. Raw materials are the elements that are used in the manufacturing process by being key inputs. It fits into the category because these are the most critical inventory group without which are a manufacturing process cannot begin.
WIP is comprised of components, which were the raw material, but they are being transformed by the procedures. The given category is plausible due to the fact that the manufacturing process is not always completed in one session, which is why some in-progress items need to be stored. Finished goods are final products of the company which are ready to be transported or shipped to the consumer. These types of inventories must also be considered, and they fit the category because some products might have an expiration date, which means that stock needs to be managed on a FIFO basis.
Packaging materials are inventories of the items which are used for packaging the post-manufacturing goods. One should not dismiss the importance of packaging, and therefore, it is a necessary category due to the fact that it might be critical to functionally hold the product. MRO or consumables are any elements that are inputted alongside the raw materials but get used within the process. It fits into the category because some inputs are not part of the raw materials and packaging. In the case of Walden Farms, raw materials for ketchup are tomatoes and salt, WIP is a mashed form of tomatoes, finished goods are ketchup sauces, the packaging is plastic bottles, and consumables are oil and bolts for the machinery of production.
Walden Farms uses its inventory in a standard way for a food company due to the majority of the products having expiration dates. For example, in the case of finished goods, it is important to ship or transport the items manufactured earlier first. In other words, such an approach should use a first-in-first-out or FIFO method, where finished goods with lower expiration dates are sold before the ones with longer periods. Walden Farms also pays close attention towards its raw materials because they are tomatoes or other unprocessed foods, which need to be stored properly. For example, it is essential to preserve tomatoes in large-scale fridges in order to avoid spoiling them.
The manufacturing process in Walden Farms utilizes a wide range of machinery, which is why it also manages consumables or MRO inventories, such as oils, bolts, and replaceable parts (“About Walden Farms,” 2020). For instance, a technician oversees these procedures and ensures that machinery is operating at its optimum level of functionality without major hindrances.
It is important to note that to conduct an ABC analysis of Walden Farms, it is vital to determine the categories, and in this example, ketchup will be assessed. The classification of the company’s inventory can be seen in Table 1. The A group includes tomatoes or other unprocessed foods, which need a special type of storage. The B group is more resilient raw materials, such as salt. The C group includes plastic bottles and boxes, which are not prone to spoiling and becoming useless. These classes adhere to the Pareto principle, where the smallest portion of inventory contributes to the largest values share of the product, and it can be seen in Chart 1 and Graphics 1. The main reason behind such a classification is that tomatoes require tight and accurate control, whereas salt requires a more relaxed one. Plastic bottles demand the least amount of regulation because they are not to be consumed, and they do not spoil.
Table 1. ABC Analysis of Walden Farm’s Ketchup.
Reference
About Walden Farms. (2020). Web.