Academic journal article Issues in Accounting Education

Garden Patch Foods: Analyzing the Purchasing-through-Payables Process

Academic journal article Issues in Accounting Education

Garden Patch Foods: Analyzing the Purchasing-through-Payables Process

Article excerpt

ABSTRACT: Analyzing nonstrategic functions has become a major focus in today's business environment. This case presents the facts behind a decision faced by Garden Patch Foods, a prepared foods company that is looking for ways to increase efficiency and to improve the bottom line. As management considers how to increase efficiency of support operations, two major alternatives arise: (1) create a shared-services arrangement for the three divisions or (2) outsource the support functions. The case requires you to assume the role of a staff accountant and analyze the case facts and research issues relevant to shared-services arrangements and outsourcing. You will then communicate your recommendation in a written report to the CFO. Several references are included in the case to facilitate Internet-based research.


Shirley Davis had the touch when it came to growing fruits and vegetables. In her small town of Farmville, North Carolina, Shirley would supply most of her neighbors with fresh produce throughout the year. Many of these neighbors encouraged Shirley to start a business selling her crops, but she didn't feel she had the time to devote to both her family and starting a new business. After her children were grown, Shirley started experimenting with different methods of canning her produce. Her neighbors were always willing to be guinea pigs, and told her that her products had a better flavor than those available at the local grocery store.

In 1940, Shirley was able to convince her local grocer to begin carrying her products under the label "Garden Patch Foods." Within two years, the grocer was asking for more products than Shirley could supply, so she expanded her business by adding two cooks and one truck driver. She also needed to find additional suppliers of the raw fruits and vegetables. Shirley moved the operations from her home kitchen to a downtown warehouse. And so began the growth of Garden Patch Foods.

As more and more stores began to carry the Garden Patch Foods label, Shirley had to expand the business to meet the increasing demand. Shirley hired an Operations Manager to oversee the production process, allowing her to spend more time investigating new canning techniques. In 1944, Shirley became aware of new methods of freezing foods that had been developed by Birdseye. She believed that this technology was the way of the future, and she was able to convince one of Birdseye's employees to join Garden Patch as director of research, primarily with the purpose of staying abreast of changes in freezing technology. This foresight catapulted Garden Patch Foods into a new era.

In 1950, when the business had grown to sales of approximately $300,000 with 20 employees, Shirley decided to capitalize on the success of the company's frozen food product line. She bought out Mama Goode, a local bakery with a wonderful reputation for its baked goods, and began packaging frozen breads, cakes, and pies using their recipes and Garden Patch Foods' freezing processes. Because the bakery was already in operation, she decided not to disrupt the food preparation process with changes other than management. She retained the building and staff and added the machinery necessary for freezing the products.

In 1977, Garden Patch Foods purchased a snack-making company in Richmond, Virginia. The company saw this acquisition as a natural progression of its bakery operations. The snack maker continued to operate in the same fashion, retaining all operations and most administration, but began to produce under the name Mama Goode. Garden Patch hoped that this would help to spur the snack food sector by name recognition with its already successful baked-goods products.

By 1999, Garden Patch Foods enjoyed a national reputation for quality frozen foods, baked goods, and snacks. Sales had grown to $50 million and the company employed 400 workers. Although many changes had occurred in management as the control of the business passed down through the Davis family, success had been achieved by focusing on what the company did well--freezing high-quality foods. …

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