KFC - FACILITY

LOCATION AND LAYOUT

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KFC & Facility Location:

KFC Corporation, or KFC, founded and also known as Kentucky Fried

Chicken is a chain of fast food restaurants based in Louisville, Kentucky.
KFC is the third largest fast food chain with over 12,200 outlets in 99
countries. KFC has maintained its title, for the last 60 years, of being the
chicken Experts. Opening the first KFC outlet in Gulshan-e- Iqbal in 1997.
KFC wore the title of being the market leader in its industry. Serving
delicious and hygienic food in a relaxing environment made KFC everyone’s
favorite. Since then, KFC has been constantly introducing new products and
opening new restaurants for its customers.

Presently KFC is branched out in eighteen major cities of Pakistan (Karachi,

Lahore, Gujranwala, Sukkur & Muree) with more than 60 outlets nation-wide.
The outlets comprise of franchises, company owned and affiliated. They
used the proper method for facility location and layout analysis of new or
existing outlets. Facility location involves the evaluation of various sites for a
new facility.
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Existing Locations of KFC In Lahore:

 Barket Market
 Defence
 Cavalry Ground
 Shadman
 Mall Road
 Thokar Niaz Baig
 M.M. Alam Road
 Y-Block
 GT Road
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Factors That KFC Management Keep in Mind during Facility Location

Analysis:
There are several factors that influence the Facility Location Decision.

 Proximity to Customers,
 Business Climate,
 Total Costs,
 Infrastructure,
 Quality of Labor,
 Host Community,
Etc.
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Facility Location Techniques:

There are many analytical techniques that can be used in facility
location decision. Some of these are:

1) Factor Rating
2) Cost-Profit-Volume analysis
3) Center of Gravity Method, and
4) Transportation and Simulation Models.

But first two methods “Factor Rating” & “Cost Profit Volume
Analysis” are more simple & suitable for KFC Because of easily
understandable than “Center of Gravity” & “Simulation Method”.
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Method of Factor Rating:
In factor rating method, first we must identify the Most Important
Factors in evaluating alternative sites for the new facility. Then we
should assign a weight between 0 and 100 to each of these factors.
Each alternative location will then be rated based on these factor
weights. The most weighted alternative is selected as the best
alternative.

Example:
Suppose KFC is considering three alternative sites for its new
facility locations.

Site A. Moon Market

Site B. Shadra
Site C. Chock Chu Burgi
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Method of Factor Rating(Cont…)

After evaluating the firm’s Needs, the Managers have narrowed the
list of Important Selection Criteria down into three major Factors.
- Availability of skilled labor
- Availability of suitable Infrastructure, and
o Proximity of target customers.

Weights reflecting the relative importance of each factor have been

assigned as follows:
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Method of Factor Rating(Cont…)

ow we will multiply each score by its corresponding factor weight:

Weighted scores are calculated as: (Site Score) x (Factor Weight).
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Method of Factor Rating(Cont…)
From these results, the largest total weight is for Site A. It appears to be
the best location.
What happens if we change the factor weights. Lets use the following
factor weights:
Skilled labor: 0.45; Raw Materials: 0.40; and Market: 0.15
Then the following results are obtained:

In this case, Site “C” appears to be the best choice with largest weight
score.
Therefore, factor rating method is very sensitive to the weights assigned
to each factor.
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Cost-Profit-Volume Analysis:
When the fixed and variable costs for each site differ, Cost-profit-
volume analysis can be used to identify the location with the lowest
cost.
Example:
Suppose KFC is considering three alternative sites for its new
production facility.
Site A. Moon Market
Site B. Shadra
Site C. Chock Chu Burgi
The Annual Production Cost associated with each alternative is a
linear function of the production volume. That is:
Total Production Cost = (Fixed Cost) + (variable unit cost) x (annual
production volume)
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Cost-Profit-Volume Analysis (Cont…):
Assume that the expected annual production volume is 250.000
units. And further assume that:

(x: production volume = 250)

For Site A: Prod. Cost = 10,000 + 250 x
For Site B: Prod. Cost = 25,000 + 150 x
For Site C: Prod. Cost = 60,000 + 50 x
Based on these information, Which site has the lowest cost?
At a production volume of 250.000 units, site B has the lowest cost,
because

For Site A: Prod. Cost = 10,000 + 250 (250) = 72,500

For Site B: Prod. Cost = 25,000 + 150 (250) = 62,500
For Site C: Prod. Cost = 60,000 + 50 (250) = 72,500
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Cost-Profit-Volume Analysis (Cont…):

This graphic shows that annual production cost changes with different
production volumes.
- If the expected annual production volume is below 150 units, then choose site
A.
- If the expected annual production volume is between 150 and 350 units, then
choose site B.
- If the expected annual production volume is over 350 units, then choose
site C.
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Facility layout:
Facility Layout means Planning And Arrangement of all

 Machines,
 Utilities,
 Employee workstations,
 Customer service areas,
 Material storage areas,
 Aisles,
 Restrooms,
 Lunchrooms,
 Internal walls,
 Offices, and
 Computer rooms,
for the smooth flow patterns of materials and people around, into, and within
Buildings Infrastructure services.
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Factors that influence layout:

- Volume, weight of items to be produced.

- Nature of the service to be provided.
- Cost of the building to house the operation.
- The fragility of the product or component

KFC Facility Layout:

Internal & External layout of KFC outlet is attractive and charming all over
the world. Ideal color schemes, pleasant lighting outlets, comfortable
sitting arrangement, fully trained employees and their proper work
division, State of the art interior beautification, speedy & appropriate
cooking process, special club/block for kids, etc. are the chief
characteristic of the KFC layout.
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KFC Process Layout Map:
KFC fallow the standardized process for production. The facility
layout process schematic diagram are presented blow.

KFC Old Process Layout: Customer Place

Order

Finished
Raw
Goods
Material
Cook Assemble Deliver

KFC Modern (New) Process Layout:

Customer
Place Order

Raw
Material W. I. P.
Cook Assemble Deliver
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Advantage of KFC’s Good Layout:

• Reduces bottlenecks in moving people or material.

• Minimizes materials-handling costs.
• Reduces hazards to personnel.
• Utilizes labor efficiently.
• Increases morale.
• Utilizes available space effectively and efficiently.
• Provides flexibility.
• Provides ease of supervision.
• Facilitates coordination and face-to-face
communication where appropriate.
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Conclusion And Recommendation:

KFC can progress rapidly by identifying new facility locations

and increasing existing target market and facility locations by
launching new competitive product chain at minimum cost.
KFC’s Unity Drive had a simple but essential message and
objective. To bring together the people of Pakistan by
promoting in the words of KFC founder, “Unity, Faith &
Discipline”. In a time of uncertainty and fear, KFC rose to the
occasion and built a platform of solidarity and togetherness for
the people of Pakistan. The campaign proved to be a successful
initiative in not just providing hope for our patrons, but also
allowed KFC Pakistan to take an effective step forward during
tough times and entrust other responsive companies to act in a
similar manner.