Running head: LOGISTICS MANAGEMENT KFC 1

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LOGISTICS MANAGEMENT KFC 2

Introduction to Paper

KFC has performed extraordinarily in major markets of the world such as the

UK. However, the organization still ranks behind Chicken Cottage, McDonald's and

Burger King depicting that it is operating in a highly competitive market. In the UK,

KFC has retained its position in a highly competitive market working through

numerous branches within the UK. In the UK, fast food restaurants of KFC were

compiled to shut down, temporarily, their huge number of outlets because they faced

a shortage of chicken after the failure of their supply agreement with QSL and DHL.

This paper reflects on the measures taken by KFC in avoiding delays in the supply

chain in future. It also discusses the application of e-commerce in supply chain

management of the company. In the end, recommendations are presented through

which KFC can avoid such situation in future.

Introduction of Company

World's largest chain of chicken restaurant, Kentucky Fried Chicken (KFC)

was established in Louisville by Harland Sanders in the early years of the 1930s. It is

currently operating in 109 states of the globe and serving greater than 12 million

customers. In the USA, KFC has a chain of greater than 5200 outlets and worldwide it

has greater than 15000 outlets. Sanders has started his food business by making and

selling food to the travelers, who came across his service station located in the state of

Kentucky, USA. There was not a proper café, owned by Sanders. Thus he used his

own living quarter's dining table to serve the customers. By the year 1964, he started

expanding his business in Canada and USA and franchised greater than 600

restaurants. Customers across the globe like greater than 300 food items of Kentucky

Grilled Chicken (KGC) first introduced in USA and salmon sandwich of Japan.
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When Yum Brands was acquired from PepsiCo in the year 1997, KFC gets merged

into that and established a global restaurant as Tricon.

Analysis of KFC’s Logistics Management

Task 1

Evaluate the significance of KFC’s Logistics variables in avoiding such

delays in the future and achieving customer satisfaction.

Considering a debacle in its last month's supplies, KFC has decided to follow

again its old technique of delivering the products and rehires its supply partner

Bidvest Logistics. At that time, KFC takes into the twitter to state that they have

chicken supply and outlets but are facing some issues to bring them together.

KFC soon realized the shortcomings of its logistics and re-considered its

supply chain partnership with Bidvest. When the tender for the contract was opened

in 2017, Bidvest lost the bid, but after some time the company has announced that it

has won some part of it and signed a long run contract under which it will supply for

almost 99 outlets of KFC. Bidvest's Director for the business unit, Paul Whyte,

welcome KFC for joining their services again. He said that when it comes to

delivering fresh chicken, there are some complexities from which a logistic firm has

to go through, but still, their firm will ensure best quality services.

Joining hands with Bidvest can help KFC in avoiding such situations in future.

A minute number of KFC restaurants remained shut down whereas others were

serving a limited menu. KFC stated that to bring the business to normality, the firm

has decided to rehire Bidvest (Francisco, 2018). Bidvest helped KFC in reopening its

closed restaurants and is likely to stay effective in the future.

Through such partnerships, KFC will be able to ensure the undisrupted

delivery of their chicken to their consumers. The company has also decided to take
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DHL and QSL in confidence, to regenerate their supply agreement with Bidvest for

about 350 of their outlets operated in the North of England. This action will release

the burden from DHL's Rugby depot to facilitate KFC in normalising its business

activities in a short period (Francisco, 2018). Consequently, from its 900 outlets, 97%

have started their business although they are still offering a limited menu but are

expected to soon back to their regular menu.

Working through DHL, QSL and Bidvest, KFC can create a collaboration of

organizations with their 3PL partners for keeping a record of which type of carriers

will be utilized for shipments and make sure that their security and quality

requirements are transferred to subcontractors in contract form with the 3PL. KFC can

also be benefited by clearly defining the important indicators of performance with its

3PL partner and set standards for carriers that they are using (Hanif and Usman,

2018). In-person checks conducted by the logistics buyers for a minimum slice of the

subcontractors of a 3PL partner will help to check out their security practices,

business continuity, and quality.

Furthermore, it must also identify that where its supply chains are running

through the areas that are prone to local disruptive events and then a redundancy

should be built to circumvent supply chain bottlenecks or disruptions (Baryannis,

Validi, Dani and Antoniou, 2018). Localized high-likelihood, low-impact events are

great risks to the supply chains all over the globe without creating global news and

can form cascading risk where a disruption in one portion of supply chain resulted in

more issues downstream.

Another move taken by KFC during such instances is to provide normal pay to

salaried workers whereas those who rely on hourly wages will receive the pay for the

last 12 week’s average number of hours or will offer a holiday. Such strategies will
LOGISTICS MANAGEMENT KFC 5

help in remaining cost-effective along with fulfilling the commitments with the

workers. The staff members remain motivated and are likely to enhance their

relationship with the organization for avoiding such situations in the future (Prakash,

2018).

Task 2

Analyze how innovations in e-business and e-commerce, can help KFC

avoid such delays in the future, within its supply chain management

Rapid growth in emerging markets and the proliferation of digital channels

through which to search for and engage with businesses, consumers all around the

globe are becoming online shoppers. Beyond the products and brands consumers

know locally, the Internet is introducing them to new merchants and unique products

not readily available in their markets (Turban et al., 2018). Here, the major challenge

to brand owners and their supply chain participants is to make the flow of commerce

faster and more responsive to the pull of customer demand.

Agency Wieden & Kennedy and KFC, Portland have established a set up of e-

commerce shop having branded products, comprising hipster-friendly sweatshirts,

Colonel Harland Sanders t-shirts, and a meteorite 400-year-old carved to appear just

like the Zinger sandwich of KFC, whose price is $20,000, as stated by Ad Age’s

Creativity (Kirkpatrick, 2017). This move shows that KFC is focusing on the area of

adopting e-commerce in its supply chain strategy. E-commerce has narrowed down

the supply chain. The intermediaries have been deducted. Buyers directly reach to

sellers. This has affected in cost and time of the purchase. On the other hand, it has

virtualized the supply chain.

KFC can gain multiple advantages for integrating e-commerce in its supply

chain strategy. E-commerce will link the chains facilitating information flows most
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effectively by way of adding speed and availability to it. As result decisions could be

made faster, data available to analyze and detect patterns will be facilitated, services

within the supply chain will be optimized and automated, and cost which is the

ultimate goal of any process/change optimization is minimized or justified (Yu,

Wang, Zhong and Huang, 2016).

To enhance its e-commerce logistics management, KFC also needs to create a

partnership with courier companies is the first step for e-commerce businesses to

handle their shipping, and doing this with big logistic companies is very beneficial

(Yu, Wang, Zhong and Huang, 2016). This, however, comes with its own set of

challenges as most of these courier companies ask for a minimum commitment of

orders or they aren't serviceable over enough pin-codes. Hence aggregators play a

significant role in overcoming these complications and provide exceptional courier

service.

The platform that e-commerce provides is a singular one stop shop for all

entities involved in the supply chain, e.g. point of sale (POS). Information generation

and transmission became easier, quicker and efficient as the Internet created a big

boom in a change in the way communication happened (Turban et al., 2018).

The branded smartphone and e-commerce store are only the new tactics of

marketing by KFC that go far above than the traditional brand awareness advertising.

For the promotion of Mother's Day, the Yum! the chain has released ebook; last week,

a National fried chicken day was celebrated by it by installing animatronic AI-

powered Colonel Sanders to take orders at the chosen drive-thru areas (Kirkpatrick,

2017).

Task 3
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KFC aims to improve its reliability within its supply chain and logistics.

Suggest and analyze best practices, which can help KFC to achieve its aim.

A well-written supply contract will ensure that such losses can recover with

ease and within less time. It is always recommended that the contract should clarify

the kind of losses that are recoverable so that a conflict could be avoided among the

parties over direct and indirect accounts of loss, for instance (Schönsleben, 2016). It

should also be ensured that the suppliers have adequate insurance policies, as it is not

rational to recover losses from suppliers who are unable to pay.

Perform Good in Due Diligence

Although it is better to start from the beginning in the case of KFC if they

make more due diligence in the selection of their possible supply partner, it might

ultimately affect their final decision. For instance, one important aspect could be the

modeling of KFC's downstream and upstream components of the supply chain. Which

kind of parameters were generated by its modeling and how much suitable those

parameters were for the DHL?

Another aspect is a comparison of suppliers. Considering the good

performance of Bidvest, how DHL could be compared with this? Bidvest has shown

satisfactory performance in all the areas, how DHL can prove that it would be able to

provide equal or improved performance?

Furthermore, KFC's supply chain context was different from the typical

customer of DHL whose supplies consists of non-perishable items (Todd, 2018).

Contrary to this, food items are perishable and thus needs a change in logistics

procedures to deliver the items promptly, without any damage and under healthy

conditions. Then the most relevant question is, How DHL could provide evidence to
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convince KFC for its capabilities so that KFC could rely on it as its suppliers? (Todd,

2018)

Switching to a New Supplier in Phases

Considering the larger scale organization like KFC is not advisable to take

strategic decisions lightly. As any change in their supply chain could impact their 900

outlets, it is better for KFC to follow rollout strategy. Rather than shifting entirely to

DHL at once, they should let the Bidvest control the major part of logistics and

systematically shift the control to DHL in phases.

Following this strategy will help the KFC to fulfil two objectives. First is the

best control of outlet chain over various risk factors. Second is the ability of KFC to

make a comparison of DHL's performance with Bidvest (Pelli, 2018).

In this way, the difficulty of maintaining a single supply chain would reduce,

and KFC would be better able to evaluate its decision of changing its supply partner

(Trudgian, 2018). In addition to this, in case KFC decided to make a complete shift to

DHL, the phased conversion would allow DHL to improve its operation so that it

could provide better services to KFC.

Establish Contingency plans for Damaging Supply Chain Incidents

As the confidential information about the supply chain of KFC is unknown, it

could not be stated that whether KFC or DHL has established any contingency plans

or not. They might have established such plans but not for such a high-level situation.

Whatever the case might be, both the organizations requires more authentic

contingency plans. Considering its highly extended supply chain and the perishable

nature of its products, KFC should create easily accessible contingency plans to

ensure the food delivery at the right time and place. The fast-food business is based

on convenience thus any disruption could create much damage.

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Making backup plans for the situations like delayed truck or damage of A/C is

not enough, and they need to have broader plans like contingency plans which could

deal with larger interruptions in the supply chain (De Villiers, Nieman and Niemann,

2017).

There might be the number of events for which it was difficult to create

backup plans or which were challenging for the partners to handle. Whatever the case

was, it is hoped that this event will make the KFC aware of the fact that it needs to put

more focus on its supply chain planning. In most cases, it might be additionally

sustainable in the long run to deal with a roster of few verified logistics companies,

giving the delivery lanes to all these based on the area where their networks are robust

and denser (Schönsleben, 2016). The performance across all lanes is then compared

by the organizations, and they are then reallocated depending on performance levels.

Doing work with various logistics companies works as a form of insurance policy. If

there is some sort of issue regarding business continuity with any of them, then other

providers may be capable of filling in the gap (Baryannis, Validi, Dani and Antoniou,

2018). If basic precautionary measures are taken by the company today for protecting

the supply chain integrity, then the functioning of organizations would be

uninterrupted in future.
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References

Baryannis, G., Validi, S., Dani, S., & Antoniou, G. (2018). Supply chain risk

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De Villiers, G., Nieman, G., & Niemann, W. (Eds.). (2017). Strategic logistics

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Francisco, T. (2018). Cuts to KFC’s Logistics Network Result in Supply Chain

Catastrophe. Retrieved from

https://www.supplychain247.com/article/no_chicken_no_gravy_no_customers

_kfcs_planning_woes_are_entirely_preventabl

Hanif, Y., & Usman, M. (2018). Adoption & Implementation of Supply Chain

Management in the Fast Food Industry in Pakistan.

Kirkpatrick,D. (2017). KFC's e-commerce shop peddles $20K meteorite shaped like a

chicken sandwich. Retrieved from https://www.marketingdive.com/news/kfcs-

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sandwich/447104/

Pelli, T. (2018). Avoiding Supply Chain Breakdowns: Learning From the KFC

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http://www.scmr.com/article/avoiding_supply_chain_breakdowns_learning_fr

om_the_kfc_debacle

Prakash, G. (2018). Review of the food processing supply chain literature: the UK,

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