Supply Chain Management

Supply Chain Management

Term Report
Kentucky Fried Chicken (KFC)

Submitted to: Syeda Shazia Hamid

SCM – Monday (6-9pm)

Group Members:
Abbas Sajjani Ayesha Ibrahim (6408) Dania Saher Imtiaz (6208) Mahwish Jawaid Mohsin
Ahmed (6407) Sadiq Rajani (6302)

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Contents
Supply Chain
Management.........................................................................
................1 Kentucky Fried Chicken
(KFC)..............................................................................
.......1 Submitted to: Syeda Shazia
Hamid............................................................................1
SCM – Monday (6-
9pm)...............................................................................
................1 Group
Members:...........................................................................
..............................1
Contents...........................................................................
.......................................... 2 Company
Profile............................................................................
............................. 4 Parent
Company............................................................................
............................. 4 Cupola
Pakistan ..........................................................................
...............................4 Cupola’s
Vision.............................................................................
.............................. 4 Cupola’s
Mission............................................................................
............................. 5 KFC
Pakistan...........................................................................
.................................... 5 KFC’s
Mission............................................................................
..................................6 Objectives of
KFC................................................................................
.......................6 Values of
KFC................................................................................
.............................6 Core
competency.........................................................................
.............................. 7 Franchise
Locations..........................................................................
..........................8 Presently KFC is branched out in eighteen major cities
of Pakistan with around 64 outlets nation-wide. Some of the cities in which the KFC
is in operation are as
follows,...........................................................................
............................................ 8 Organization
Structure..........................................................................
.....................9 KFC Supply
Chain..............................................................................
.......................10
Procurement........................................................................
..................................... 11
Chicken............................................................................
......................................... 11
Sauces.............................................................................
.........................................12 Spices and
herbs..............................................................................
........................12 Packing
Material...........................................................................
............................ 12 Bread and
Buns...............................................................................
......................... 12
Fish...............................................................................
............................................ 13 French
Fries..............................................................................
................................13 Other miscellaneous
items..............................................................................
.........13

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Supply Chain Management
Storage and Inventory
Management........................................................................1
3
Chicken............................................................................
......................................... 13
Sauces.............................................................................
.........................................14 Spices and
Herbs..............................................................................
........................14 Bread and
Buns...............................................................................
......................... 14 Zonal
Distribution.......................................................................
..............................14
Vehicles...........................................................................
.........................................15 Company: Hyundai
Shehzore...........................................................................
........15 Company: Hino Dutro
Truck..............................................................................
.......15 Quality
Assurance..........................................................................
...........................16
MRP/ERP............................................................................
....................................... 16

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COMPANY PROFILE
KFC Corporation, based in Louisville, Kentucky, is the world's most popular chicken
restaurant chain, specializing in Original Recipe, Extra Crispy, Kentucky Grilled
Chicken. Every day, more than 12 million customers are served at KFC restaurants in
109 countries and territories around the world. KFC operates more than 5,200
restaurants in the United States and more than 15,000 units around the world. It is
the world’s largest and most well known chicken restaurant, with chains in more
then 10 thousand locations and worldwide in 80 countries. KFC and its franchised
employees are more than 200 thousand, all over the world. KFC is world famous for
its Original Recipe fried chicken -- made with the same secret blend of 11 herbs
and spices Colonel Harland Sanders perfected more than a half-century ago.
Customers around the globe also enjoy more than 300 other products -- from Kentucky
Grilled Chicken in the United States to a salmon sandwich in Japan.

PARENT COMPANY
CUPOLA PAKISTAN
Cupola is a Dubai based multinational company and has been at the forefront of
development in Food & Retail sector for over a decade. Its flagship brand KFC has
amassed itself as the dominant concept in the Quick Service Restaurant (QSR)
business in the country. Cupola’s Vision Cupola, Pakistan Ltd. aims to, “Create
value through change, challenging existing paradigms by applying vision, innovation
and skilled execution”. The company has always accentuated corporate social
responsibility through various initiatives taken under the banner of its flagship
brand KFC. These include setting up of libraries in various

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Supply Chain Management schools, provision of training for teachers and now to
educational support for underprivileged children. Cupola’s Mission Cupola’s mission
is to harness and reap the potential of the rapidly developing markets of the
Arabian Peninsula and South Asia. In the mature capital markets of Europe and the
United States, they are well regarded as innovative and creative niche investors.
They believe in the minimization of risk: through the depth of their senior
management and the quality of their professional staff; through exhaustive and
through an emphasis on pre-feasibility. Everyone in Cupola shares an almost
obsessive drive for quality, an active consciousness of the team approach and a
commitment to their collective success. They strive continually to improve the
tangible and intangible returns for all their stakeholders. Cupola’s Businesses:
Cupola is involved in several business including, oil gas exploration, plastic
cards, retail markets and food franchising. Cupola holds the master franchise
rights to operate KFC in Pakistan. Some of the businesses which are under contract
with Cupola Pakistan are, 1. KFC 2. Indulge 3. My Superstore 4. Lal Qila

KFC PAKISTAN
Food, fun & Festivity, this is what KFC is all leading the market since its
inception; KFC provides the ultimate chicken meals for a chicken loving nation. Be
it colonel sanders secret original recipe chicken or the hot & spicy version, every
bite brings a yum on our face. At KFC they say, “We do chicken right”.

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Supply Chain Management Perfecting its secret recipe of 11 herbs and spices in
1939, KFC has come a long way. With over 10,000 outlets in the world, 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. KFC’s
Mission KFC’s mission statement is, “To be the leader in western style quick
service restaurants through friendly service, good quality food and clean
atmosphere” KFC Pakistan has contributed in providing Halal and Hygienic products
to its customers and managed this through proper training of its human resources.
It has created competitive level for other thus improving the overall industry
standards.

Objectives of KFC Every organization and company has some certain goals laid down
by them to achieve to make it renown and have value added services to satisfy
customers.  Build an organization dedicated to excellence.  Consistently deliver
superior quality and value in our products and services.  Maintain a commitment to
innovation for continuous improvement and grow, striving always to be the leader in
the market place changes.  Generate consistently superior financial returns and
benefits our owner and employees.

Values of KFC To establish a position in Pakistan as a leading WQSR (Western Quick

Service Restaurant) chain, serving good value added services and Innovative chicken
based products. KFC is consistently providing a pleasant dining experience, with
fast friendly, in a clean and convenient location. Every moment dedicated to
providing excellent and delighting customers.

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 Focusing all resources to the restaurants operation because that is where they
serve their customers.  Reward and respect the contributions of each individual at
KFC.  Expand and update training with time and be the best we can be and more. 
Be open, honest and direct in our dealings with one and other.  Commit themselves
to the highest standard to the personal and professional integrity at all times. 
Encourage new and innovative ideas because these are the key to their competitive
growth.  Reward result and not simple efforts.  Dedicate themselves to continuous
growth in sales, profit and size of organization.  Work as a team.

Core competency Since beginning, KFC has presented itself and well competed, only
through it delicious chicken. People from all over the world know KFC as the best
chicken expert. Their chicken has always been unique in taste and has helped them
in order to build their own identity all over the world.

PRODUCTS OF KFC
KFC Pakistan provides 100% Halal and Hygienic products to its customers. It offers
a variety of finger-licking products, some of which are as follows: 1. Crispy Fried
Chicken 2. Zinger 3. Twister 4. Hotshots 5. Chicken Burger 6. Hot wings

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Supply Chain Management 7. Rice n Spice 8. Fish Zinger 9. Nuggets 10. Corn on the
Cob 11. French Fries

FRANCHISE LOCATIONS
Presently KFC is branched out in eighteen major cities of Pakistan with around 64
outlets nationwide. Some of the cities in which the KFC is in operation are as
follows, 1. Karachi, 2. Hyderabad, 3. Lahore,
4. Islamabad,

5. Sukkur, 6. Faisalabad, 7. Gujranwala, 8. Rawalpindi, 9. Sialkot, 10. Multan, 11.

Peshawer, 12. Jhelum, 13. Sukkur,
14. Murree etc.

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Supply Chain Management

ORGANIZATION STRUCTURE

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KFC SUPPLY CHAIN

KFC has a very simple supply chain. As the operations are on a relatively small
scale, all the operations are performed by the company (i.e. Cupola) itself. The
supply chain process can be summed up as a 3 step process: Step 1: Raw materials
procured from various suppliers and stored at two warehouses; the normal-storage
and the cold-storage. Details are discussed later. Step 2: All product preparation
is done at the branch except for the marination of chicken and sold to customers at
the branch itself or delivered at the desired locations. Step 3: Warehouses
replenish each branch according to their requirement (usually three times a week)
using company’s own vehicles and drivers upon the request of the branch manager.

WAREHOUSING
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Pakistan is divided into two areas, namely North and South. The area below Multan
falls under the southern region whereas, Multan and the area above it falls under
North region. Each region hence has its own warehouse. The North region has its
warehouse in Lahore. The south region has its warehouse in Karachi.

PROCUREMENT
Monthly budgets are made to plan purchasing activities. These comprise of dividing
the allocated budget into the inventory policies already defined at the warehouse
from past data and experience. FIFO method is used for all items for the inventory
at the warehouses. Chicken Chicken is supplied by K&N’s in customized cut, packed
and labeled packets directly to the warehouses in each region. Labeling is
necessary for inventory management and efficiency. KFC gives a lead time to K&N’s
of one week for them to deliver their order. The chicken arrives in special freezer
fitted van which keeps the chicken frozen while it is being transported. The

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Supply Chain Management different types of pieces ordered by the warehouse are in
baskets of 5 square feet and having a height of 8 inches. The vehicles used for
this are small trucks which have a maximum loading capacity of five tons.

Sauces Unilever (Yum) provides all the sauces needed by KFC such as Ketchup, Chilly
Sauce, Mayonnaise, Tartar Sauce etc. Yum is a brand especially made for KFC and
cannot be sold in the market to the customers. These are delivered directly to each
warehouse by Unilever themselves. The lead time for this operation is about two
weeks. Spices and herbs These are imported directly from Dubai and Singapore. The
lead time for these exceeds two months as these are not perishable items and it
takes a lot of time for transportation. All imports are done through sea in
dedicated 20” containers for KFC. Packing Material This is purchased from local
parties namely Afeef Packaging, AAA and Gold Packages. Due to frequent re-designing
of boxes and deals offered by KFC, the inventory of these is kept at a minimum.
Bread and Buns

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Supply Chain Management Since the last 4 or 5 years KFC has been producing their
own buns in their own bakery. Their plant is located at Sohrab goth, Karachi. Fish
Information was not provided. Internationally, fish is bought from Thailand. But in
Pakistan, fish is bought from local vendors as it is a low selling item. French
Fries These are imported directly from America. They are also imported to Pakistan
by Yum company through china where they also come from America. Other miscellaneous
items Items Oil Vegetables Rice Salt Toys Corn Source IFFCO Local suppliers Makro
Hub Salt Hong Kong America

STORAGE AND INVENTORY MANAGEMENT

Chicken Inventory of chicken is for 15 days. The storage area for chicken is not in
the warehouse itself but in a separate cold storage area built right beside the
warehouse in each region. Before marinating, the chicken is stored in an organized
form in six separate cold storage rooms whose area is around 45 to 50 square feet,
having a height of around 7 feet. The chicken is stored in the same baskets which
it comes in and stays there till its turn for marinating. Marination is done in a
separate room in the same cold storage facility where the chicken is first washed
and mixed with the herbs and spices it needs. The mixture is fed into a machine
known as ‘Tumbler’ which marinates it. After this is done the chicken is re packed
into labeled clear

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Supply Chain Management plastic bags with stickers on them showing the description
of the item inside it and the expiry for it. These bags are then put into a
separate cold storage room, again in an organized form.

Sauces Inventory for Sauces are stored for around 25 to 30 days depending on the
forecasted sales and the expiry dates for each. Spices and Herbs Inventory for
these are stored according to forecasted sales and the three months lead time given
by the procurement department. Bread and Buns Buns are provided directly to the
branches at KFC from the factory after every 4 days. There is a weekly audit of
every single inventory item at the warehouse to match it with the numbers in the
system as deviations are high due to high replenishment cycles.

ZONAL DISTRIBUTION
Distribution is done on need basis. The cities are divided into zones and the
routes taken are accordingly. Karachi is divided into 3 zones: Zone 1: Gulshan-e-
Iqbal and Gulistan-e-Johar

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Supply Chain Management Zone 2: Clifton and Defence Zone 3: Bahadurabad, Tariq Road
and Sindhi Muslim Society Daily 5 to 6 vehicles are dispatched from the south
warehouse for the interior Sindh (15 days inventory) and Zonal distribution in
Karachi (1 week inventory for normal-storage and 2 days inventory for cold-storage
goods).

Vehicles Company: Hyundai Shehzore Quantity: 4-5 Company: Hino Dutro Truck
Quantity: 4-5 Gross vehicle weight: 8.90 tons Maximum capacity: 4 tons (reduced
from 5 tons because of modifications) Dimensions: Wheelbase Weight Overall Length
Overall Width Overall Height Turning Radius Cab to axle Overhang Tread mm Total kg
Front kg Rear kg mm mm mm On tire mm mm Front mm Rear mm Front mm Rear mm 3,870
2,470 1,545 925 6,675 1,995 2,235 6,300 3,280 1,045 1,760 1,655 1,520

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QUALITY ASSURANCE
There are multiple ways by which KFC assures the quality of its products. Some of
the ones which were disclosed to us were: • • • • Surprise visits to branches
Planned visits to branches Rigorous raw material inspection Customer feedback

SOFTWARE
MRP/ERP The company uses Supply Chain Management (SCM) Software to manage its
inventory across its whole supply chain. This software has been developed by
Siddhat Haider. There is a weekly physical count of the inventory to tally it with
the figures in the softwares.

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