STI COLLEGE OF STA.

MARIA

SANTA MARIA BULACAN

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

In Partial fulfillment of the Requirements for the Subject

SUPPLY CHAIN MANAGEMENT IN HOSPITALITY INDUSTRY

June , 2020

SUBMITTED BY:

Gajo, Robin G.

MS. MARIA THERESSA SODELA

INSTRUCTOR
 Kentucky Fried Chicken (KFC)

A. The supply chain framework(s) that the establishment has employed in its

supply chain.

Supply chain management is one of the key aspects in ensuring that a business runs

smoothly. Unless each and every point of the supply chain is strong and functioning at

its optimal level of performance, a production business cannot operate at its full

potential. From boosting customer satisfaction to cutting operating costs, effective

supply chain management goes a long way in increasing the bottom line as well as the

customer base. But it is also important to keep the right balance between all the

elements, just like in the case of KFC, the focus on cutting costs ended up in disrupting

the on-time delivery of chicken, forcing the outlets to be shut down for days, causing

loss of profits and customers’ perception of the brand.

Porter's value chain model (1985) is highly popular in the business world and is

utilized by the KFC Company.

B. Advantage and disadvantage of supply chain framework(s) on the

establishment’s supply chain.

Supply chain management in simple words refers to the management of the flow of

goods in a systematic way right from raw material stage to the final stage that is until the
product is delivered to the customer. In order to understand more about this concept,

one should look at the advantages and disadvantages of supply chain management.

It is important for KFC to base its competitive advantage on activities in which it has

access to the rare or scare resources. It may include- intellectual capital, assets, skills

or distribution network. The Value chain analysis can help KFC identify those activities

and develop those areas to get a strong competitive edge over rivals. There are many

examples that consider Value chain analysis as a tool to get a competitive advantage

and invest heavily in research and development activities within their value chain

network. Porter’s strategies for achieving the competitive advantage and value chain

model can be used together to set strong competitive advantage basis.

There are several key points in the advantage and disadvantage of KFC’s supply chain

framework and they are as follows;

Advantages

Cost Efficiency

The first and foremost advantage of KFC’s supply chain management is that it helps the

company in achieving cost efficiency because it can lower various costs like

transportation costs, warehousing, packaging costs, reduces wastage by timely delivery

of goods and so on which ultimately helps the company in achieving cost efficiency

which in turn increases the profitability of the company.

Helpful in Identifying Problem Areas

In the absence of proper supply management company will find it hard to find problem

areas as every department will blame other departments for failure but due to this

management company can identify the problem areas in the company due to which

company’s profitability and reputation are taking a hit. Hence, for example, suppose the

production department is producing goods in time but due to the lackluster attitude of

dispatch departments goods are not reaching on time to ultimate customers than supply

chain management can easily identify the problem area which is the dispatch

department and hence can take action against the concerned people.

Customer Delight

Since the primary task of this management is to make sure that goods reach customer

on time it results in customer delight because nowadays people do not care about

paying more money provided they get quality service from the company and supply

chain management does exactly that resulting in costumer of the company getting

satisfied and we all know that a satisfied customer will bring not only his or her business

but acts as a marketing spokesperson of the company by bringing other customers to

the company

Disadvantages

Lack of Coordination between Various Departments

The biggest disadvantage of KFC’s supply chain management is that it can work only if

there is proper coordination between all the departments of the company and if

departments are at loggerheads than this system will be a failure. Hence for example, if

the marketing department does not inform the production department about the possible
order than the production department will not be able to produce the desired order on

time.

Complicated

Since it involves multiple departments sometimes it can be complicated and may

hamper the normal working of the company besides workers as well as employees may

feel insecure and demotivated because human beings by nature resist new things and

to them the concept of supply chain management may appear very complicated

resulting in them accepting this management half-heartedly.

Trained and Professional Staff

KFC requires professional and trained staff in order to properly execute supply chain

management and in order to hire professional staff company will need to pay money

which is an expensive proposition.

C. Recommended practices in improving the supply chain management of the

establishment.

In this conclusion and regarding the overall study of Supply chain management, it has

been observed that KFC in allover follows a similar pattern of Supply chain that enables

it to reduce time involved to reach end customers and reduce expenses in supply chain.

Ultimately it is able to reach and fulfill its end customers’ needs and wants at a

reasonable or customer acceptable rates all over world. On the other hand KFC has yet
to prescribe a minimum living wage for its members’ workers Instead KFC audits

concentrate on ensuring that employers pay at least the legislated minimum wage and

make the correct payments into national social security funds The great majority of

members were already compliant in these respects and therefore, in most cases, KFC

compliance does not increase costs of employing workers.

Logistics and supply chain management is crucial to any business and is especially

important in a fast food business with a global presence like KFC. When evaluating the

efficiency of a certain point in the supply chain, the criteria shouldn’t be just the

monetary cost involved in the process but the value added at each point should also be

given equal weight.

Contingencies should be built and the decision-making process should involve an in-

depth research and permutations of the possible outcomes while taking into account all

the aspects in which the decision can affect the business operations before making any

major decisions like changing the logistics partner.

References

E-Books:

Baldwin, R. E., & Evenett, S. J. (2015). Value creation and trade in 21st century manufacturing. Journal of

Regional Science, 55(1), 31-50.

Bustinza, O. F., Bigdeli, A. Z., Baines, T., & Elliot, C. (2015). Servitization and competitive advantage: the

importance of organisational structure and value chain position. Research-Technology Management,

58(5), 53-60.

Chang, W., Ellinger, A. E., Kim, K. K., & Franke, G. R. (2016). Supply chain integration and firm financial

performance: A meta-analysis of positional advantage mediation and moderating factors. European

Management Journal, 34(3), 282-295.

Websites:

https://www.supplychain48.com/value-chain-analysis/13728-KFC-Value-Chain-Analysis#:~:text=Porter's

%20value%20chain%20model%20is,not%20require%20same%20scrutiny%20level.

https://www.google.com/search?q=does+KFC+uses+porter%27s+value+chain+model

%3F&rlz=1C1OKWM_enPH867PH867&oq=does+KFC+uses+porter%27s+value+chain+model

%3F&aqs=chrome..69i57j33.15729j1j4&sourceid=chrome&ie=UTF-8