The report brings out the supply chain and logistics management of KFC. The report suggests innovation in e-commerce and e-business that can help the KFC to avoid delays in future and also in the supply chain management. The report provides the solution to the problem, which is being brought out in the case study. The evaluation of KFC`s logistics variables that can avoid delays in future and achieve customer satisfaction (Wang, and Luo, 2016). The organisation has strived to improve the reliability of supply chain management.
The company uses certain systems and models to operate a successful supply chain such as DRP system and star system that includes quality, technical, financial, and communication and reliability. After the problem faced by KFC in the supply chain management, DHL undertook the supply chain system of UK and keep the chicken destined for the use. DHL has provided an infrastructure and the other party included QSL that supplied the software for the information system (Qiang, Huang, Ke, and Yang, 2014).
Introduction of the company (KFC)
Harland Sanders founded KFC when it started his first restaurant in 1930. Soon after expanding, it began to actively participate in franchising business after 1952. The company has achieved to have more than 600 franchised stores including Canada, England, and USA in 1964 and it had 6000 KFC restaurants worldwide. Kentucky fried chicken is shortly known as KFC.
It is an famous American fast food chain that specialises in serving fried chicken which is further headquartered in Kentucky. It is second largest restaurant chain of fast food after and other than McDonalds. KFC has an renowned brand and operating segment that raised the concept of Yum. Since 1997, the company spun off from the PepsiCo. The company primarily sells wraps, sandwiches, salad, and chicken pieces. The focus lies in fried chicken and it also offers grilled and roasted chicken product such as hamburgers, kebabs, and other pork products.
Evaluate the significance of KFC’s Logistics variables in avoiding such
delays in the future and achieving customer satisfaction.
Consumers often wants to know that how supply chain works. There is no doubt that it gets fresh chicken from the poultry farms to outlets when it is required. No workforce among the KFC drivers and KFC trucks receive orders from the KFC stores. Current modern supply chains are highly complex and involve a number of organisation to make the system successful that contributes to different experts. The reason behind how chicken could not reach to KFC outlets was the completely new system even after including number of partners. It is important to know that employing new software and technology can lead to teething issues.
In order to improve the customer satisfaction, the store has to consider four important components while strategizing the supply chain. The components are the infrastructure (warehousing and transportation), adequate information system especially among the people that are involved in chain operations. By coordinating all the activities and the variables of logistics system efficiently to execute the supply chain management, the company manage its operation by following specific system such as DRP system that includes three input files and output plans.
The first required planning operates when managers of the outlets try to fulfil the use of term-type orders that are filled and convert raw material into frozen goods, wet goods, and dry goods. The inventory file manages another variable such as raw material, every time before starting the day, the staff line up all provisions of inventory of raw material and its registration.
(Source: Management and development centre, 2018)
To serve the customers very well, the company has to plan its supply recourse, transmission, supply response time, processing order, and the effective distribution centres. The procurement plan deals while receiving order for processing such as shipment data, existing inventory, and abnormal fluctuations. When it comes to evaluate the logistics of KFC, at first it provides strong support to the normal operation of the organisation that leads to rapid expansion. Various restaurants based on accurate demand planning through procurement strategy that lead to reduction in the organisation`s inventory costs.
The distribution centre in the logistics system in the central location and the function of information system can be appropriately reflected. Demand forecasting and distribution planning of quantitative and standardised management can lead to high level of enterprise management. Moreover, the demand estimation decisions are adopted on the basis of purchase cycle, safety stock, past data, seasonal patterns, forecasting, and safety stock. Here is the glimpse of how the company operates with DRP system.
The restaurant reports to the branch distribution centre that collect order demand, after the order is placed to the supplier, he delivers to the distribution centre under the line delivery system. The mode of operation tend to follow the logistics supply to follow DRP.
Analyse how innovations in e-business and e-commerce, can help KFC avoid such delays in the future, within its supply chain management
While indulging into global business, the company shifted to international competitive through existing firms and new entrants (Zhu, Anagondahalli, and Zhang, 2017). The transition to manage supply chain through great coordination of entire distribution channel, relational exchanges, and alliances. Employing B2B could improve the performance through business. The company can employ Structural equation Modelling (SEM) that can be used to assess measurement and structural model. After following the B2B system, the business seeks focus on business performances. The supply chain management system should be integrated and should be enabled with internet.
To recover from the customers, KFC revolutionises and integrated UK`s foodservice supply chain with QSL and DHL. It employed three-way partnership way to focus innovation, quality, and reliability in the distribution market. DHL have made the rulebook and set benchmark to deliver the fresh product to KFC (Wilding, 2018). Moreover, the company should engage star system into the organisation to support the operations. The elements are Quality, Technical, Financial, communication, and reliability. Key area to focus have reduced the logistics-related emissions to zero over the life of contract and it optimised the delivery scheduling so that it can fasten the turnaround of several orders and lead to greater integrity of food while transporting and allowing for fresher products. After collaborating with the KFC in 2011, food logistics QSL brings the expertise in E-commerce. Moreover,
it fastened the services especially to the UK in form of crucial demand planning ad stock management with the help of IT solutions. The company is reforming its internal and external processes with the IT experts and on the parallel side, place the distribution system at the heart of new supply chain strategy. It has assisted to add unique proposition for KFC and drives specific needs of the business. By using the e-commerce system, a company can improve its supply chain management and logistics operations so that it can avoid delays in the operational business (Mylonakis, and Evripiotis, 2016).
It is discovered that there are more advanced logistics technologies that can have significant impact such as Uber-ization system of trucking. In this system, the company can transport its goods by moving freight long distances through trucks, inexpensively and safely. Now a days, customers demand visibility and control of inventory through transportation in the supply chains (Maras, 2015).
Robotization of the Warehouse
The second usage of E-commerce facilities can lead to robotization of existing warehouses. The concept and usage of E-commerce have revolutionised the shopping and also the way how purchases are delivered to customers (Supplychain247, 2018). Therefore, there is always remain a serious bottleneck in the e-commerce chain of logistics such as human stock pickers. The robot picker has already been implemented in various companies that has revolutionised warehouse and supply chain operation (McKeown, 2018).
The third implementation of e-commerce in logistics is the augmented reality such as wearable digital system that strive to reinvent the cost and time of picking process in the warehouse. Many warehouses still maintain a paper-based approach of stock picking that can be slow and error prone. Another augmented reality systems offered by the companies include Knapp, Ubimax, and SAPthat consists of smart glass display, wearable PC and a battery pack. With the combination of indoor navigation capabilities, they discern best routes to the particular items and reduce the travel time by effective path planning (Supplychain247, 2018).
KFC aims to improve its reliability within its supply chain and logistics. Suggest and analyse best practices, which can help KFC to achieve its aim
Supply chain management is a broad range of actions that are required to plan, execute, and control the flow of material and products that starts from procuring the raw material and production by distributing it to the final customers in a streamlined and effective manner especially in regards to cost and coordinating the activities. Although the supply chain management follows a common structure but it is not necessary that each organisation can successful the use the given model of supply chain.
Most of the raw material are procured from either market or self-owned facilities (Press Release, 2017). While considering the logistics model, which is based on DRP system, the company should improve each element of the system that includes input files and output plans. It has to improve its tools for the demand planning and forecasting, supply resources files, distribution plans, inventory files and procurement plans.
The company have to employ efficient workforce to avoid resource wasting and timely placing of refrigerator of perishable goods. Managers are appointed to acknowledge main requirement planning that includes the responsibility of term type filling of orders and the number of order*volume which is equal to total demand – inventory (Baryannis, Validi, Dani, and Antoniou, 2018).
The company has to maintain inventory file where the provisions of staff and inventory of raw material with its registration is necessary. This will help to calculate the EOQ (Equal order quantity), LIFO, FIFO and weighted average with its costing in the single day. The supply resources file is maintained to check how the supply-side arrival time is affected. The time depends on the transmission, supplier response of the number of orders, processing orders and finally the efficiency of distribution centres (Henderson, 2018).
It is important to identify the adequate remedies rather than breaching and braking the terms and conditions laid down in supply agreement. Apart from losses, it was seen that some of the chicken was wasted in KFC. An efficient supply chain agreement should ensure that activities lead to losses can be recovered easily only when supply chain is drafted properly. It should be already mentioned that which dispute are over and above the direct and indirect loss and cost (Omer, 2018).
Conclusion
After analysing the supply chain and logistics system of the food restaurant named “KFC,” it can be seen that earlier the company had operated its supply chain with the whole efficiency but the challenging time given in the case study spoiled the brand image. To improve and employ e-commerce knowledge, KFC partnered and collaborated with the three partners, one among them was DHL. The report brings out how and what supply chain system is the company using and which steps should be rendered to improve the existing and lacking supply chain.
The company is investing a good sum in order to improve supplier relationships, customer relationships and supply chain. The report also suggests new e-commerce ideas to improve the operations. DHL helped the company`s UK`s supply chain system through Intelligent wearables, uber-isation, and operating task automation.
References
Baryannis, G., Validi, S., Dani, S. and Antoniou, G., (2018) Supply chain risk management and artificial intelligence: state of the art and future research directions. International Journal of Production Research, pp.1-24.
Hand, A. (2018) Intelligent Wearables Guide Industrial Field Workers: The technology combines head-mounted mobile computing, augmented reality, video, guided work instructions, access to remote experts and more to guide operators in their tasks. Available on: https://www.automationworld.com/article/technologies/mobility/intelligent-wearables-guide-industrial-field-workers [Accessed on 14/11/18]
Henderson, J. (2018) Expert reaction: KFC supply chain crisis could have been avoided. Available on: https://www.supplychaindigital.com/scm/expert-reaction-kfc-supply-chain-crisis-could-have-been-avoided [Accessed on 14/11/18]
Management and development centre, (2018) Distribution Requirements Planning DRP. Available on: https://mdcegypt.com/Pages/Operation%20Management/Production%20&%20Operation%20Management/Distribution%20Requirements%20Planning/Introduction.asp [Accessed on 14/11/18]
Maras, E. (2015) The Warehouse as a Competitive Advantage: Automation keeps adding ways to streamline inventory flow. Available on: https://www.foodlogistics.com/3pl-4pl/article/12050647/the-warehouse-as-a-competitive-advantage [Accessed on 14/11/18]
McKeown, H. (2018) What can KFC teach us about supply chain management?. Available on: https://www.hillyermckeown.co.uk/can-kfc-teach-us-supply-chain-management/ [Accessed on 14/11/18]
Mylonakis, J. and Evripiotis, M., (2016) TOWARDS AN ASSESSMENT OF GLOBALIZATION AND LOCALIZATION OF WESTERN EAST-FOOD CHAINS IN CHINA: THE CASE OF KFC. European Journal of Business and Innovation Research, 4(3), pp.17-28.
Omer, S.K., (2018) SWOT analysis: The tool of organizations stability (KFC) as a case study. Journal of Process Management. New Technologies, 6(4), pp.27-34.
Press Release, (2017) KFC revolutionizes UK foodservice supply chain with DHL and QSL. Available on: appointmenthttps://www.dhl.com/en/press/releases/releases_2017/all/logistics/kfc_revolutionizes_uk_foodservice_supply_chain_with_dhl_and_qsl_appointment.html [Accessed on 14/11/18]
Qiang, Q., Huang, Z., Ke, K. and Yang, Y.X., (2014) Overview of supply chain risk management and the current issues of closed-loop supply chain in China. International Journal of Business Continuity and Risk Management, 5(3), pp.236-243.
Space of technologies, (2017) How Can Uber for Trucks Benefit the Trucking & Freight Industry?. Available on: https://www.spaceotechnologies.com/uber-for-trucks-app-benefits/ [Accessed on 14/11/18]
Supplychain247, (2018) Tech Trends Shaping the Future of Global Logistics. Available on: https://www.supplychain247.com/article/3_tech_trends_shaping_the_future_of_global_logistics/dhl [Accessed on 14/11/18]
WANG, Q. and LUO, Q., (2016) Chain Operation Innovation of Sichuan Cuisine: the Perspective of Logistics and Supply Chain Management. Innovation and Supply Chain Management, 10(3), pp.101-105.
Wilding, R. (2018) KFC: an important MBA case study in Risk, Supply chain. Available on: https://www.cips.org/en-SG/supply-management/opinion/2018/february/kfc-an-important-mba-case-study [Accessed on 14/11/18]
Zhu, L., Anagondahalli, D., and Zhang, A., (2017) Social media, and culture in crisis communication: McDonald’s and KFC crises management in China. Public Relations Review, 43(3), pp.487-492.
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