The aim of the report is to evaluate the case of KFC that is “KFC – The Apology” and to recommend the ways through which the effective supply chain variable can be used by the company for avoiding such delays in the near future. Thus, the purpose of the report is to evaluate the supply chain and its impact on the success of the company. Moreover, it includes the ways through which innovations in e-business and e-commerce can help the company in avoiding the delay in the near future related to supply chain management. Further, the aim of KFC is to bring the improvement in its reliability within the supply chain and logistics. In the end, the best practice helps the KFC to achieve the aim of the company.
KFC is a well known and largest fast-food operator, developer and franchiser across the world. The company was founded by Harland Sanders in the year 1890 with the headquarters in Louisville Kentucky. The company is the second-largest restaurant chain with approx. 20,000 locations in more than 123 countries. The company products majorly include chicken box, popcorn chicken and tenders.
The case reflects that KFC has apologised to the customer for the delay in running out of chicken in the pretty cheeky way. KFC chain was forced to close the hundreds of stores this week as they are facing the problem with the chicken suppliers. This shows the poor supply chain management of the company which leads to the closure of the restaurant. The company apologised for being closed for those who visit the restaurant and store remain closed. The supplier remains affected due to which they showed their disappointed fans complained on social media. The huge number of KFC branched had unexpectedly closed (Pooley, 2018). Moreover, the number of outlets was forced to shut their doors due to lack of supply. Considering the same, the below given is the recommendations to the company to resolve the issues.
KFC successful business leader will acknowledge the crucial importance of effectively organized logistics. Effective transport will improve a supply chain by reducing waste of the material and time (Christopher, 2016). This helps the KFC supply chain professional transport products and delivers them to the right location which leads to success priority of business.
The major significance of KFC logistics variable is creating visibility in the supply chain of the company. The advanced transportation management system (TMS) analyse the historical data and with this, they track the real-time movement of the goods. This movement tracking helps in analysing that delivery will reach on time (Das, 2011). The managers of the KFC can make use of the information for the process optimization and evading disruptions. Thus, TMS data analysis is an effective logistics variable that helps the company in managing the supply chain effectively. Further, TMS will contribute in reducing the issues of KFC related to the problems of availability of chicken at their stores because the tracking will provide the estimation of the time it will take. In addition, the tracking will help in managing the inventory. Thus, inventory management is a tool which is used to maintain the stock at every outlet of KFC so that it can meet the needs of customers and leads to satisfaction.
The satisfied customers of the company are considered as the important assets for the business. Similarly, for KFC, the customer satisfaction supply chain is the main driver which involve three major phases like manufacturing, marketing and logistics. Thus, this is the reason that the company rely on their logistics from the suppliers which are important because through this they can meet the needs of customers (Gianpaolo, Laporte and Musmanno, 2013). The demand and needs of customers from KFC is their chicken in different forms on time which relies on the logistics. Thus, it shows the importance of logistics variable for KFC in achieving the customer’s satisfaction in future.
In the current market, the demands of the customer are becoming which bring the variables in the logistics of the company as they want to meet the needs of business to get better results. The significance of KFC logistics variable includes the selection of the experienced team of professions who can manage the time so that delivery of the products can be done on a timely basis which will reduce the faults in near future (Harrison and Hoek, 2011). The major product of the company is chicken which needs to deliver quick and with the safe shipping because it is a perishable product.
KFC logistic variable includes effective relations with the supplies and transport companies which plays an important role in getting a diverse range of products on time. KFC requires different suppliers from which they can source the raw material and this is the reason they need to form the relations. Logistics helps in forming the relations with the transport and suppliers which will help to manage the stocks effectively (Rushton, Croucher and Baker, 2014). Thus, logistics variable helps in avoiding the delay in the future and will meet the needs of customers.
In the present world, the innovation in the e-business and e-commerce is increasing that can support KFC company to prevent the delays in the near future.
E-commerce is driving the changes in the company’s activities to interact with the clients. In the Omnichannel world, the companies want to meet the expectations that are transforming all the aspects of their businesses. Different stakeholders are involved in collaborating the business and communication with the technology (Arvis, et al 2018). The evolution of different e-commerce business models in supply chain offers the delivery order being sources from the various warehouses and merge in-transit process. Thus, the rise in a number of items for transit and deliveries will enhance the visibility for tracing the deliveries. This innovation will help in increasing the support to prevent the delays in the near future.
One of the innovations in the business is the use of drones; the deliveries through drones are possible within the radius of 5-10 min that helps in the supply chain of KFC. The delay in the supply of the products can be reduced with the help of the centralised warehouse and with the support of drones (Logistics Institute, 2016).
Rethinking Transportation Management System is an innovative system that has the ability to organize and track the shipments across the modes and across the LSPs. The use of the ERP system in the e-commerce works as an innovation in which the operations get linked with the operations that help in integrating and working effectively which will reduce the failure in the delivery of raw material to KFC (Murphy and Wood, 2010).
The innovation in the e-commerce and e-business in the supply chain has brought the automated logistics software which will help to import the orders, process the goods and print shipping labels easily (Mangan and Lalwani, 2016). KFC cam integrates the automated logistic software which the business and at marketplace which offers more convenience to the company in keeping the records and placing the orders on time with this its offer the information about the stock. KFC gets the benefit of same as this will prevent the delays in the near future.
E-commerce has revolutionized in the way people make a purchase of products but this innovation has brought the ways from the logistics services as well. In the warehouse, a human has to rush for the product’s packaging and delivering it to the location (Logistics Institute, 2016). The use of robots offers the advantage of picking up goods and reducing the human work to search for products which will not lead to the delay and support in performing the functions effectively.
The major innovation and advance in logistics are augmented reality as a wearable digital system that commits to reinvent the costly and cumbersome picking process in warehouses. KFC can make use of the augmented reality with the help of which the workers can see the digital picking list in the field of vision with the help of the smart glasses (UPS, 2016). Further, this innovation includes the navigation capability that shows the best route to the particular times and reduces the time to travel which eliminate the delay in the delivery. The vision picking software offers real-time object recognition, data integration with warehouse management and barcode reading.
Reliability within the supply chain and logistics refers to the extent to which consistent performance is produced by the supply chain. Reliability of the supply chain also plays an important role in successfully meeting the expectations of the customers. In supply chains and logistics, the best practices revolve around minimizing costs, optimizing resources and efficiency along with increasing input.
Following are the best practices which can assist KFC in achieving its aim of improving its reliability within its supply chain and logistics-
JIT (Just- in- Time) Inventory Management- With the help of JIT inventory management, KFC will be able to ensure the alignment of the raw material orders from suppliers directly with production schedules (Hugos, 2018). The adoption of this practice by KFC will further ensure an increase in the inventory turnaround along with a significant reduction in inventory costs. JIT inventory management will benefit KFC by reducing the order fulfilment communication mistakes and declining the overhead costs. This will warrant that there are no shortages of stock, which will permit KFC to meet the demands of its customers.
Transportation management- For the purpose of improving the reliability of the supply chain, KFC can use transportation management which is useful in handling the rising transportation costs and will provide an answer for improved service, performance, management and reliability. The use of a transportation management system by KFC will help in the process of planning, execution and optimization of the physical movement of goods (Monczka, et al, 2015). The transport management system will further allow KFC to track and monitor the shipments along with the lifecycle of the orders in real time and to get the status updates. Through this, KFC will be able to access an accurate forecast of the inventory which will further improve the accountability and reliability of the supply chain.
Devising a Distribution Strategy- The entire supply chain system of KFC is dependent on its distribution network. KFC should aim at devising a distribution strategy with the help of which it can effectively manage the delays in supplies thereby improving its customer service. It will also assist KFC in attaining a profitable growth in the market (Wisner, Tan and Leong, 2014). However, the distribution strategy will depend on different parameters such as transportation and logistics, warehousing, the location of the target market, etc. Moreover, the company should also aim at improving the distribution network through proper delivery tracking.
Increasing Transparency- Supply chain and logistics cannot be considered as reliable if it is not transparent. Mistakes, wastes and frauds can be effectively managed by KFC by way of increasing transparency in its supply chain. However, for the purpose of achieving a transparent supply chain and logistics system, KFC will be required to invest money, time and effort along with the adoption of a new tool and hiring new skillsets. Transparency can be regarded as the solution which will enable KFC to discover, monitor and analyze all components, suppliers and facilities from source to store. This practice will further contribute in dealing with the unexplained inventory and unnecessary financial losses.
Conclusion
In the end, this can be stated that KFC is dealing with the major issues due to which it is losing its market image and position and to rectify the same. The company needs to analyse the importance of the KFC logistic variable that can help them in avoiding the delay and improving customer satisfaction. Further, it has been found that the innovation in the e-business and e-commerce can help KFC to avoid delays in the future within the supply chain management. Moreover, KFC needs to apply some frameworks that can help in improving the reliability within its supply chain and logistics.
References
Arvis, J.F., Ojala, L., Wiederer, C., Shepherd, B., Raj, A., Dairabayeva, K. and Kiiski, T. (2018) Connecting to Compete 2018: Trade Logistics in the Global Economy. World Bank.
Christopher, M. (2016) Logistics & supply chain management. UK: Pearson.
Das, K. (2011) A quality integrated strategic level global supply chain model. International Journal of Production Research, 49(1), 5-31.
Gianpaolo, G., Laporte, G., and Musmanno, R. (2013) Introduction to Logistics Systems Management. 2nd ed. U.S.A: Wiley.
Harrison, A., and Hoek, V. R. I. (2011) Logistics Management & Strategy, Competing Through the Supply Chain. 4 th ed. London: Prentice Hall.
Hugos, M. H. (2018) Essentials of supply chain management. New Jersey: John Wiley & Sons.
Logistics Institute (2016) E-Commerce Trends and Challenges: A Logistics and Supply Chain Perspective [Online]. Available from: https://www.tliap.nus.edu.sg/pdf/whitepapers/vol16-Nov-ti.pdf [Accessed on 16th December 2018]
Mangan, J. and Lalwani, C. (2016) Global logistics and supply chain management. 3 rd ed. Hoboken: John Wiley & Sons.
Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L. (2015) Purchasing and supply chain management. Cengage Learning.
Murphy, P. R., and Wood, D. (2010) Contemporary Logistics: International Edition. 10th ed. U.S.A: Pearson Higher Education.
Pooley, C.R. (2018) KFC runs out of chicken in logistics fiasco [Online]. Available from: https://www.ft.com/content/223d4df0-1595-11e8-9376-4a6390addb44 [Accessed on 16th December 2018]
Rushton, A., Croucher, P. and Baker, P. (2014) The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.
UPS (2016) 3 Tech Trends Shaping the Future of Global Logistics [Online]. Available from: https://www.supplychain247.com/article/3_tech_trends_shaping_the_future_of_global_logistics/warehousing [Accessed on 16th December 2018]
Wisner, J.D., Tan, K.C. and Leong, G.K. (2014) Principles of supply chain management: A balanced approach. Cengage Learning.
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