KFC Corporation is also known as Kentucky Fried Chicken. It is a chain of fast food restaurants headquartered in Kentucky, United States. Till December 2015, the company was the second largest restaurant chain in the global market after McDonald’s with its presence in more than 130 countries and territories with approximately 21,000 outlets (KFC, 2018). The chain is a subsidiary of Yum! Brands, it is a restaurant company which also owns Pizza Hut, WingStreet, Taco Bell, etc. chains. Organizational supply chain management is meant to be the most effective as consumers could feel the same taste and varieties at all its locations. In this report, failure of its supply chain management will be discussed along with the variables of KFC’s logistics management in order to avoid such failures for enhancing customer satisfaction. Further, the report will focus on the concept of innovation which could be adopted by KFC in relevance to the e-commerce and e-business for avoiding such failures as well as to uplift the performance of supply chain management. With regards to this, the last part of the report will discuss the best practices which could be adopted by the organization in their supply chain management for improving its reliability of its supply chain.
KFC’s functionalities are mainly dependent upon its supply chain management and it is a fast food restaurant chain and to maintain the same taste at all its locations, management contracts with some of the suppliers in order to maintain the quality of food served in the restaurant. Main raw materials for KFC are chicken, mashed potatoes and seasoning and it is mainly determined by the head office supplier and the other raw materials like bread, vegetables, beverage puree, packaging, etc. are determined by the district level suppliers. KFC uses STAR SYSTEM for selecting their suppliers. Recently, organization faced an unexpected incident due to which approximately 700 to 900 restaurants were closed due to shortage of raw materials. In this incident, organizational brand image affected in negative manner as DHL is the partner of KFC in terms of supplying chicken and other raw materials in various locations across Britain. This not only affected organizational brand image, but it also affected brand loyalty from their customers. The dispute arises from the suppliers’ end as they were unable to fulfil the demand of KFC. Trade Union GMB also criticised KFC for their penny-picking decision award DHL as their primary delivery firm and this directly affected organizational functionalities (O’Marah, 2018).
KFC’s supply chain management is considered as one of the best in the global fast food industry because the primary components used in their fast food items are mainly chicken, seasoning and mashed potatoes and all these are delivered from the supplier’s head office (Nuševa & Mari?, 2017).
Logistic management of KFC functions on the simple theory of flow of things from the place of origin to the point where consumers consume the products for fulfilling their demands and wants. Mainly logistic management includes the management of food, equipment, liquids, and all other goods which vary on the basis of nature and type of organization. As per the scenario of KFC, their logistic management includes movement of both physical as well as intangible goods like chicken, seasoning, vegetables, packaging material and time, information, measures to check the quality, respectively (Christopher, 2016).
KFC’s logistics management is divided into two parts i.e. main raw materials and secondary raw materials. Main raw materials like chicken, mashed potatoes and season are determined by the head office of suppliers while the other items are supplied by the district suppliers. In order to avoid such delays, the STAR SYSTEM will strictly be followed in order to manage the supplies of their products and services. The main attribute of organizational supply chain management is the mode of operation of the logistics and supply to follow DRP. It is the system which includes three input files and output plans i.e. main demand planning, supply the resource file, inventory files, procurement plans and distribution plans (Yilmaz & Belbag, 2016). With regards to this, the supply chain management process of the organization implement all the appropriate actions through which the raw materials could be stored according to their nature.
Customer satisfaction is directly linked with the services rendered and products delivered to them. In the scenario of KFC that is a chain of fast food restaurant specialised in serving verities of chicken dishes had faced several hiccups in their supply chain management in the past few weeks. KFC is known for serving fresh and quality foods to its consumers and this is the primary factor for their customer satisfaction. In relation to the failure of supply chain management in the two third of the Britain, organizational functionalities have been affected and with regards to this, major loss faced by the organization was disappointment from customers which created negative impact over organizational brand image (Martí, Puertas & García, 2014). Revenues and sales of the organization were also affected because due to shortage of chicken, various branches were forced to shut their gates. Thus, to avoid these types of hiccups in the customer satisfaction, organization will use their existing supply chain management with the objective of enhancing organizational performance as well as to make the organization effective enough to match up with the expected performance of the organization in order to fulfil desired goals and objectives (Mellat-Parast & Spillan, 2014).
With the changing business trends and introduction of internet, technology and globalisation in the business, business organizations have faced huge opportunities in terms of expanding their businesses in the international markets and numerous threats such as aligning organizational products and services as per the demands and wants of different customers in different countries. In relation to this, innovation of e-business and e-commerce has also brought revolutionary changes in the functionalities of business corporations (Soto-Acosta, Popa & Palacios-Marqués, 2016). Today, there are number of companies operating only at e-commerce platform and have marked their mammoth presence in the global market whereas business enterprises those were operating in offline market are also moving towards e-commerce industry in order to enhance their reachability along with enhancing their revenues, sales, profitability, etc. E-commerce is a new trend for the business entities in order to make their functionalities effective enough to grab the market share in the global market along with expanding in the global very easily. Audience has also accepted shopping online due to availability of huge product and services along with the effective policies of easy return and refund. These are the major attractions of e-commerce platforms which has diverted interest of consumers towards online shopping from offline shopping (Tsironis, Gotzamani & Mastos, 2017).
Although, KFC has moved towards e-commerce platforms but they have not launch their full fleshed presence on the internet. Thus, organization could adopt appropriate measures in relevance with enhancing organizational performance as well as to match up with the latest trends followed by other companies in the same industry. Introducing their e-commerce platform will lead the organization to enhance their customer base as major part of the target audience will be targeted along with generating attaining desired goals and objectives. According to the latest business trend, organizations believe in performing through brick and mortar business model in order to approach audience through both the platforms i.e. online and offline mediums. This will help the organization to expand its presence in the global market along with enhancing customer satisfaction by delivering quality food items to its target audience (Popa & Soto-Acosta, 2015).
With regards to the introduction of e-business stores, KFC would be able to target larger part of their target audience along with gaining competitive edge. In relation to the context of KFC, recent failure faced by the organization due to inappropriate delivery partner in the supply chain management needs to be considered while selecting other delivery partners for delivering the online orders. Organization will approach to the major distributors at local level with the objective of delivering ordered food to its customers at fast speed in order to enhance reliability amongst the target audience as well as to boost up the organizational image in the global market (Al Omoush, Al-Qirem & Al Hawatmah, 2018). KFC could launch its mobile application through which consumers will be able to place orders and that mobile application will be capable enough to provide all relevant information to its consumers like live tracking of their order, name and contact details of the courier person who will deliver the order and other necessary information. Apart from this, organization could also offer different payment options to its consumers who will place order on mobile application in order to enhance customer base as well as to enhance organizational performance in the global market.
In relation to the supply chain management, these features will help the KFC to track the live location of their suppliers and that application will be capable enough to place order automatically at the end of the day to its suppliers to deliver the required raw materials in order to speed up the supply process for making the enhancing the effectiveness of functionalities of organization for enhancing customer interaction with the organization along with delivering quality food to their customers and these features will also help the organization to eliminate the delays and issues faced by the KFC in their supply chain management (Raymond, et. al., 2018).
Best practice is considered as the general or special technique or tool which is accepted by the majority of people for performing a particular task. In relation to this, for improving the supply chain management of KFC, best practices could be adopted through which not only organizational performance will be enhanced but it will also lead to improve organizational performance along with boosting up the image in the global market (LTD Management, 2018). In terms of supply chain management, best practices available are:
KFC is known for delivering best quality roasted chicken amongst the all fast food chains in the globe and with regards to this, organization have made their effective presence in the global fast food industry. People from different places especially comes at the doorstep of KFC to enjoy delicious chicken, thus, it becomes duty for the organization to fulfil their consumers’ demands along with fulfilling their expectations. This has helped the organization to make appropriate brand image along with setting reliable image amongst the target audience (Wild, 2017).
KFC has recently faced an unexpected incident from their suppliers and this has put the organization in a negative situation. In order to recover along with regaining their reliable image and to improve their supply chain management, it is required for the organization perform following three best practices:
These best practices will help the KFC to deliver the customers’ orders in less time along with keeping the safety stock level so that customers who have travelled a long way to reach to the store of KFC for having delicious food could be fulfilled. These best practices will not only help the organization to improve their brand image but it will also help the organization to improve its reliable image amongst the suppliers as well as customers which will ultimately enhances organisational performance (Ptak & Schragenheim, 2016).
Conclusion
It can be concluded that supply chain and logistics management is one of the most appropriate aspect for an organization as it helps the organization to deliver within time along with fulfilling their expectations. In this report, issues faced by the organization in their supply chain management process has been discussed along with the measures which could be adopted for the purpose of improving customer experience and its reliable image in the organization.
References
Al Omoush, K.S., Al-Qirem, R.M. and Al Hawatmah, Z.M., 2018. The degree of e-business entrepreneurship and long-term sustainability: an institutional perspective. Information Systems and e-Business Management, 16(1), pp.29-56.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
KFC.com. 2018. What made us great is still what makes us great [online]. Available at: https://www.kfc.com/about [15/11/2018].
LTD Management. 2018. Global Logistics / Supply Chain Best Practices – To Support and Drive Business Success and Trends [online]. Available at: https://www.ltdmgmt.com/logistics-best-practices.php [15/11/2018].
Martí, L., Puertas, R. and García, L., 2014. The importance of the Logistics Performance Index in international trade. Applied economics, 46(24), pp.2982-2992.
Mellat-Parast, M. and E. Spillan, J., 2014. Logistics and supply chain process integration as a source of competitive advantage: An empirical analysis. The International Journal of Logistics Management, 25(2), pp.289-314.
Nuševa, D. and Mari?, R., 2017. Quick response logistics in retailing as an information technology based concept. Strategic Management, 22(4), pp.32-38.
O’Marah, K. 2018. 3 Supply Chain Lessons From the KFC Fowl-Up [online]. Available at: https://www.forbes.com/sites/kevinomarah/2018/03/01/three-supply-chain-lessons-from-the-kfc-fowl-up/#560bb96b1cb1 [15/11/2018].
Popa, S. and Soto-Acosta, P., 2015. Factors Affecting e-Business use and its Effect on Innovation and Firm Performance in Manufacturing SMEs. In European Conference on Intellectual Capital (p. 270). Academic Conferences International Limited.
Ptak, C.A. and Schragenheim, E., 2016. ERP: tools, techniques, and applications for integrating the supply chain. Crc Press.
Raymond, L., Uwizeyemungu, S., Fabi, B. and St-Pierre, J., 2018. IT capabilities for product innovation in SMEs: a configurational approach. Information Technology and Management, 19(1), pp.75-87.
Soto-Acosta, P., Popa, S. and Palacios-Marqués, D., 2016. E-business, organizational innovation and firm performance in manufacturing SMEs: an empirical study in Spain. Technological and Economic Development of Economy, 22(6), pp.885-904.
Stevens, G.C. and Johnson, M., 2016. Integrating the supply chain… 25 years on. International Journal of Physical Distribution & Logistics Management, 46(1), pp.19-42.
Tsironis, L.K., Gotzamani, K.D. and Mastos, T.D., 2017. e-Business critical success factors: toward the development of an integrated success model. Business Process Management Journal, 23(5), pp.874-896.
Wild, T., 2017. Best practice in inventory management. Routledge.
Yilmaz, K.G. and Belbag, S., 2016. Prediction of consumer behavior regarding purchasing remanufactured products: a logistics regression model. International Journal of Business and Social Research, 6(2), pp.01-10.
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