KFC: An In-Depth Analysis of Supply Chain and Logistics Issues

This presentation provides an in-depth analysis of the supply chain and logistics issues faced by KFC, including improper selection of suppliers, absence of technological advancement, and unethical usage of growth hormones and antibiotics. It also discusses the need for restructuring the supplier's code of conduct and finding responsible logistics management organizations to ensure smooth business conduction.

KFC
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-AN IN DEPTH ANALYSIS

Introduction
In the modern world, the business conduction of the
various organizations is subjected to significant
amount of difficulty that is generated due to various
reasons like the completion of the concerned industry
or the reputational damage for the misconduct of the
organization. However the organizations which are
concentrating on the food production are significantly
observed to get affected more with the reputational
damage than any other problems. In this presentation,
pone such organization in the form of KFC will be
discussed which faced significant amount of issues like
racial insensitivity, improper selection of the materials
for the packaging or the usage of the significant
amount of growth hormones or antibiotics.

Organizational Overview
 Kentucky fried chicken or KFC is a notable
name in the restaurant industry.
 KFC operates in the fast food genre.
 It was founded by an established American
businessman colonel Harland David Sanders.
 Fried chickens, chicken sandwiches, French
fries, salad, dessert, soft drinks and wraps are
the general products.
 The organization is currently having more than
20952 number of employees.
 It is operated by yum! Brands and yum china
(kfc.Com, 2018).

General Issues: Supply and Logistics
Suppliers’ business model.
Improper selection of the suppliers.
Absence of Technological Advancement in the Logistics
and Supply Chain.
Supplier’s unethical business conduct- Unethical usage of
the growth hormones and excessive antibiotics.
Improper supply of the products.
Ill-functioning Logistics

Suppliers’ business model
 Significant amount criticism for
animal welfare record.
 Tendency to choose such poultry
suppliers who receives significant
amount of criticism or protests from
the part of the people for the ethical
treatment of animals (PETA)
(peta.Org, 2018).
 Negative brand image of the
organization in terms of animal
welfare.

Research question and remedy
o Why the organization is concerned with the
availability of the suppliers with the tag of “animal
friendly”?
o More focus on the PETA recognised suppliers.
o It will enable the organization to portray itself as
animal and wild life friendly.
o It will help in elimination of the concern of the
probable customers and the animal lovers.

Improper selection of the suppliers
 Significant amount of trouble from the
selection of the suppliers.
 It was accused to source soya bean from
Cargill for the purpose of its chicken feed
in the year 2006.
 Cargill was accused of evaporating
considerably enormous bands of amazon
rainforest for the purpose of growing the
crops (cargill.Com, 2018).
 Strong criticism from a non-governmental
environmental organization, Greenpeace
(greenpeace.Org, 2018).

Research question and remedy
 What is the need of ethically conducting suppliers?
 Search for suppliers with negligible amount of criticism in
environmental issues.
 KFC highly appreciates the creation of a better brand image of it
among the customers.
 These sort of controversies will be significantly demotivating for the
customer
 Search for suppliers who conduct ethical business and have a better
brand images.

Absence of Technological Advancement in the Logistics and
Supply Chain
o Logistics was significantly
inefficient in coping up with such
high customer demands.
o The flow of the information is
significantly less among the
relevant parties in the supply and
logistics management.
o The supply and logistics managers
are unable to keep a track of the
customers preferences.

Research question and remedy
 What is the need of this flow of information among the
relevant parties involved in the processing?
 More concentration on the application of RFID and the
enterprise resource planning along with the presence of
internet.
 Increased amount of communication and flow of
information among the supply chain and logistics
managers regarding the customer trends.

Unethical usage of the growth hormones and
excessive antibiotics
 Several cases of using chemicals or
hormones for the rapid growth of the
chickens.
 In the month of December 2012, as it was
found that the KFC suppliers were using
growth hormones for rapid growth of the
chickens (Smith, 2016).
 Inject considerable amount of antibiotics
which is completely unethical as those
compounds.
 The organization went so far with it that it
violated the Chinese rules (export.Gov, 2018)

Research question and remedy
• Why should the organization reduce
the usage of the growth hormones
and the antibiotics?
• It was a significant challenge for
yum!
• It faced a decline of 20% in the
month of December and January in
the same-store sales (Yum.Com,
2018).
• It will be instrumental in eliminating
the concern of the people regarding
their health during consuming the
products of KFC.

Ill-functioning Logistics
Absence of transportation vehicle of the
required temperature.
Improper delivery of the raw materials.
Inappropriate pricing of the raw materials.
Inappropriate response of the Delivery
queries and specification queries.

Research question and remedy
What is the need of the restructuring in the suppliers’
code of conduct?
The organization must restructure the supplier's code of
conduct with strict formulation of the rules in terms of
improper functioning of the logistics and the suppliers.
This will enable the organization to reduce the avoidable
issues of the supply chain and logistics like the improper
delivery, absence of the cold storage for the raw
materials along with the inappropriate high pricing.

Improper supply of the products
 Logistics management in the UK operation
is conducted by DHL express (Dhl.Com,
2018).
 KFC suffered an acute shortage of chicken
in UK due to the mismanagement of DHL
express.
 UK is the largest European market for KFC.
 It forced them to cut off the business on
temporary basis in several restaurants of the
nation.
 A formal apology was issued by the
organization to their customers.

Research question and remedy
What should the organization focus on the logistics management
and find responsible companies for the purpose?
Must focus in acquiring the service of responsible logistics
management organizations.
It will enable the organization in reducing the shortages of supply
of the raw materials or the improper delivery of those materials.
It helps in smooth business conduction.

References
CARGILL.COM (2018). PROVIDER OF FOOD, AGRICULTURE, FINANCIAL AND INDUSTRIAL PRODUCTS AND SERVICES TO
THE WORLD. | CARGILL. (2018). RETRIEVED FROM HTTPS://WWW.CARGILL.COM/
DHL.COM (2018). RETRIEVED FROM HTTPS://WWW.DHL.COM/
EXPORT.GOV (2018). EXPORT.GOV - CHINA STANDARDS AND REGULATIONS. (2018). RETRIEVED FROM
HTTPS://BUILD.EXPORT.GOV/CHINA/DOINGBIZINCHINA/EG_CN_027473
GREENPEACE.ORG (2018). HOME - GREENPEACE INTERNATIONAL. (2018). RETRIEVED FROM
HTTPS://WWW.GREENPEACE.ORG/INTERNATIONAL/
KFC.COM (2018). KFC WEBSITE. RETRIEVED FROM HTTPS://WWW.KFC.COM/?GEOREDIRECT=FALSE
PETA.ORG (2018). INTERNATIONAL LANDING PAGE | PETA. (2018). RETRIEVED FROM HTTPS://WWW.PETA.ORG/
SMITH, R. (2016). BUCKET IN MY HAND: KENTUCKY FRIED CHICKEN ADVERTISING, AMERICAN DREAM DISCOURSE, AND
THE HUNGER-OBESITY PARADOX.
YUM.COM (2018). YUM! BRANDS – A WORLD WITH MORE YUM!. (2018). RETRIEVED FROM HTTP://WWW.YUM.COM/