Logistics and Supply Chain Management for KFC

This report discusses the issues faced by KFC in their supply chain management process and measures that could be adopted for improving customer experience and its reliable image in the organization. It covers the significance of KFC's logistics variables, innovations in e-business and e-commerce, and best practices for improving supply chain management.

Running Head: Logistics management
KFC
Logistics and Supply chain management

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Table of Contents
Introduction.............................................................................................................................................................. 2
Company’s background................................................................................................................................... 2
Task 1 Significance of KFC’s Logistics Variables........................................................................................ 2
Task 2 Innovations in e-business and e-commerce.................................................................................. 3
Task 3 Best practices for improving supply chain.................................................................................... 4
Conclusion................................................................................................................................................................. 6
References................................................................................................................................................................. 7

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Introduction
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.
Company’s background
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

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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).
Task 1 Significance of KFC’s Logistics Variables
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 & Marić, 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

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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).
Task 2 Innovations in e-business and e-commerce
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

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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.

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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).
Task 3 Best practices for improving supply chain
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:
 Increasing inventory velocity
 Implementation of lean principles
 Improving suppliers’ performance
 Employ supply chain technology
 Segmentation of supply chain
 Utilising meaningful metrics
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).

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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:
 Providing training to their employees so that they could treat the customers in
better way to enhance their experience with the organization.
 Regularly improving the quality of their food items as well as to maintain the same
taste by maintaining good relations with the customers (Stevens & Johnson, 2016).
 Adaptation of automation system in the supply chain and logistics management for
improving the performance of the organization as well as to enhance customer
experience.
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).

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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.

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References
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