Logistics and Supply Chain Management for KFC

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