Challenges Faced by Companies in Supply Chain Management and Impact on Customer Retention

This research project focuses on the challenges faced by companies in supply chain management and their impact on customer retention. The study specifically examines the situation faced by KFC in relation to its suppliers and the effect on customer retention. The research aims to identify the importance of customer retention, the challenges faced by KFC in storing chicken, and recommend strategies for improving supply chain management. The findings will contribute to the understanding of supply chain management and its impact on customer satisfaction.

Research Project

Abstract
Supply chain management play an important role in maintain high quality of the finished
goods and services that are produced by company so it is important that companies have an
efficient SCM so that high quality of goods and services can be offered to customers so that
customer retention can be increased. The companies also need to effectively deal with challenges
faced while maintaining effective supply chain in company so that high customer satisfaction can
be achieved which is important to gain a competitive edge in market.

Table of Contents
Abstract............................................................................................................................................2
Research Topic.................................................................................................................................4
“To identify the situation faced by company pertaining to suppliers and its impact on customer
retention.” A study on KFC.............................................................................................................4
Chapter 1-Introduction.....................................................................................................................4
Aims and objectives...............................................................................................................4
Research rationale..................................................................................................................5
Chapter 2-Literature Review............................................................................................................5
Chapter 3-Research Methodology...................................................................................................7
Chapter 4-Analysis and Findings...................................................................................................13
Chapter 5-Critical appraisal, Recommendations & Suggestions...................................................20
Chapter 6- Conclusion...................................................................................................................21
REFERENCES..............................................................................................................................22

Research Topic
“To identify the situation faced by company pertaining to suppliers and its
impact on customer retention.” A study on KFC.
Chapter 1-Introduction
While operating in the competitive business environment it is important that companies maintain
a strong supplier network so that there is an efficient and continuous supply of requires goods
and services which are to be further utilised in manufacture of company’s final products and
services. It is also important that companies maintain an efficient supply chain management so
that flow of goods and services can be managed in company that can help in effective supply of
the required raw materials in appropriate quality and at reasonable rates. The quality of supply
available with company determines the quality of final goods and services that are delivered
ultimately to customers (Skuza, McDonnell and Scullion, 2018). Thus suppliers play an
important role in maximising customer satisfaction and also help in their retention in company.
In this report KFC is taken which is an American fast food restaurant chain having its
headquarters in Texas, US. The company is specialised in fried chicken, chicken sandwiches,
wraps etc. and is located in about 2261 global locations. In this report a small scale research is
conducted so that the challenges that are faced by companies due to suppliers along with their
impact on customer retention can be evaluated. Various research tools and techniques will also
be used during this research that will help in obtaining effective results and completing the
research on time and in an efficient manner.
Aims and objectives
Research aim: To identify the situation this is faced by KFC in relation to its suppliers and its
impact on customer retention.
Research objectives
 To determine the importance of retaining customers in business.
 To determine the importance of managing operations in company.
 To assess the challenges faced by KFC in storing chicken that also creates an impact on
customer retention.
 To recommend strategies that could be used in KFC so that it can retain its customers.

Research questions
 Why is customer retention important for business?
 What is the importance of managing operations in company?
 What are the challenges faced by KFC in storing chicken?
 Which strategies can be followed by KFC in storing raw materials so that customers can
be retained?
Research rationale
The rationale behind choosing this topic for research is that it will help the researcher in
gaining knowledge regarding the importance of storing raw materials so that more number of
customers can be retained in business (Elegbe, 2016). This research will help in building
knowledge of the researcher regarding handling business and also will develop their academic
and research skills so that overall personal and professional development can be achieved. Also
the results obtained after this research can be applied in company on which it is conducted so
that huge benefits can be generated through the received results. Further the research will also
help the researcher in improving their research knowledge which is important for getting future
research projects.
Chapter 2-Literature Review
Importance of customer retention for companies
For a company having loyal customers can help it in earning huge profits and with a 5% increase
in customer retention the increase in company profits are about 25%. Being able to retain
customers in business can help the company in building a strong brand image in market and also
the cost and efforts required for marketing about its goods and services can significantly reduce
(Lin and Tseng, 2016). The company is able to gain a competitive advantage in market as it is
able to attract its loyal base of customers and also these customers can help in generating
referrals for company which can increase its customer base leading to an increase in sales. In
order to retain a large number of customers it is important that company improves the quality of
goods and services so that high customer satisfaction can be achieved (Ambrosius, 2018). Also it
is important that businesses offer products to its customers based on their likes and preferences

so that high customer experience can be achieved. Customer retention also helps businesses in
improving their products and services so that high customer satisfaction can be achieved.
Significance of managing business operations
For a business it is important that its operations are streamlined properly and monitored
professionally so that all the activities that take place in business can be carried out in an
efficient manner. Managing business operations help in completing all the processes in business
smoothly and efficiently so that the company can survive successfully in market. It help in
improving the overall productivity of business, help in catering to customer requirements in an
efficient manner along with increasing the efficient use of resources of company (Saboo, Kumar
and Ramani, 2016). Operations management also help in managing the supply of company so
that only the raw materials which are of high quality can be acquired so that the finished goods
and services produced can be of superior quality that can help in attracting customers and
increasing customer satisfaction. It also help in providing goods and services to customers as per
their demands that can help in retaining customers in business so that repetitive business
activities can take place and profits of company can be maximised. In companies like KFC
managing operations play an important role in effectively using its resources so that high quality
goods and services can be produced and customers can be made loyal towards company
(McCormack and Johnson, 2016).
Challenges faced by company in storing the raw materials
For a business it is important that it maintain an efficient supply chain management in
company so that all the raw materials that is acquired by the company from its suppliers can be
well stored (Wu and Yen, 2016). Storage of raw materials play an important role in maintaining
the quality and standards of final goods and services produced by company as it help in keeping
the properties of raw materials intact. KFC is facing certain problems in storing its raw materials
i.e. chicken in an efficient manner which has lead to the closure of many outlets of company in
various locations. There are various reasons that have been identified which has lead the
company to face such challenges out of which the major one is that the company only has one
warehouse where it stores its chicken which are then transported to all its outlets. As the
company logistics in managing its supply chain is not efficient the company face problems in
making its specialised products to be available to its customers on time. This also affects the

quality of chicken which it is able to make available to its customer so that high value can be
created for them (Pucci and Zanni, 2019).
Strategies that can be adopted by KFC to improve supply in company
For companies it becomes essential to prepare well structured strategies that can help in
managing the supply chain of company so that they can maintain the supply of raw materials
which is of high quality in company (Ahmad, Rezaei, Tavasszy and de Brito, 2016). Various
strategies can be used by companies so that a continuous supply of high quality raw materials
can be made available in company at reasonable prices so that customer needs can be met
effectively. There are various strategies that can be used in KFC so that an efficient supply chain
can be maintained in company. It is important that the root cause of problem is identified so that
effective steps can be taken on time that can help in managing supply chain of company. The
companies should also have enough warehouses where the raw materials of company can be
stored as per the amount of production and demand in market (Huang, 2016).
Chapter 3-Research Methodology
It is the method that is to be used by researcher in conducting the research in a particular
direction so that information related to the given topic is collected and interpreted that can help
in deriving efficient results. It determines the way in which research will be conducted and
progressed so that effective results are achieved within a stipulated time and budget. It is
important that the researcher make use of his research and academic knowledge in an efficient
manner so that the results that are drawn are effective, reliable and trustworthy.
Research philosophy:
It is belief regarding the method of collection of data from various sources so that they
can be gathered, analysed and used to draw the results that can help in proving certain theory. It
deals with the source, nature and development of knowledge related to the researched topic by
collection of relevant data that can help in creation of knowledge. The choice of research
philosophy creates an impact on the practical implication of the results that are achieved after the
completion of research (Kumar, 2019). There are four types of philosophies that can be selected
by researcher to carry on with the research which are positivism, realism, interpretivism and
pragmatism. Positivism is a philosophy which believes that only the data that can be logically
and scientifically proved is real and trustworthy. These belief only beliefs the data if it can be

rationally proved and factual knowledge can be drawn through it. Realism philosophy relies on
the idea that the reality is independent from human knowledge. Interpretivism involves
interpretation of the data that is collected by the researcher so that efficient results can be drawn.
Pragmatism on the other hand only accepts a concept if it can be practically applied in the real
working environment. In this research interpetivisim philosophy will be chosen so as to carry out
the research and gain desired results.
Research approach
It is related to the approach which is selected by researcher to carry on with research in a
particular direction by using appropriate methods, tools and techniques so that the desired results
can be achieved. This approach will determine the time taken and resources that are utilised by
researcher during the complete process (Wiek and Lang, 2016). There are two types of
approaches that can be chosen by researcher which are deductive and inductive which depend on
the nature of researched topic. Deductive approach is used when a hypothesis is to be proved by
the way of data collection and its interpretation so that on the basis of results such hypothesis can
either be accepted or rejected. Inductive approach on the other hand is used when the approach is
reversed which means that first data collection is done and a pattern or conclusion is drawn so
that theory can be formulated. In this research deductive approach is used by researcher so that a
hypothesis can be proved on the basis of data collection and interpretation.
Research strategy
It is the technique that is to be followed during the research so that research can be
carried out in an effective and efficient manner which can help researcher in using a determined
path that can help in completion of research on time and within budget. Strategy needs to be
determined so that the research can take place in certain direction and also help in getting results
that can be practically applied and also help in proving a hypothesis (Amin and Smith, 2017).
The research can proceed forward in a systematic and strategic manner so that all the activities
get completed efficiently. Also it will help in selecting sources for data collection that can help in
collecting highly reliable and trustworthy information so that authentic results can be drawn
which will make research more effective. In this research all the activities are planned and well
structured along with the use of tools and techniques that can help in maximising the efficiency
of results drawn.

Research methods
It is related with the method which is chosen by researcher to collect data that can help in
collecting required information related to the topic so that they can be interpreted and highly
authentic results can be drawn. The method chosen will determine the nature and type of
information which will be gained so that it can be used accordingly to drive desired results.
There are two methods that can be used by researcher like qualitative and quantitative methods
which have different sources for completing different type of information (Bolton and Hannon,
2016). Qualitative method helps in collection of data by the way of open ended questions so that
the ideas, views and opinions of the source can be known so that a deep knowledge related to the
topic can be created. the information so collected cannot be depicted on tables, pie charts etc.
which can make it difficult in interpreting information that can be explained to third party.
Quantitative method on the other hand help in collection of information through closed ended
questions so that mathematical information can be gathered that can be easily depicted on
graphs, pie charts etc. This type of information is easy to be interpreted so that the third party can
also understand the information contained. In this research quantitative method will be used so
that the information so collected can be easily depicted and interpreted to gain required results.
Sources of data collection
There are various sources available that can be used by researcher so as to collect the
required information related to the topic on which research is being done. The two sources that
can be used by researcher are primary sources and secondary sources that help in gaining
different information. Primary sources are the ones from where researcher has to collect
information for the first time. This help in collection of information which has not been
manipulated and also these are fresh sources as they help in gaining information directly from
the source (Fernie and Sparks, 2018). The information can be interpreted based on the
knowledge of researcher which increases the effectiveness of results so drawn. The sources for
this type of information are questionnaires, interviews etc. Secondary sources on the other hands
are the ones which already contain information related to topic based on the interpretations and
knowledge of other authors like newspaper articles, magazines, internet articles etc. In this

research primary sources will be used to collect data which will be interpreted to draw
conclusions while secondary sources will be used to complete the literature review of research.
Research ethics
It is related with following ethical practices while carrying out the research so that it can
be completed in an efficient manner and can help in increasing the interest of all the
stakeholders. Research ethics will also help in maximising the authenticity and reliability of
results that are achieved at the end of the research so that they can be applied in proving an
hypothesis. The researcher thus needs to follow ethics so that research can be completed
effectively and efficiently. Talking permission from teachers, not hurting anyone during the
research, collecting information from reliable sources etc. are the ways through which research
ethics can be increased (Flax, Bick and Abratt, 2016).
Instrument used
These are the instruments that help in collection of data from desired source of
information so that highly accurate and efficient data can be gathered. The use of an appropriate
instrument is important so that only the relevant data can be collected that will help in
maximising the efficiency of results and also the collection of data can complete on time. In this
research questionnaire is being used as an instrument so that desired data can be collected from
primary source of information which in this research are the employees of KFC so that the
research aim can be justified and the objectives can be strategically achieved.
Sample method
When form a large population having similar characteristics only a few samples are
selected so that research can be conducted on the sample and the results that are gained are
applied to complete population. Choosing a sample size can help in making data collection easy
as only the sample size has to be used for data collection that will also help in completion of
research on time. In this research random sampling method is used by researcher which means
that the questionnaire will be given to random employees of KFC so that information regarding
various aspects can be gathered. The sample size which is chosen to complete this research is 20.
Questionnaire
It is an instrument which helps in collection of primary data by the way of close or open
ended questions which are contained in the questionnaire. It consists of certain structured
questions which are formed by researcher so that certain information can be gathered.

Questionnaire
Quantitative questions
Q1) Do you understand what customer retention in company means?
a) Yes
b) No
Q2) Do you think there is a relation between supply chain management and customer retention?
a) Yes
b) No
Q3) Why is customer retention important in company?
a) Competitive advantage
b) Increase on profits
c) Loyal customers
Q4) Why is operation management in company important?
a) Increase in productivity
b) Smooth functioning
Q5) How can customer retention in company b increased?
a) Improving supply chain
b) Improving quality of goods and services
c) Customer focus
Qualitative questions
Q6) How can supply chain of company be improved?
a) Increase transparency of supply chain
b) Use of technology
c) JIT
Q7) What are the challenges faced by KFC related to suppliers?
a) Inadequate supply
b) Untimely supply
c) Low quality of chicken
Q8) What are the impact of poor supply chain management?
a) Degrading quality of finished goods
b) Decrease in customer retention

c) Deteriorating brand image
Q9) What are the strategies that can be used in KFC to improve SCM?
a) Increase in warehouses
b) Increase number of suppliers
c) Effective marketing
Q10) How can operations be managed in company?
a) TQM
b) Lean production
Chapter 4-Analysis and Findings
Q1) Do you understand what customer retention
in company means?
Frequency
Yes 15
No 5
From this pie diagram it can be interpreted that in KFC out of 20 managers 15 have the
idea about customer retention while the other 5 do not understand this concept. It is thus
important that the company need to create an awareness of customer retention in company so
that all the workers can work towards achieving high customer satisfaction that can help in their
retention.

Q2) Do you think there is a relation between
supply chain management and customer retention?
Frequency
Yes 10
No 10
This pie chart depicts that of the 20 employees of KFC, 10 think that SCM is related with
customer retention while the other 10 do not think so. It can thus only half employees understand
the importance of supply chain management and so the company need to train its employees on
how SCM help in retaining customers. It will also help the company in maintaining effective
supply in the company so that high quality of goods and services can be made available to
customers and their satisfaction can be achieved.
Q3) Why is customer retention important in
company?
Frequency
Competitive advantage 7
Increase on profits 5
Loyal customers 8

From this graph it can be said that of the 20 respondents 7 say that customer retention can
help the company in gaining a competitive advantage in market, 5 say that it help in increasing
company profits while the rest 8 say that it help in building a loyal customer base. Thus customer
retention plays an important role in the successful existence of company which help it in
providing its goods and services to customer so that profits can be earned (Loader, 2015).
Q4) Why is operation management in company
important?
Frequency
Increase in productivity 9
Smooth functioning 11

This graph help in depicting that out of the 20 employees in KFC, 9 say that managing
operations in company is important as it help in increasing its productivity while the rest 11 say
that it help in smooth functioning of company operations. Operation management thus play an
important role in company as it help in effectively managing all the company activities so that
profits can be maximised and customers can be attracted towards company’s products and
services.
Q5) How can customer retention in company be
increased?
Frequency
Improving supply chain 5
Improving quality of goods and services 9
Customer focus 6

From this pie chart it can be said that out of 20 respondents, 5 say that improving SCM
can help in increasing customer retention, 9 say that improving quality of company’s products
and services can help in doing so while the rest 6 say that customer focus must be increased.
Thus there are various ways through which company can retain its customers that can help it in
gaining a competitive edge in market and increase its sales.
Q6) How can supply chain of
company be improved?
Explanation
Increase transparency of supply
chain
The company needs to make transparent and clear
agreements with suppliers so that they can deliver raw
materials to company on time and of a determined quality.
Use of technology With the use of technology the company can monitor the
requirement of raw materials that will be required so that
production can be effectively carried out.
JIT By this technique customers can be reached on right time
and at right place and also it help in improving the supply
chain of company (O'Brien and Pipkin, 2017).
Q7) What are the challenges faced
by KFC related to suppliers?
Explanation

Inadequate supply The suppliers are unable to provide the appropriate
quantity of supply of chicken that is required to run its
restaurants.
Untimely supply The supplies are not done on time which is increasing
inefficiency of KFC to meet customer requirements.
Low quality of chicken The suppliers are unable to provide appropriate quality of
chicken that help KFC in making its specialised fried
chicken.
Q8) What are the impact of poor
supply chain management?
Explanation
Degrading quality of finished
goods
The quality of finished goods and services can deteriorate
with the inefficient supply chain of company which affects
the quality of raw materials so used.
Decrease in customer retention As the quality and quantity of finished goods that are
available in company depend on the supply chain of
company it can affect customer retention.
Deteriorating brand image The brand image of company can deteriorate if there is
unavailability of required quality and quantity of goods and
services in the company (Silverman, 2016).
Q9) What are the strategies that
can be used in KFC to improve
SCM?
Explanation
Increase in warehouses It is important that KFC increases the number of
warehouses in company so that chicken can be stored at
various locations and can be made available to its outlets in
fresh condition.
Increase number of suppliers The company must increase its number of suppliers so that
it can obtain its materials from various suppliers and can
also lower the prices of raw materials.

Effective marketing The company can effectively market about the availability
of products in its outlets so that more customers can be
reached.
Q10) How can operations be
managed in company?
Explanation
TQM This technique can be used in company so that the number
of non-value adding and waste stages can be reduced which
can help in reducing defects and increasing quality of final
products.
Lean production It also helps in reducing the waste and defects in
production so that high quality of goods can be produced.
Chapter 5-Critical appraisal, Recommendations & Suggestions
From the above research it can be said that maintaining efficiency in supply chain plays
an important role in retaining customers which means that the company should take effective
steps so that supply chain management can be made highly efficient. KFC is a known brand for
its specialised fried chicken so it is important that it makes high quality of chicken available to
its customer so that it can remain competitive in market and also retain customers.
Stakeholders: These are the people who are directly or indirectly affected by the company
activities and sop it is important that the decisions that are made in company help in maximising
the interest of all its stakeholders so that their trust and support can be achieved. It is thus
important that supply chain is managed in KFC so that all its stakeholders can help the company
in its growth and progress (Walliman, 2017).
Communication: After obtaining the results of research it is important that all the stakeholders
are circulated the information by the use of effective communication channels so that they can
know about the decisions that are made in company. Use of e-mails, messages etc. can be done
to reach to the company stakeholder so that their trust can be regained.
Recommendations: After completion of the research following are certain recommendations that
can help KFC in maintaining its supply chain in an efficient manner:

 The company need to form clear policies as regards to the quality and time at which
suppliers must deliver raw materials to the company.
 The company must increase the transparency of supply chain so that the weak links can
be found and quick actions can be taken so that high quality of chicken can be made
available to customers.
 The company should increase the number of locations of warehouses so that it can store
chicken as per the needs of the outlets which will help in efficiently managing the
quantity of chicken in company.
Chapter 6- Conclusion
From this report it can be concluded that supply chain management play an important
role in maintaining high brand image of company and also in retaining its customers. It can be
said that if the supply chain of company is efficiently maintained then high quality of finished
goods can be made available to customers that can help in sustainable existence of company.
Certain strategies can be formulated so that challenges in maintaining SCM can be dealt with and
high quality of goods can be made available in market. The company thus need to form proper
policies related to the suppliers and the time at which they are to deliver the supplies along with
the quality which is required so that high quality material can be provided to the customers
which can help in enhancing customer satisfaction. It is also important that the company use
effective strategies in retaining its customers as it play an important role in improving its brand
image in market and also in increasing trust of its customers. Transparency in supply chain and
increase in the number of warehouse location can help KFC in improving its supply chain issues
so that the customer demands can be efficiently fulfilled.

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