AS THE delivery problems facing KFC look set to continue for the rest of the week, supply chain expert Dr Jonathan Owens looks in more detail at what might have gone wrong.
Dr Owens, of the University of Salford Business School, said: “KFC has now decided to close more than half of its 900 UK outlets after delivery problems meant they ran out of chicken. The speed of this action, particularly, during the traditional half term holidays has been particularly surprising. Yum! Brands Inc who own KFC are not small players in the food market and will be no doubt infuriated by the major supply chain issues.
“This will still be a problem into next week and may take some time to settle beyond the one week stated by KFC and DHL. For one, DHL just have the one centralised depot for this distribution. Two, no established or track record in this specialised form of distribution, thus may not have recovery plan in place. Three, dealing with a limited shelf life product and demand appears to be exceeding supply, i.e. they cannot keep up.
“KFC are trying to put an interesting marking spin for their loyal customers by having a nearest store locator on their website. Twitter reporting people driving and walking miles, so either they are genuine lovers of the Colonel’s meal or just up for creating their own supply chain!
“The actual reason for this dramatic failure may never be fully revealed by any of their major parties involved, however it is probably associated broadly to warehousing and distribution operations, as this is what DHL tool over from Bidvest Ltd when they joined QSL, as KFC’s two preferred companies for their reputation of ‘innovation in logistics’.
“QSL are the seasoned experts in and deem themselves to be a food logistics company in Fast Moving Consumer Goods (FMCG) and specifically fast food and quick service restaurant sectors. Therefore, very well known within the food sector but perhaps not so greatly outside. Unlike DHL, which replaced Bidvest Ltd. KFC chose DHL as they were looking to bring in its expertise in other industries into the sector. When DHL took over last November, they described this relationship with KFC as ‘groundbreaking’ and said it was ‘committed to setting a new industry benchmark’ in service.
“Particularly in this industry suppliers need to manage big volumes and with extremely fast rotation rates with distributors, so they demand a transport and logistics chain capable of constant agility. In simple terms, this is what DHL’s part of the bargain is to manage warehouse and distribution. So particularly in the 24/7 life we live today, and this is never more so important than in the fast food industry to ensure that there is a constant product availability. Subsequently, accuracy and constant updating of this information in the supply chain during the movement of the chicken and other food stuffs to the customer is critical.
“Tracking and stock alert to this tracking is a vitally important tool in order to maintain this important uninterrupted goods supply. Although one of the reasons given by KFC is that the Colonel would ‘not comprise on quality’, the tracking tool would have alerted them to this issue coming and there are a number of alternative actions they perhaps could have taken instead. Perhaps this may be the ‘teething problems’ commented on by KFC and DHL’s MD John Boulter?”