Why Should Businesses Focus on Supply Chain Management: A Look at Kfc’s Supply Chain

Why should businesses focus on Supply Chain Management: a look at KFC’s Supply Chain

This report focuses on why companies should focus on supply chain management within their business, through the analysis of KFC’s (Kentucky Fried Chicken) chicken crisis, as well as other examples to highlight the successes, and downfalls of effective and poor supply chain management.

Supply chain management is a set of ongoing activities covering each step of the process from product development, supplies, logistics and production as well as information systems to achieve maximised customer value, sustainable competitive advantage, efficiency, and effectiveness. The supply chain is linked together through physical and information factors. The physical factors include movement, transportations and storage, while the information factors allow the supply chain partners to coordinate and communicate with each other regarding plans, day-to-day operations and the flow of goods through the supply chain.

An example of efficient supply chain management within a business is from H&M, a popular, multinational clothing company. H&M relies largely on efficiency and integrated systems within their supply chain to work smoothly. They have heavily strategised cost efficient production, and reducing lead times for inventory. Additionally, their effective inventory management techniques have played a significant role in their success with stock control. All these factors have led to their notability for offering trendy styles with quick turn around, and a smooth supply chain. On the contrary, an example of an inefficient supply chain management can be seen through an incident from Toys R Us in 1999. The company was unable to fulfill a large amount of Christmas orders promising customers to be delivered by Christmas. However, since they failed to do so, due to the lack of efficiency and supply chain management, Toys R Us sent out emails two days prior to Christmas apologising to their customers. One of the few impacts they incurred was negative public relations, and public backlash.

Furthermore, the reports’ issue of focus surrounds KFC. The issue dates to February of 2018 in the United Kingdom when KFC terminated their contract with their original distributor, BidVest, and changed the distributors to DHL and QSL in order to cut costs on logistics. KFC still had the same suppliers to supply their ingredients, and most importantly chicken, however, besides their suppliers, almost all other intermediaries were altered due to their new partnership with DHL and QSL. Their original supply chain was for the food supplies to be transported from the suppliers to the distributors (BidVest), then directly transported out of 5 regional distributing offices to KFC restaurants throughout the UK. However, with their new distributors, this supply chain became more complex. With DHL and QSL, their supply chain went from the the suppliers transporting the food materials to a single regional office in Rugby, England, then sent to satellite depots, which would then divide all food materials to smaller vehicles to be distributed to the various KFC restaurants.