Page 6 - Logistics News April 2018
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Opinion





                         Why did the chicken




                                   cross the road?





                                                                                                   By Rick de Klerk

              For Kentucky Fried Chicken (KFC) in the UK, at least, this answer was, “Because we
                                         thought it’d save us a ton of money”.



            IN FEBRUARY, KFC switched over 3PL                 any issues would compound over time.
            providers, going from a multi-warehouse            And, as it turns out, the room for error was
            approach to a single location for the              exceedingly low – the scandal has revealed
            storage and delivery of its chicken. Due to        just how much fl ex KFC’s new system had
            complications in the switch, KFC’s supply          for error. The failure to properly integrate
            plummeted; within a week, two thirds of the        its ordering process meant a breakdown in
            franchises were out of chicken and unable          communication. According to some reports,
            to serve their customers. While it has hastily     full loads of chicken spoilt in trucks as drivers
            switched at least part of its business back,       sat idling, waiting for delivery instructions that
            the drag created by this error has been            never arrived.
            substantial. As of April, it is still experiencing    The other reason was that KFC failed
            supply issues with specifi c items, such as         to match its want of effi  ciency with the
            gravy.                                             unique qualities of food distribution. I’ve
               KFC’s dilemma is of interest for a number of    written previously how diff erent product
            reasons. For one, it is instructive in its scope;   classes require diff erent solutions; during
            with constant tales of large corporations          the West Africa Ebola crisis, for example, the
            demonstrating keen supply chain acumen             delivery of critical vaccines was hindered by
            with eff ortless ease, it is comforting to know    pharmaceutical best practice, which focuses
            that logistics actually is hard to get right and   on safe transport of medication in controlled
            even the biggest companies sometimes hit a         conditions that minimise contamination and
            pothole in implementation.                         product loss. It was not expedient, which is
               Experts and experienced supply chain            what the crisis required, but that was due to
            journalists have proposed several reasons as       extraordinary circumstances.
            to why KFC failed in this particular instance,        Kevin O’Marah from Forbes said it best in
            but I found two to be the most likely. The fi rst   his own reporting on the story: “Logistics is
            is integration: according to technology analyst    not a cost centre”. KFC saw transportation
            Chris Green, it was likely that KFC’s ordering     and distribution as an operating expense that
            system was not properly converted over,            needed to be trimmed down. More than 250
            partly thanks to the pace of implementation        jobs were made redundant as a result, but
            (roughly four months). “If you were one of         with none of the benefi t. The UK division of
            KFC’s 750 franchisees, you could order your        KFC, which makes up around 3.5 percent of
            replacement chicken and other supplies and         the company’s global total and pulls in
            usually within about 24 hours, a lorry from        $2.1 million a day, lost two thirds of that daily.
            Bidvest would appear outside your store with          Ensuring that a company can meet the
            what you needed. The stores were used to           demands of your business with real-world
            that kind of just-in-time ordering, and that’s     examples of its implementation and provide
            what caught them out,” he says.                    adequate time for proper integration and
               Delivering food from a single warehouse         communication of the changes means your
            is not impossible, but combined with KFC’s         logistics will deliver triumphant crows, not wet
            size and its franchises’ typical order process,    squawks. •


                                       To add comment, email rick.de.klerk@opsi.co.za


        14                                                                             April 2018  |  Logistics News
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