Essay Example on KFC Supply Chain: Simplified Flow Process

Introduction

Under the KFC supply chain flow process, restaurants report to the branch distribution center whose duty involves assessing the entire demand of the location. After the assessment of the complete demand, the KFC distribution center orders the supplier for required supplies. KFC products include French fries, chicken bucket, vegetable strips, krushers, vegetable zinger, and the toasted twister (KFC Corporation, 2019).

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

According to figure 1.0 above, KFC has a simplified supply chain that can be summed up as a three-step process. Within the first step, raw materials are procured from suppliers and stored at two warehouses; the cold storage and the standard storage. In the second step, all product preparation is conducted at the branch apart from the margination of chicken and delivered to customers at the desired location. Finally, the third step revolves are replenishing of each brand according to the requirements with the company vehicles thrice a week.

Upstream Flow

The dry and frozen supplies are ordered weekly while the wet goods are ordered 2-4 times weekly. KFC sources 100% real chicken with companies such as Venky's in India. KFC procures the supplies from suppliers such as Kerry Ingredients, McCain, Nestle, among others (KFC Corporation, 2019). Also, McCormick & Company is one of the biggest sauces, marinades, and seasonings suppliers. After the upstream flow, using a "Start System," the supplies are ready for distribution to all the branches bringing about the downstream flow (Herzi, 2013).

Downstream Flow

Downstream First Tier

The KFC supply chain follows the distribution requirement planning (DRP) system, which includes three output plans and two input files. Within the distribution requirement planning, it utilizes procurement planning, material requirement planning, inventory file, supply resource file, and distribution planning (Herzi, 2013).

Downstream Second Tier

Within the second tier involving retailers, KFC ensures preparation and packaging of the products from the cold storage warehouse and others from an ordinary storage warehouse. There are different retailers that KFC considers, such as KFC drive-thru outlets, KFC restaurants, and other outlets.

Downstream Third Tier

Due to the vast collection of products, KFC focuses on improving customer relationships. For example, drive-thru outlets are developed to ensure a hassle-free experience to customers. The corporate customer relationship forms a significant domain for KFC as they maintain proper availability of quality staffs.

Information and Financial Flows

There are different activities with KFC supply chain since it interacts with the value chain as well. For instance, there are primary activities involving inbound logistics, outbound logistics, marketing and sales, and service. In the inbound logistics, chicken is acquired from Godre and Taloja. Frozen chicken is acquired from Venkies-Pune while vegetables from ESSAR and other spices. The outbound logistics involve quality control, freight truck inspection, and timely delivery or distribution (Yum Brands, 2019).

Moreover, in other activities such as procurement, chicken is purchased weekly and vegetables after every two to three days. In consideration of the financial flows of KFC, the company earned a revenue of $3225 million as of 2016 and $3110 million as of 2017. The average annual sales per unit were $1.2 million as of 2013 with a worldwide food order at an outlet of 250 occurring with two-hour peak period (Collins Foods Limited, 2018).

Issue KFC Supply Chain is Facing

The issue of the supply distribution is amongst the significant issues KFC is encountering. Early in 2018, KFC faced major distribution issues on the delivery of chicken. The issue was enormous in that it led to the closure of some of the stores in the UK. Other giants in the market, such as Burger King, Dominos, and McDonald's are rendering a regular competition to KFC an occurrence that is equally pushing KFC to widen is distribution. In as much KFC supply chain has managed to mitigate the issue with the necessary measures, it is still an issue considering the difficulties of managing franchisees.

Michel Porter's Analysis Concept of KFC

Correspondingly, Michel Porter's Analysis plays a significant role in defining the issues facing KFC and the entire supply chain as a whole. In the description of the business evaluation model, there is; the threat of new entrants, buyer power, supplier power, the threat of substitute products, and rivalry among existing firms (Bain, 2002). Specifically, in consideration of the bargaining power of buyers, there is the factor of steady competitors such as Burger King and McDonald offering lower prices hence switching cost is low. Also, buyers can influence prices since they have ample choices.

On the other hand, there is the supplier power. It includes; a large number of suppliers available for KFC raw materials and high switching cost as suppliers cannot switch easily due to the availability of other suppliers. Therefore, the concept of Michel porter analysis offers a significant explanation of the issue facing the supply chain.

References

Bain, J. S. (2002). Relation of the profit rate to industry concentration: American manufacturing. The Quarterly Journal of Economics, 5(3), p243-252.

Collins Foods Limited. (2018). Annual Report 2018 Collins Foods Limited [E-book] (pp. 1-96). Retrieved from http://member.afraccess.com/media?id=CMN://2A1093136&filename=20180726/CKF_02002462.pdf

Herzi, A. (2013). Kentucky Fried Chicken (KFC) Supply Chain Management. Al-Madinah Management and Finance Science, 1(4).

KFC Corporation (2019). What Made Us Great Is Still What Makes Us Great. [online] KFC. Retrieved from https://www.kfc.com/about

Yum Brands (2019). Kentucky Fried Chicken. [online] Yum.com. Retrieved from https://www.yum.com/wps/portal/yumbrands/Yumbrands/company/our-brands/kfc