Product Detail
Expert reaction: KFC supply chain crisis could have been avoided |
|
| University | Amity blog |
| Service Type | Assignment |
| Course | |
| Semester | |
| Short Name or Subject Code | |
| Product | of Assignment (Amity blog) |
| Pattern | |
| Price | Click to view price |
Supply Chain Management (BB849)
EMA
Learning Outcomes:
· To evaluate your knowledge and understanding of key concepts and ideas covered throughout BB849.
· To evaluate your ability to select information from a case study, and develop arguments based on that selection
· To evaluate your ability to apply module ideas to a practical situation as presented in a case study
· To evaluate your ability to use academic and business and management language appropriately and effectively to communicate your ideas
Word Limit: 4000 words
Case: - Expert reaction: KFC supply chain crisis could have been avoided.
It was a partnership that was supposed to ‘revolutionize the UK foodservice supply chain’, but has instead ended with hundreds of KFC stores across the UK shuttered, with DHL unable to deliver the food chain’s chicken.
KFC overhauled its British supply chain in November 2017, entering a partnership with DHL and Quick Service Logistics, but against the backdrop of GMB Union warning KFC against cutting food distribution specialist Bidvest from its supply chain.
In short, the warning signs were there.
“Making changes to a contract, where often it is only the current supplier and the individual workforce who truly understand what the logistics operations involve, is a huge risk that has to be managed,” says John Perry, managing director at SCALA, a provider of management services for the supply chain and logistics sector.
“We recently came across a company that had re-tendered its logistics operation and the current provider had bid significantly under its current contract price. When asked why, the supplier said that it had responded to the tender brief as it had been written. It knew that there were many complexities that came with the job, which had not been included in the tender document.
“But, the company also knew that its competitors, who didn’t know the business or how it worked, would only be bidding against what was included in the tender document.”
The decision to change logistics providers will no doubt have been – at least in part – driven by a desire to make its operations more cost effective; part of the effort to become leaner and more efficient.
But it is a move that has back-fired quite spectacularly, leading to bad publicity for all parties.
‘In the past few years, many companies have taken steps to streamline supply chain processes by reducing holding inventory, outsourcing non-core activities and cutting the number of supplier on the assumption that the market is relatively stable and predictable," says Dr Virginia Spiegler, a Senior Lecturer in Operations and Supply Chain Management at the Kent Business School at the University of Kent.
“KFC’s decision to switch its 3PL provider from Bidvest to DHL was a measure to reduce logistics service cost. However, having hundreds of restaurants closed could cost them millions in lost sales and low capacity utilisation. This problem could have been anticipated by comparing Bidvest and DHL capabilities.
“While Bidvest is specialized in food service distribution and operates a network of distribution centers across the UK, DHL is trying to run the same operation from a single distribution center. Moreover, it is the first time that DHL is partnering with QSL, who has been providing IT solutions on demand planning and stock management to KFC since 2011.
“Therefore the alignment between QSL services and DHL physical distribution is also crucial.”
Ultimately, says Andy Hill, Commercial Director at Sorted, KFC has paid the price for making an age-old error.
“The KFC ‘chicken crisis’ underlines the importance of not putting all your eggs in one basket and being reliant on one carrier. It is always prudent to have other logistics options available especially as delivery problems are not uncommon when a new supplier is taken on,” he says.
And while it is expected that the shuttered KFC stores will reopen in the coming days, the ramifications of this week’s saga could be felt for some time to come, according to Alan Gunner, Business Development Director at Adjuno.
“Once red flags were raised, KFC and DHL should have not only focused on how to install their new processes, but established how they could maintain normal service for customers whilst they continued to iron out the unexpected kinks,” he comments.
“Part of the problem they have faced is due to the change in the supply systems, switching from processing orders from six warehouses to just one distribution center. A brand of this scale needs to ensure that it has a stable and wide-reaching supply chain in order to avoid situations like this occurring and minimize the impacts should a problem arise. That said, it is possible for a large company to operate from one hub, but in order to do this everything needs to be aligned, which unfortunately in this case, it was not.
“Whilst stores may be starting to reopen, the reputational damage to KFC and DHL could be long-lasting, amongst both consumers and franchisees.”
Part A (60 marks)
After reading the case “Expert reaction: KFC supply chain crisis could have been avoided”, prepare a report on what happened in KFC supply chain crisis. You should prepare your answer in a report format and comment on:
1. Discuss the events of February 2018 that led to KFC’s Supply chain crisis. (10 marks)
2. Why did KFC switch to DHL? (10 marks)
3. What lead to the breakdown of KFC’s Supply chain? (10 marks)
4. Compare Bidvest and DHL capabilities. Which do you believe is better at meeting supply chain requirements of a company like KFC and why? (20 marks)
5. What are the mitigation measures that KFC adapted later to alleviate its supply chain issues? (10 marks)
Word limit: 2500 words
Part B (30 marks)
Case: - The KFC chicken crisis is finally over: it's (sort of) ditched DHL
KFC has sought to alleviate its troubles with chicken supply by renewing its contract with previous distribution partner Bidvest logistics, sharing responsibilities with DHL, the distributor which replaced it less than a month ago.
The agreement means that from March 26, Bidvest will take over supply for 350 restaurants in the north of the UK, while DHL and QSL continue with their own work in the south. Bidvest says that it will be conducting its work for KFC from a single location, its "northern depot", which is located in Royton, near Oldham in Greater Manchester.
Paul Whyte, from Bidvest's business unit, said his firm understood "the complexities of delivering fresh chicken." KFC said the switch would ease pressure on DHL's depot in Rugby that had been the source of recent problems. The fast food chain said it was now aiming to get its restaurants back to normal "as quickly as possible".
To recap how all this began, KFC moved distributors at the end of last year, choosing DHL over its long-term partner Bidvest. On February 14, the day DHL took over, several factors – including DHL's decision to use a single depot, a motorway crash on the M6 right next to it, and an apparent lack of contingency planning – caused a backup of deliveries. This became acutely visible the following Sunday and Monday (March 18-19), when KFC had to close over 600 of its restaurants due to depleted supplies of ingredients. It has spent the last several weeks slowly reopening them.
Although KFC has left the headlines since then, things still haven't been perfect. While 97 per cent of restaurants are open, limited menus are still in place at some locations. There has also been recent reports of a new shortage, this time affecting gravy.
As well as a new contract with Bidvest, it also engaged the services of flexible warehousing startup Stowga, hiring a warehouse near Bristol at short notice to store its non-perishable supplies, thereby easing strain on the Rugby depot.
Source: https://www.wired.co.uk/article/kfc-bidvest-dhl-chicken-gravy-crisis-shortage-logistics
After reading the case “The KFC chicken crisis is finally over: it's (sort of) ditched DHL” comment on the following in a report format:
1. What do you think are the complexities associated with delivering of products like “fresh” chicken? (10 marks)
2. Do you believe that the mitigation measures as adapted by KFC will provide a long term solution? Support your answer with adequate reasoning. (10 marks)
3. What else would you like to suggest KFC as possible changes to prevent such disruptions from happening in future? (10 marks)
Word limit: 1500 words
Academic Writing (10 marks):
Ø Cohesive writing skills including word count
Ø Grammar, Punctuation, References
Assessment Guidance:
See the study planner for the EMA submission cut-off date.
For the EMA you will be drawing on all the concepts and ideas that you have studied in this module, including discussion on the TGF.
The EMA requires you to prepare a 4000 word report that includes two distinct parts:
1. Part A requires you to research and analyze what happened in KFC’s case.
2. In Part B you will critically evaluate how KFC handled the situation and draw suggestions on certain supply chain issues.
You should aim to exhibit both objective and subjective analytical skills to complete this assignment and demonstrate your strategic thinking abilities. As you attempt this assignment, make use of the concepts and frameworks you have read about and used, and the insights you have developed. Please ensure that any use of content is appropriately referenced.
EMA RUBRIC
|
Criteria |
Ratings |
Pts |
||
|
Part 1
|
|
60 pts |
||
|
Part 2
1. What do you think are the complexities associated with delivering of products like “fresh” chicken? (10 marks) 2. Do you believe that the mitigation measures as adapted by KFC will provide a long term solution? Support your answer with adequate reasoning. (10 marks) 3. What else would you like to suggest KFC as possible changes to prevent such disruptions from happening in future? (10 marks) |
|
30 pts |
||
|
Academic writing:
i. Cohesive and writing skills including word count ii. Grammar, Punctuation, References |
|
10 pts |
||
|
Total Points: 100 |
||||