Lessons to Learn from the KFC Crisis
February 1, 2018
The closing of hundreds of KFC restaurants last month has highlighted the importance of closely working with suppliers in order to identify any issues and tackle them before a disaster arises.
This situation could have been prevented if the brand had worked more closely with their new delivery partner DHL (who were also working alongside logistics from QSL), in order to help put the right processes in place and ease any ‘teething problems’. The partnership was announced in October, with DHL promising to deliver fresh products to KFC in a sustainable way, but despite this positive message there were reports that KFC were warned it could face delivery problems months ago due to this new agreement, yet steps were not taken to prevent this. Having a fully visible supply chain is a deciding factor in whether businesses can avoid a crisis such as KFC has experienced, but whilst knowing what may be on the horizon is one thing, organisations also need to act accordingly. 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.
Part of the problem they faced was due to the change in the supply systems, switching from processing orders from six warehouses to just one distribution centre. If organizations do choose to work from one megahub they need to ensure that everything remains aligned, from beginning to end. Although there are many brands that operate efficiently from one main site, working with a network of stable suppliers minimises the impact brands will feel should a crisis occur. By its nature of variety, supply chain diversity enables brands to adapt more easily around any stock shortages, delays, logistics issues, ethical concerns or product recall situations that may happen. In fact, once the majority of the shortage problems were solved, KFC announced that it was returning to work with its original provider Bidvest, which would cover 350 of the brand’s 900 restaurants. This diversity will enable KFC to continue working with DHL to assess any outstanding issues and reduce the consequences should there be problems in the future.
Whether you choose to operate from one site or multiple, what the KFC crisis has shown is that in order to meet consumer demand and maintain the reputation of your business and that of your partners, it’s more important than ever to have strong, honest and transparent relationships throughout the supply chain.
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