No Chicken tonight?
Tuesday 20 February 2018
DR Jonathan Owens, expert in operations management and the supply chain, at the University of Salford Business, school comments on the ongoing supply chain issues which have led KFC to close hundreds of its stores across the UK.
Dr Owens said: “Supply and demand is perhaps one of the most fundamental concepts of business economics and it really is the backbone of a market economy such as the UK’s. It would be reasonable to expect KFC to be at high utilisation of the distribution and net chains, particularly as it is the UK’s traditional half term breaks. But this is nothing new and for the supply process in a company the size of KFC, you would expect this to be planned.
“So what has gone wrong? It is not a regional problem, but nationwide as there are reports of outlets shutting up and down the UK. There are two key players involved in the supply of chicken to KFC. QSL, who are the relatively established partner and DHL who came onboard in November 2017 to manage the supply and distribution of food products. DHL are managing the physical warehouse and distribution service, therefore, in FMCG environment, this partnership in not really in its infancy.
“KFC chose the two companies for their reputation of “innovation in logistics.” So, what is so shocking is how quick the supply has gone and with little or no warning. Obviously there was demand there, because this is the result are seeing. However, supply represents how much the market can offer.
"This is the triangulation and communication between KFC, DHL, QSL and their first and second tier suppliers and so on. Depending upon the size of the chain could have an impact on the communication levels to front of shop and in FMCG industries there is very limited room for error. A major UK supermarket had similar issue in the early noughties when they attempted to implement ‘LeAgile’. We may never know the true reason as to what happened, but, the impact has been instant and at the front-line.”