KFC CHICKEN SHORTAGE OF 2018: A CRITICAL ANALYSIS

Introduction

Until February 2018, the Kentuckey Fried Chicken (KFC) seemed to be a very reliable

and trusted supplier of fried chicken with a sustainable and ethical supply chain. Since 1965,

when KFC commenced operation in the United Kingdom, it has continued to attract many

customers and suppliers. According to a report, KFC has about 850 locations in the United

Kingdom alone (KFC, 2018). However, KFC’s profile changed in February 2018 when KFC

suffered from failure supply of goods as most of KFC’s United Kingdom’s outlets were reported

to have run out of chicken. This operational issue led to the closure of 562 KFC restaurants in the

United Kingdom (Weaver, 2018) and resulting in incomplete orders. Considering this context,

the main focus of this report is to provide a causal analysis of KFC shortage of 2018. It discusses

what KFC could have done to avoid the operational issue. Lastly, the report makes

recommendations on operational strategies and supplier management system.

Issues Analysis

The KFC chicken crisis of 2018 did not occur in vacuum. There were a few occurrences

that led to the KFC scandal of 2018. One of the underlying causes of the shortage was the

decision of KFC to change its transportation contract. On February 17 th, 2018, it was reported

that KFC ran out of chicken due to its new transportation contract with DHL (Evening Standard,

2018). Unlike Bidvest Logistics (which was the replaced with DHL), the DHL struggled to

supplying over 800 KFC stores across the United Kingdom (Allen and Allen, 2018). Prior to the

change in suppliers, the supply chain management of KFC could be considered effective and

reliable. As put by Miller (2015) the supply chain management (see Appendix 1), was “the
combination of activities that purchase, outsource or hire materials or services, later transform

them into intermediate goods as sellable final product for consumer.” This supply chain

management system made it easier for KFC to successfully work with Bidvest Logistics.

One of the major ways to have avoided the KFC crisis was to carry out an extensive

research on DHL whether it could meet the demands of customers in the frozen food industry.

Notably, DHL found it difficult to distribute chilled foods due to its inexperience in delivery the

chilled foods. Incontrovertibly, Bidvest Logistics was more experienced in delivering chilled

foods unlike DHL that was entirely new to food industry. DHL had not worked with frozen

foods companies unlike Bidvest Logistics that had supplied other popular brands in the frozen

foods industry. According to the Supply Management (2018), “KFC done a dreadful mistake

taking on DHL as labor union officials cautioned KFC that bringing on DHL will be a disaster

as DHL has limited experience in food distribution”. It is candid say that if KFC had done proper

checks of what DHL is capable of doing or has experience in and how DHL will implicate the

fast food chain before the contract, may be this crisis would have been escaped.

Another notable cause of the crisis was due to poor distribution system of DHL. There is

an indication that DHL’s structure of the distribution system could not match its predecessor.

DHL’s storage and technologies were originally not equipped to handle bloodless cold storage

(Holdingson, 2018). As it must be noted, Bidvest Logistics had over 6 distribution centers, unlike

DHL that had access to only one warehouse in Rugby. This made it impossible for DHL to cater

the needs of over 900 KFC’s restaurants across the United Kingdom. The existence of a single

warehouse consequently lowers the distribution rate of DHL as most of KFC outlets were far

from the warehouse. In some cases, DHL’s drivers got stuck in traffic resulting in delay in the

chicken deliveries (Anon, 2018). This mistake could have been avoided if DHL was made to
establish more distribution centers during the signing of the transportation contract. It is not

feasible for DHL to supply over 900 KFC restaurants without experiencing any strain and

inconvenience.

More so, the KFC crisis of 2018 can also be attributed to the introduction of a new

software system by QSL (a third party). It was ascertained that DHL could not quickly adapt to

the new software as most of its workers could not successfully comprehend the in and out of the

software (Anon, 2018). This made it difficult for DHL to collect and process the right data from

KFC’s order. According to Green (2018), “DHL failed to collect the right data from KFC’s

order due to DHL not knowing how to use the new software as introduced by QSL ”. Mistakes on

KFC’s orders were often made by DHL leading to miscommunication between the two partners.

This incidence cost KFC an unprecedented revenue loss of at least least £920,000 per day

(boulton and Marketing, 2018). This might have not occurred if KFC had invested more money

in logistics and securing the best logistical partners when it sought to part ways with Bidvest

Logistics.

Lastly, the crisis became escalated due to improper handling of social media comments

by KFC. There is no doubt that KFC received a reasonable number of negative comments made

by angry consumers on their social media pages (wilding, 2018). According to a report, “social

media posts about KFC shortages of chicken had been shared 219,138,216 times on social media

and KFC had 796,709,795 editorial coverage due to the lack of chicken in the UK restaurants”

(Campaignlive.co.uk, 2018). This incidence caused KFC’s bad reputation. This bad reputation

could have been averted if KFC had responded to the comments by providing quality services to

its customer. A different approach in dealing with the shortage problem should have been taken

by KFC to solve the issue in the supply chain.

Recommendations

Having discussed the major causes of the KFC shortage crisis of 2018, it is fundamental

at this juncture to recommend on how KFC can incorporate a sound supplier management

system, evaluate its suppliers and sustain viable relationship with them.

It is recommended that KFC should incorporate a sound supplier compliance system such

as the SafetyChain software. The incorporation of this software will help KFC to improve its

productivity and compliance as the software is capable of capturing, managing and analysing

real-time operations data.

Not only that, KFC can incorporate the Vendor Managed Inventory system as developed

by Walmart. This supplier management system will enable KFC to explore the option of Vendor

Managed Inventory and allow its suppliers to be fully responsible to fill out the inventory with

clear visibility of the stocks at the stores.

KFC should be serious about supplier evaluation. At least, it should be carrying out a

supplier evaluation biannually. In doing so, KFC should evaluate the production capacity,

environmental impact, compliance to specifications, customer service, quality of deliverables,

capability, past performance, strategic and innovation. The evaluation of the aforementioned

elements will help KFC to uncover and remove hidden waste and costs and achieve sustainable

procurement.

Lastly, working with sustainable suppliers helps to sustain procurement. This is why KFC

should establish sustainable relationship with its suppliers. KFC should ensure that its suppliers

align with its values and understand its needs. Regular communication should exist between

KFC and its suppliers and feedbacks should be given timely and adequately.
Conclusion

From the foregoing, it can be seen that the introduction of a new software system by

QSL, poor distribution system of DHL, poor responses to negative social media comments by

KFC and the inexperience of DHL in delivery the chilled foods were the major causes of the

KFC chicken shortage of 2018. An analysis on how these problems could have been avoided was

made above. It is presumed that the crisis would have been prevented if KFC had invested more

money in logistics and securing the best logistical partners when it sought to part ways with

Bidvest Logistics. Notwithstanding, KFC needs to remain relevant in the frozen food industry.

This is why KFC needs to implement necessary measures as recommended above.

 References

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 Appendix 1

KFC SUPPLY CHAIN PHASE