Dr Virginia Spiegler, a Senior Lecturer in Operations and Supply Chain Management at the Kent Business School, comments on the supply chain issues affecting KFC restaurants across the UK.
‘The interest in supply chain risk management and in building supply chain resilience, which is the ability of a supply chain to prepare for unexpected events, respond quickly to disruptions and recover from them, has arisen following high impact events, such as man-made and natural disasters, in the early 2000s.
‘Since then, research in this area has focused on uncertainties originating from the customer side, supplier side, external and environmental factors and internal processes. The KFC case highlights the importance of transportation and logistics operations, which are frequently and unfairly regarded by many scholars and companies as non-value adding.
‘In the past few years, many companies have taken steps to streamline supply chain processes by reducing holding inventory, outsourcing noncore activities and cutting the number of suppliers on the assumption that the market is relatively stable and predictable. KFC’s decision to switch their 3PL (third party logistics) 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 specialised in foodservice distribution and operates a network of distribution centres across the UK, DHL is trying to run the same operation from a single distribution centre.
‘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 and building such alignment can take time.’
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