Supply chain KFC - SCM PDF

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Supply chain management KFC

Executive Summery KFC is the world largest and most well-known chicken restaurant, with chains in more than 10 thousand locations and worldwide in 80 countries. KFC and its franchised employees are more than 200 thousand in all over the world. John Y. Brown and Jerry Messy purchased KFC for USA for $2 million in 1964 that time KFC become a corporation. After five years, 2 Colonel buys first 100 shares of KFC. In 1986, Pepsi Company purchased KFC. Pepsi Company changed the logo from Kentucky fried chicken to KFC in 1991 and then in 1992 KFC 1000 the restaurant opened in Japan and in 1994 9000th restaurant in china. KFC is the part of Tricon global restaurant. Tricon global restaurant is the world largest restaurant group, with in nearly 100 countries around the world, which in turn was spun off in 1997, and has now been renamed to Yum! Brands. Supply chain management is the management of the flow of goods. It includes the movement and storage of raw materials work in process inventory and finished goods from point of origin to point of consumption. Interconnected or interlinked networks, channels and node businesses are involved in the provision of products and services required by end customers in a supply chain management has been defined as the designing planning control execution and monitoring of supply chain activates with the objective of creating net value building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally The study of reports the findings of a research project which efforts to analyze the supply chain management of KFC using the supply chain approaches.

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Supply Chain Management And Distribution KFC denied. 2007 is the 20th anniversary of KFC (Kentucky Fried Chichen) into the world market, the number of branches in mainland China have more than two thousand. Behind the rapid development, efficient and smooth logistics system is a KFC a powerful weapon ahead of the competition.

The fast moving consumer goods supply chain requirements Fast moving consumer goods (FMCG, Fast Moving Consumer Goods or CPG, Consumer Package Goods), refers to the rapid consumption of consumers, need to constantly repeat purchase of products, typically fast moving consumer goods, including cosmetic products, food and beverage and tobacco. consumer package goods (CPG) market is a typical mass consumer market, the market capacity. With the improvement of living standards, consumer demand preferences change faster, the product tends to fierce competition, this time, the enterprise should have a supply chain thinking. CPG supply chain must have a keen ability to capture market opportunities, rapid response capability and a shorter structure. To this end, establish a customer demand-driven pull supply chain, enhance product promotion, and ensuring the procurement of raw materials and inventory control, to make fast food chain to build a more efficient supply chain, to ensure and consolidate the business in the market position to provide strong support for the extended enterprise There are two logistics of KFC supply chain management Supplier Management KFC products are the main raw materials (Chicken, mashed potatoes, seasoning) determined by the head office supplier, usually raw materials (bread, beverage puree, vegetables, packaging, etc.) by the district level has confirmed that the suppliers. KFC a “star system (STAR SYSTEM)” a selection of alternative suppliers, which is specifically for a global assessment of supplier management system in China since 1996, full implementation of the supplier. This assessment system consists of five areas: quality, technical, financial, reliability, and communication. Every three to six months of regular assessment and evaluation throughout the year were, from KFC’s technical department and the purchasing department were assessed at the end of the composite score will determine the supplier of the volume of business in 3

the next year in the share.

The supply of logistics model based on DRP KFC supply process is: The restaurant will be reported to branch distribution center order demand, the latter after an order to the supplier, the supplier delivery to the distribution center, distribution center under the line delivery. This mode of operation of the logistics supply thought to follow DRP, DRP system includes two three input files and output plans, namely: the main demand planning, inventory files, supply the resource file; procurement plans, distribution plans.

The main requirements planning Manager of the store orders the use of term-type orders filled, raw materials into frozen goods, dry goods, wet goods (short shelf life of bread, vegetables, etc.), the number of weekly orders are 1,1,2 – 4, ordering volume = demand – inventory. Demand is the purchase cycle, lead time and safety stock of, and, ordering the manager considering the historical sales data and promotional activities, or weather factors to calculate the turnover of an order cycle, and then converted according to the amount of thousands of round needed the number of raw materials. Demand plans to form form, set the table, including raw materials, estimated demand, not yet reached the volume of the end of the stock, order quantity, the amount of allocation of the purchase details, the form signed by the store manager sent to distribution centers .

Inventory File Every day before work, the staff of the provisions of the inventory of raw materials inventory and registration. This data is the order quantity is essential calculations, this data can also be used for costing the same day. Supply resource file It is affected by supply-side arrival time. This time depends on the time of transmission and processing orders, supplier response time of the order, the efficiency of distribution centers.

Procurement Plan Distribution Center branch of the restaurant received orders for processing, such as the number of orders found abnormal fluctuations in a restaurant, the communication and confirm, the restaurant orders must be received 15 points in the end of the afternoon, after ordering the distribution center

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personnel view existing inventory and shipment data are not revised order, the next day by email or fax sent to the supplier, which according to the quantity and date for production and transportation to distribution centers. Distribution Planning According to the distribution centers indicated by the restaurant’s order number and the required raw material arrival time in the system, picking orders and shipments to generate summary tables, pickers, picking, packing, shipping transportation officer under the distribution plan summary arrangements, including: capacity approval, vehicle selection, delivery routes, transfer. The assessment team through the delivery vehicle loading efficiency, punctuality rate of fuel consumption and goods, safe rate were carried out.

Discussion Of The Supply Logistics KFC Through the above analysis we can see the following advantages Kentucky logistics system: First, strong support for the normal operation of the enterprise and rapid expansion; the second is based on the various restaurants on the basis of accurate demand planning procurement strategy makes the company’s inventory costs are greatly reduced; third distribution center in the entire logistics system in a central location, status and role of information systems to be truly reflected; Fourth, demand forecasting, distribution planning and other aspects of quantitative and standardized management reflects the high level of enterprise management.

Long Run Growth Decline

Fast food franchising was still in its infancy in 1954 when Harland Sandlers begun his travels across the United States to speak with prospective franchises about his “colonel” sanders recipe Kentucky fried chicken”. By 1960 “colonel” Sandlers had granted KFC franchise to over 200 take home retail outlets and restaurants across the unite states. They had also succeeded in establishing a number of franchises in Canada by 1963, the number of KFC franchises had risen to over 300 and revenues had reached $500,000 per unit, on average.

By 1964, the colonel had tired of running the day to day operations of the business and was eager to concentrate on public relations issue. He sold the business to two Louisville business people Jack Massey 5

and John Young Brown, Jr. for $2 million. During the next five years, Massey and Brown concentrated on growing KFC’s franchise system across the U.S. in 1966 they took KFC public, and the company was listed on the New York Stock Exchange. By late1960’s a strong foothold had been established in the United States, and Massey and Brown turned their attention to international markets. In 1969, a joint venture was signed with Initsubishi shoji kaisha, Ltd., in Japan, and the right to operate 14 existing KFC franchises in England were acquired. Subsidiaries were also established in Hong Kong, South Africa, Australia, New Zealand, and Mexico. By 1971, KFC had 2,450 franchises and 600 company owned restaurants worldwide, and was operating in 48 countries.

Stability of Demand for Products Many KFC’s problems during the late 1980’s surrounded its limited menu and its inability to quickly bring new products to market. As KFC entered 1996, it grappled with a number of important issues. During the 1980’s, consumers began to demand healthier foods, and KFC was faced with a limited menu consisting mainly of fried foods. In order to reduce KFC’s image as a fried-chicken chain, it change its logo from Kentucky Fried Chicken to KFC in 1991. It responded to consumer demands for greater variety by introducing a variety of new products. The increased popularity of healthier foods and consumersincreasing demand for better variety led to a number of changes in KFC’s menu offerings.

Stage in Product Life Cycle KFC is on its Maturity Stage; KFC’s products have survived the earlier stages. KFC’s early entry into the fast-food industry in 1954 had allowed it to strong brand name recognition and a strong foothold in the industry. During the 1990’s and 1970’s, KFC pursued an aggressive strategy of restaurant expansion quickly establishing itself as one of the largest fast-food restaurant chains in the United States. By 1990, restaurants located outside of the United States were generating over 50 percent of KFC’s total profits. By 1995, KFC was one of the three largest fast-food restaurant chains operating outside of the United States.

Conclusion 6

In this conclusion and regarding the overall study of Supply chain management, it has been observed that KFC in allover follows a similar pattern of Supply chain that enables it to reduce time involved to reach end customers and reduce expenses in supply chain. Ultimately it is able to reach and fulfill its end customers’ needs and wants at a reasonable or customer acceptable rates all over world. On the other hand KFC has yet to prescribe a minimum living wage for its members’ workers Instead KFC audits concentrate on ensuring that employers pay at least the legislated minimum wage and make the correct payments into national social security funds The great majority of members were already compliant in these respects and therefore, in most cases, KFC compliance does not increase costs of employing workers. In short we can say the Supply chain management of KFC has a positive impact on profit maximization by considering following: 1. KFC supplies ingredients to all its outlet by its own transportation network all over world. 2. KFC has no logistics partners they are self-sufficient and efficient to all logistic operation involved in reaching the customers. KFC follows a periodic review system to keep track on all its inventory and market demand.

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