Answer to Question #263486 in Management for Danny D

Question

the challenges KFC faces because of depending on other companies for logistics/delivery of key materials.

Answer 1

KFC, the most famous food store for chicken lovers. KFC (also known as Kentucky Fried Chicken) is an American fast food restaurant chain headquartered in Louisville, Kentucky specializes in fried chicken. It is the world's second-largest restaurant chain (as measured by sales) after McDonald's. KFC experiences some challenges though for depending on other companies for logistics/delivery of key materials as discussed below;

For instance, KFC, made headlines recently for suffering a chicken shortage that brought 900 restaurants in the UK to a halt and recently, the chain announced it was suffering from a gravy shortage as well. Not ideal for a chicken restaurant. No chicken and no gravy means no customers. The whole debacle could have cost Yum! Brands Inc., KFC’s Parent company, up to £1m in losses per day. Not to mention a public relations crisis that, despite a cheeky apology, will follow the company for years to come.

Chicken being the main food that KFC sells, it is prone to contamination by salmonella and other diseases, so transport is strictly regulated and must be done by refrigerated trucks. If they run out of chicken and the supplies of stocks haven’t arrived yet or fail to arrive at all, this means loss of sales because not all customers are willing to wait till the chicken arrives, also customers will feel disappointed and some may not come back some other time. For consumers, it doesn’t make a difference how the chicken gets to their favourite restaurant. They expect it to be available when they want it. When it isn’t, they simply go somewhere else. 

Rising supply chain costs is also another challenge KFC experiences. Running a food supply chain comes with many costs like energy and fuel costs, logistics and freight, investment in new technology etc. These costs are significant, as such, keeping a check on operating costs is a constant challenge.

Conclusion

It is important to note that, if a business wants to avoid logistical cluck-ups, it should make a point out of working closely with its franchisees. 

Reference

Weng, X., An, J., & Yang, H. (2015). The analysis of the development situation and trend of the city-oriented cold chain logistics system for fresh agricultural products. Open Journal of Social Sciences, 3(11), 70.