KFC’s recent lack of chicken product due to a supply chain problem has forced the closure of hundreds of KFC fast food outlets across the UK and made the national news headlines.
But is it an isolated screw up, or one of many such failures we have to expect in the future with our overstretched supply chains and the last-minuteness of everything? And what are the lessons for everyone involved in food and drink distribution, both retail and foodservice?
Hopefully it’s the first scenario, an isolated screw up, but who knows how many other similar situations are happening out there but are mostly kept hushed up? As well as lost sales and broken supplier-customer relationships there’s the costly damage to the reputation of everyone involved.
As the facts emerged , it turned out that KFC had switched distribution partner from Bidfood, who have a long and distinguished record as delivered wholesalers to the foodservice sector and taken on DHL, best known as an international parcel and document delivery service. The key reason for the switch was financial – DHL’s service was cheaper.
Part of the resulting problem was that with Bidfood, KFC had been served by six regional warehouses. With DHL it is now served by just one distribution centre. KFC was warned it could face delivery problems months ago due to this new agreement, yet steps were not taken to prevent this. They had been aware of the overstretch in their supply chain for some time but had, essentially, decided to cross their fingers and trust to luck. A chicken wing and a prayer, if you must.
In the words of Alan Gunner, Business Development Director at Adjuno, a supply chain platform provider, it is possible for a large company like KFC to operate from a single hub and serve the needs of individual stores, but in order to do this everything needs to be aligned, with everyone working closely together to put all the processes in place and address all the issues. Which unfortunately in this case, it seems has not been the case.
At the end of the day, Bidfood lost the KFC contract because they were more expensive than DHL. But the cheapest isn’t always the best option in a management decision about something as mission critical as logistics.
Bidfood must be feeling glad they’re not caught up in all this. But how many other people in food and drink retail and catering are sweating right now because they too have been cutting supply chain corners for budgetary reasons and are worried that their logistics house of cards could come tumbling down any day?