KFC Ran Out of Chicken in the UK: What Supply Chain Lessons Can We Learn?

by Jennifer Hart Yim | Mar 19, 2018 | Blog, Current Events, Logistics, Strategy, Supply Chain

More than half of the UK’s Kentucky Fried Chicken stores recently closed because they ran out of chicken. Here’s a look at what caused the issues and what supply chain lessons can be learned.

This guest post comes to us from Argentus Supply Chain Recruiting, a boutique recruitment firm specializing in Supply Chain Management and Procurement.

There’s another unfortunate entry in the annals of Supply Chain failures that burst into the wider world of business and pop culture: More than half of the UK’s Kentucky Fried Chicken stores recently closed because they ran out of chicken. We’ve written on the Argentus’ blog many times about Supply Chain misadventures, and how they can harm a brand’s reputation as well as profits – for example, maybe most memorably, in the case of Target, which had to retreat from the Canadian market after Supply Chain snafus led to empty shelves and disappointed customers.

Although Supply Chain Management is taking off in terms of recognition within business, it still doesn’t get a lot of attention from the wider world – until it fails, at which point the stresses and pressure of beleaguered Supply Chain teams become an object of fascination as the organization races to play catch up and get things back online.

KFC’s UK operations are the latest such story. On February 19^th, outlets began reporting about the closure of about half of the chain’s 900 stores in the country, due to delivery failures after changing their 3^rd Party Logistics (3PL) provider from Bidvest Logistics to DHL. A few weeks later, reports are that a number of stores are still closed, with front-line workers being encouraged to take holidays as the company sorts out its deliveries and tries to account for the failures. It’s no wonder that the closures have been met with derision across the internet: delivering chicken to the people is pretty much KFC’s #1 job.

So what has caused the issues, and what lessons are there to be learned?

According to the BBC, KFC recently switched its 3PL operations from food specialist Bidvest Logistics to international heavyweight DHL – the latter being a company with operations in a number of different industries, now navigating a country-wide Supply Chain out of one distribution centre location. In short, DHL took over the contract on Valentine’s Day, and delivery failures started to happen on February 16^th – an extraordinarily short time table for Supply Chain issues to get so dire that customers see disruptions.

While there’s some disagreement among experts about the exact cause of the failed deliveries, speculation is that many of the problems can be attributed to the fact that DHL has one distribution centre location serving the entire country – a bottleneck that wasn’t seen with the previous 3PL provider, who had six distribution centre locations.

While Supply Chains gain a lot of their competitive advantage from offering lower costs and greater efficiencies, it seems that the shift in providers was a cost-cutting maneuver that’s ended up costing the company’s brand — with some analysts predicting something on the order of 20% of a hit to the company’s share prices once the disruption finishes shaking its way through the system. It underscores the importance of sound planning and reliability in Supply Chain Management in an era where companies are looking to gain an edge with margins wherever they can. It’s also great evidence for what many of us know: an approach that puts cost-cutting first can cause more problems than it solves.

John Boulter, the Managing Director of DHL’s operations for retail in the UK and Ireland issued a statement saying, “The reasons for this unforeseen interruption of this complex service are being worked on with a goal to return to normal service levels as soon as possible. With the help of our partner QSL, we are committed to step by step improvements to allow KFC to reopen its stores over the coming days. Whilst we are not the only party responsible for the supply chain to KFC, we do apologize for the inconvenience and disappointment caused to KFC and their customers by this incident.”

Ouch. Boulter’s statement has two issues that, from our perspective, show a lack of the accountability necessary to restore credibility both with DHL’s immediate customer (KFC) and the wider base of customers disappointed that they can’t buy KFC’s fried chicken:

The statement attempts to shift blame onto DHL’s other partners in the deliveries (particularly QSL) in a way that looks passive aggressive. Admitting responsibility is the first step to restoring credibility when responding to Supply Chain failures, and while DHL accepts some blame for the issues, the statement doesn’t go far enough.
Going out of their way to describe the service as “complex” doesn’t do any favours for DHL in this situation. Of course modern Supply Chains are complex. Understanding that complexity, and being able to deliver anyway, should be considered table stakes for providers in 2018. To implicitly chalk delivery failures up to a complexity that your predecessor – in this case Bidvest Logistics – handled without issue for years, casts even more doubt on DHL’s competency. At the same time, the fact that analysts are having such agreeing on an explanation for these issues – despite the fact that KFC only has a few poultry suppliers in the UK – says a lot about just how complex modern-day Supply Chains have become.

Logistics failures leading to the closure of stores is pretty much the worst case scenario for Supply Chain teams everywhere, so all of us across the community are probably watching this story with bemused shock and sympathy for those involved.

Hopefully DHL – which is, after all, the biggest logistics provider in the world – can get these issues solved soon, but in the meantime, let us know in the comments: are there any further lessons you think that Supply Chain professionals can draw from KFC’s recent woes?

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There Are Lessons in Success, Not Just Failure

by Fronetics | May 1, 2017 | Blog, Leadership, Strategy

Companies usually try to understand failure, but what could they learn from analyzing their successes, too?

“Success is going from one failure to another without loss of enthusiasm.” Winston Churchill

Failure is said to be inevitable, and we all know it to be true. Any new venture is built on the hope of success. But accepting and managing failure is key to actually obtaining success.

Companies have a responsibility to ask the tough questions when things go awry. We have all been in these meetings: we diagnose failures, and we dissect the process, tools and staff involved to get to the root of the problem. Unfortunately, most companies only step back and really dive into what happened when something bad happens.

But what if companies took the same approach when something went right?

Focusing on the lessons in success

Companies are all a work in process. We learn as we go, and that learning should include understanding our successes. Shifting the focus from ‘what went wrong’ to ‘what went right’ creates a foundation for being able to recreate success in your organization.

Identifying and analyzing the components of a successful process can be the first step in moving into this new mindset. Paul Michelman, editor in chief of the MIT Sloan Management Review, experimented with dissecting his the publication’s successes and quickly discovered that their best processes start with transparency. Michelman wrote:

We plan a pipeline of content that is stored in a document accessible by the key participants. We track each content item’s progress on a shared project management platform. The few times we encounter bumps, a lack of information sharing is almost always at fault.

Though Michelman admits his research is unscientific, the key factors he has identified in their success stories has helped his business focus on what’s working, instead of waiting to dissect failure.

Technology can help

In today’s world, there is no end to the amount of data you can collect on your business. Your company’s digital presence is an easy place to start.

Tools like Google Analytics can give you advanced insight into how prospects are interacting with your company online. You can analyze how people are finding your business, and how they’re moving through your website all the way to making purchases. In other words, you can begin to analyze all of the little successes that make your business turn. How can you replicate that success on new projects and processes?

When things are going well, most companies don’t see the need to reflect on what happened, what went right. But don’t let this opportunity slip by. You should examine failures, but you should also look closely at successes. Take the time to brainstorm with your team on what you’re doing well and how you can keep up that success while you plan for future growth. —