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Current affairs Case study – The KFC chicken shortage of 2018


KFC WAS thrust into the national spotlight in February 2018 as the fried chicken chain that had run out of chicken. The fast food giant appointed a new logistics partner, DHL, on 14 February, but the company and its single warehouse in Rugby (as opposed to previous contract holder Bidvest Logistic’s six) were put under intense scrutiny as a result of their failure to deliver KFC’s most critical ingredient. At around 2am on 14 February, a collision


involving seven vehicles took place between junctions two and three of the M6 motorway. Police closed off the area between the two junctions to investigate, and shortly afterwards a pair of lorries collided near junction one. These three junctions are in the vicinity of Rugby, which is where DHL’s warehouse is located. With its lorries getting stuck in the traffic as soon as they left the depot, and with no other locations to send deliveries from, the delays that would lead to the KFC chicken shortage began here. KFC’s decision to transport a product


that was so perishable across the country from one single depot was immediately brought into question. The fact that this network consolidation coincided with a brand new IT system, along with a new supplier relationship that needed to bed down, raised further doubt about the level of planning that had been undertaken,


and what contingency measures were in place. The lack of chicken began to impact


on 16 February, and KFC started to shut down locations in response to the missing ingredient. By 18 February, only 266 of the 870 restaurants in the UK and Ireland were open, and many of those were operating from a limited menu. It wasn’t just the trust and relationships of


customers that KFC was having to repair. In an age when the general public is conscious of sustainability and food waste, reports of entire lorries of chicken spoiling in the depot as drivers were kept waiting for hours were beginning to have an effect on the company’s reputation and corporate social responsibility (CSR) policies, as well as increasing pressure on its network of farmers to increase the supply of fresh chicken. The result of this short term disruption? KFC saw an immediate 2% fall in sales and 5% operating profit impact in the first quarter, although the disruption would continue to impact financial results in the second quarter. Even then, the disruption appears to have had marginal economic impact, with a solid marketing strategy resonating well with consumers. Since the incident, KFC has renewed, in part, its agreement with Bidvest Logistics to help continue operations alongside DHL


48 MAY 2019 www.frmjournal.com


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