Supply Chain Failure: KFC’s Chicken Shortage

Supply Chain Failure: KFC’s Chicken Shortage

March 19, 2018

It seems hard to imagine that KFC would run out of chicken.  That’s their main menu item! How can they operate without chicken?

Turns out, they can’t. The majority of KFC’s UK restaurants were forced to close due to a chicken shortage.  Approximately 650 of the 900 KFCs closed in February 2018, while many of those that remained open, operated with a reduced menu.

The origins of the shortage: KFC decided to switch suppliers from Bidvest to DHL and QSL (a food distributor) in October 2017. They promised to “revolutionize the UK foodservice distribution market.”  Part of the promise included reducing logistics emissions to net zero over the life of the contract.

The change in distributors affected Bidvest and DHL.  Bidvest laid off 255 employees after it lost the contract, while DHL and QSL opened a new distribution center, and hired approximately 300 new employees.

Although improved performance was promised, not everyone saw such a rosy future.  GMB, the UK trade union for the displaced Bidvest employees, warned KFC of potential problems with the switch to DHL.  Mick Rix, the GMB’s national officer said:

“We warned them a few months Continue reading

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Walmart Raises the Stakes for Supply Chain Reliability

Walmart Raises the Stakes for Supply Chain Reliability

February 19, 2018

Walmart has raised the stakes for supply chain reliability. Its new on-time, in-full delivery guidelines (OTIF) were rolled out in 2017, with escalating requirements for 2018.

Both early and late deliveries get the thumbs down; failure to meet the metrics results in the supplier being fined 3% of the value of their order.

Requirements vary, depending on whether the shipment is a full-truckload or less-than-truckload (LTL) shipment. But either way, suppliers and 3PL’s cannot use weather or other uncontrollable events as acceptable reasons for failure to deliver in full and on time.

This post is based on the Supply Chain 24/7 article, Keeping Pace with Walmart’s On-Time Delivery Requirements, by Scott Bolduc, February 5, 2018. 

Discussion Questions
1. Assume that you are responsible for designing a lean supply chain for a supplier to Walmart. Find a company that supplies packaged water to Walmart from an internet search.  (Or find another company that supplies Walmart if you choose.)  How would you improve the supply chain to become lean to meet the demands Walmart has now imposed for suppliers such as your chosen company?

Guidance: Students should review lean supply chains, facility location considerations, and the Continue reading

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