UK – KFC is returning to its old supplier, Bidvest Logistics, the leading supplier of logistics and supply chain, to resolve the embarrassing chicken shortage that forced the closure of hundreds of outlets last month.
BBC news reported that Bidvest has signed a new agreement with KFC UK & Ireland to supply up to 350 of its 900 restaurants, to which Bidvest has pledged “a seamless return.”
All of KFC’s chicken was delivered by Bidvest until February 13, when the supply contract was switched to DHL, which uses software developed by the firm Quick Service Logistics (QSL).
However, many of the food giant’s outlets soon began running out of chicken products following the switch-over.
“Our focus remains on ensuring our customers can enjoy our chicken without further disruption,” said a KFC spokesperson.
“With that in mind, the decision has been taken in conjunction with QSL and DHL to revert the distribution contract for up to 350 of our restaurants in the north of the UK back to Bidvest Logistics.
We’ve been working hard to resolve the present situation with QSL and DHL.
This decision will ease pressure at DHL’s Rugby depot, to help get our restaurants back to normal as quickly as possible.”
Professor Richard Wilding OBE, Chair (Full Professor) in Supply Chain Strategy at the Centre for Logistics and Supply Chain Management, Cranfield School of Management UK, said the KFC episode turned out to be a harsh lesson in relational risk management.
“My experience in supply chain risk generally finds that disruptions of this nature don’t magically and instantaneously happen,” he explained.
“Decisions made in the early stages of the transition can have a significant impact on the risk profile of the future supply chain and the severity of a potential disruption.”
Professor Wilding said a supply chain transition almost always means a very high-risk period, with some level of disruption or another.
“The problems like those experienced by KFC and its chicken supplier “don’t just happen from a sudden mistake, accident or change in circumstances,” Prof. Wilding added.
“There’s usually something lurking in the history of a new supplier arrangement where the first, tiny cracks were made,” he explained.
“An organization needs to test every single assumption being made in the new model and put in place contingency plans for any assumption that includes any degree of potential wobble.”
Obviously, that is not what happened with the KFC situation. But there are positives that have already come from the situation, Prof. Wilding noted.
“That’s the way in which it’s broken the spell for consumers around how supply chains actually work.”
It’s not a matter of competition between individual firms anymore, he asserted, “but between whole supply chains.”
He plans to develop a teaching case study about the KFC debacle to help businesses learn how to prevent similar mistakes in the future.