The saddest words in supply chain…

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The saddest words in supply chain came in a tweet from KFC last week as it tried to explain to customers why there was no chicken in its restaurants.

Malory Davies, Editor.

“We changed our delivery partner last week – Valentine’s Day actually. But Cupid’s arrow wasn’t firing for us, and we’ve run into some complicated distribution problems.”

It all started out so promisingly. Back in October, KFC unveiled its new partnership with DHL and QSL (Quick Service Logistics). It must have seemed like a marriage made in heaven.

KFC has worked with QSL in Germany for seven years. DHL is the largest logistics company in the world. What could possibly go wrong?

DHL would manage the physical warehouse and distribution, while QSL would handle demand planning and stock management, with a dedicated IT system. QSL would also manage operational purchasing for KFC as well as accounting for its operations.

Together they would provide an optimised delivery scheduling with a faster turnaround of orders, and greater integrity of food during transport.

QSL’s managing director Florian Entrich went so far as to say: “With DHL, we are confident of establishing a new benchmark for quick service restaurants in the UK.”

When the service got up and running, problems started appearing straight away. While the problems might have been a surprise, the speed with which they appeared is not, given the perishable nature of the product and the velocity of quick service logistics.

By Monday of last week some 575 KFC restaurants were closed. John Boulter, managing director retail at DHL, apologised, 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 re-open its stores over the coming days.

“While we are not the only party responsible for the supply chain to KFC, we do apologise for the inconvenience and disappointment caused to KFC and their customers by this incident.”

Since, there has been a massive improvement. By Friday, KFC was able to tell customers that over 90 per cent of its restaurants were back open.

However, it appears that there is still more work to be done to solve the underlying problem. Stowga, which provides an urgent “Airbnb” warehousing service, said that it has been working with KFC to provide eight temporary warehouses to help get things moving again.

For KFC, the past week might be regarded as a supply chain disaster, but it could turn out to be a marketing triumph. There has been no suggestion of a problem with the product, it’s purely lack of availability. KFC made sure customers knew that its staff were being looked after, and produced a series of rueful tweets, culminating in a cheeky ad in some of the nationals switching the letters in its name around to say: “FCK”.

This episode has given KFC more publicity than it has had in years – a powerful nudge to people who haven’t eaten there for a while. There is a good chance that sales will actually rise – once they get the logistics problems sorted out.

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