KFC Supply Chain

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Supply Chain Management


Term Report

Kentucky Fried Chicken (KFC)

Submitted to: Syeda Shazia Hamid

SCM – Monday (6-9pm)

Group Members:

Abbas Sajjani

Ayesha Ibrahim (6408)

Dania Saher Imtiaz (6208)

Mahwish Jawaid

Mohsin Ahmed (6407)

Sadiq Rajani (6302)

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Contents

Company Profile.......................................................................................................................................4

Parent Company………………………………………………………………………………………..4

Cupola Pakistan............................................................................................................................4

Cupola's Vision..............................................................................................................................4

Cupola's Mission...........................................................................................................................5

KFC Pakistan.............................................................................................................................................5

KFC's Mission.............................................................................................................................................6

Objectives of KFC.......................................................................................................................6

Values of KFC..............................................................................................................................6

Core competency..........................................................................................................................7

Products of KFC.......................................................................................................................................8

Franchise Locations................................................................................................................................. .8

Oraganizational Structure........................................................................................................................9

KFC Supply Chain..................................................................................................................................10

Warehouses..............................................................................................................................................11

Procurement.............................................................................................................................................12

Chicken.......................................................................................................................................12

Sauces..........................................................................................................................................12

Spices and herbs.........................................................................................................................13

Packing Material........................................................................................................................13

Bread and Buns..........................................................................................................................13

Fish..............................................................................................................................................13

French Fries................................................................................................................................13

Other miscellaneous items........................................................................................................13

Storage and Inventory Management.....................................................................................................14

Chicken.......................................................................................................................................14

Sauces..........................................................................................................................................15

Spices and Herbs........................................................................................................................15

Bread and Buns..........................................................................................................................15

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Zonal Distribution...................................................................................................................................15

Vehicles...................................................................................................................................................15

Hino Dutro Truck.......................................................................................................................15

Hyundai Shehzore......................................................................................................................15

Quality Assurance...................................................................................................................................16

Software..................................................................................................................................................16.

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COMPANY PROFILE

KFC Corporation, based in Louisville, Kentucky, is the world's most popular chicken

restaurant chain, specializing in Original Recipe, Extra Crispy, Kentucky Grilled Chicken.

Every day, more than 12 million customers are served at KFC restaurants in 109 countries and

territories around the world. KFC operates more than 5,200 restaurants in the United States and

more than 15,000 units around the world. It is the world’s largest and most well known chicken

restaurant, with chains in more then 10 thousand locations and worldwide in 80 countries. KFC

and its franchised employees are more than 200 thousand, all over the world. KFC is world

famous for its Original Recipe fried chicken -- made with the same secret blend of 11 herbs and

spices Colonel Harland Sanders perfected more than a half-century ago. Customers around the

globe also enjoy more than 300 other products -- from Kentucky Grilled Chicken in the United

States to a salmon sandwich in Japan.

PARENT COMPANY

CUPOLA PAKISTAN

Cupola is a Dubai based multinational company and has been at the forefront of development in

Food & Retail sector for over a decade. Its flagship brand KFC has amassed itself as the

dominant concept in the Quick Service Restaurant (QSR) business in the country.

Cupola’s Vision

Cupola, Pakistan Ltd. aims to,

“Create value through change, challenging existing paradigms by applying vision,

innovation and skilled execution”.

The company has always accentuated corporate social responsibility through various initiatives

taken under the banner of its flagship brand KFC. These include setting up of libraries in various

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schools, provision of training for teachers and now to educational support for underprivileged

children.

Cupola’s Mission

Cupola’s mission is to harness and reap the potential of the rapidly developing markets of the

Arabian Peninsula and South Asia. In the mature capital markets of Europe and the United

States, they are well regarded as innovative and creative niche investors. They believe in the

minimization of risk: through the depth of their senior management and the quality of their

professional staff; through exhaustive and through an emphasis on pre-feasibility.

Everyone in Cupola shares an almost obsessive drive for quality, an active consciousness of the

team approach and a commitment to their collective success. They strive continually to improve

the tangible and intangible returns for all their stakeholders.

Cupola’s Businesses:

Cupola is involved in several business including, oil gas exploration, plastic cards, retail markets

and food franchising. Cupola holds the master franchise rights to operate KFC in Pakistan. Some

of the businesses which are under contract with Cupola Pakistan are,

1. KFC

2. Indulge

3. My Superstore

4. Lal Qila

KFC PAKISTAN

Food, fun & Festivity, this is what KFC is all leading the market since its inception; KFC

provides the ultimate chicken meals for a chicken loving nation. Be it colonel sanders secret

original recipe chicken or the hot & spicy version, every bite brings a yum on our face. At KFC

they say,

“We do chicken right”.

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Perfecting its secret recipe of 11 herbs and spices in 1939, KFC has come a long way. With over

10,000 outlets in the world, KFC has maintained its title, for the last 60 years, of being the

chicken Experts. Opening the first KFC outlet in Gulshan-e- Iqbal in 1997, KFC wore the title of

being the market leader in its industry. Serving delicious and hygienic food in a relaxing

environment made KFC everyone’s favorite. Since then, KFC has been constantly introducing

new products and opening new restaurants for its customers.

KFC’s Mission

KFC’s mission statement is,

“To be the leader in western style quick service restaurants through friendly service, good

quality food and clean atmosphere”

KFC Pakistan has contributed in providing Halal and Hygienic products to its customers and

managed this through proper training of its human resources. It has created competitive level for

other thus improving the overall industry standards.

Objectives of KFC

Every organization and company has some certain goals laid down by them to achieve to make it

renown and have value added services to satisfy customers.

Build an organization dedicated to excellence.

Consistently deliver superior quality and value in our products and services.

Maintain a commitment to innovation for continuous improvement and grow, striving

always to be the leader in the market place changes.

Generate consistently superior financial returns and benefits our owner and employees.

Values of KFC

To establish a position in Pakistan as a leading WQSR (Western Quick Service Restaurant)

chain, serving good value added services and Innovative chicken based products. KFC is

consistently providing a pleasant dining experience, with fast friendly, in a clean and convenient

location. Every moment dedicated to providing excellent and delighting customers.

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Focusing all resources to the restaurants operation because that is where they serve their

customers.

Reward and respect the contributions of each individual at KFC.

Expand and update training with time and be the best we can be and more.

Be open, honest and direct in our dealings with one and other.

Commit themselves to the highest standard to the personal and professional integrity at

all times.

Encourage new and innovative ideas because these are the key to their competitive

growth.

Reward result and not simple efforts.

Dedicate themselves to continuous growth in sales, profit and size of organization.

Work as a team.

Core competency

Since beginning, KFC has presented itself and well competed, only through it delicious chicken.

People from all over the world know KFC as the best chicken expert. Their chicken has always

been unique in taste and has helped them in order to build their own identity all over the world.

PRODUCTS OF KFC

KFC Pakistan provides 100% Halal and Hygienic products to its customers. It offers a variety of finger-licking products, some of which are as follows:

1. Crispy Fried Chicken

2. Zinger

3. Twister

4. Hotshots

5. Chicken Burger

6. Hot wings

7. Rice n Spice

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8. Fish Zinger

9. Nuggets

10. Corn on the Cob

11. French Fries

FRANCHISE LOCATIONS

Presently KFC is branched out in eighteen major cities of Pakistan with around 64 outlets nation-

wide. Some of the cities in which the KFC is in operation are as follows,

1. Karachi,

2. Hyderabad,

3. Lahore,

4. Islamabad,

5. Sukkur,

6. Faisalabad,

7. Gujranwala,

8. Rawalpindi,

9. Sialkot,

10. Multan,

11. Peshawer,

12. Jhelum,

13. Sukkur,

14. Murree etc.

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ORGANIZATION STRUCTURE

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KFC SUPPLY CHAIN

KFC has a very simple supply chain. As the operations are on a relatively small scale, all the

operations are performed by the company (i.e. Cupola) itself. The supply chain process can be

summed up as a 3 step process:

Step 1:

Raw materials procured from various suppliers and stored at two warehouses; the normal-storage

and the cold-storage. Details are discussed later.

Step 2:

All product preparation is done at the branch except for the marination of chicken and sold to

customers at the branch itself or delivered at the desired locations.

Step 3:

Warehouses replenish each branch according to their requirement (usually three times a week)

using company’s own vehicles and drivers upon the request of the branch manager.

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WAREHOUSING

Pakistan is divided into two areas, namely North and South. The area below Multan falls under

the southern region whereas, Multan and the area above it falls under North region. Each region

hence has its own warehouse. The North region has its warehouse in Lahore. The south region

has its warehouse in Karachi.

PROCUREMENT

Monthly budgets are made to plan purchasing activities. These comprise of dividing the allocated

budget into the inventory policies already defined at the warehouse from past data and

experience. FIFO method is used for all items for the inventory at the warehouses.

Chicken

Chicken is supplied by K&N’s in customized cut, packed and labeled packets directly to the

warehouses in each region. Labeling is necessary for inventory management and efficiency. KFC

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gives a lead time to K&N’s of one week for them to deliver their order. The chicken arrives in

special freezer fitted van which keeps the chicken frozen while it is being transported. The

different types of pieces ordered by the warehouse are in baskets of 5 square feet and having a

height of 8 inches. The vehicles used for this are small trucks which have a maximum loading

capacity of five tons.

Sauces

Unilever (Yum) provides all the sauces needed by KFC such as Ketchup, Chilly Sauce,

Mayonnaise, Tartar Sauce etc. Yum is a brand especially made for KFC and cannot be sold in

the market to the customers. These are delivered directly to each warehouse by Unilever

themselves. The lead time for this operation is about two weeks.

Spices and herbs

These are imported directly from Dubai and Singapore. The lead time for these exceeds two

months as these are not perishable items and it takes a lot of time for transportation. All imports

are done through sea in dedicated 20” containers for KFC.

Packing Material

This is purchased from local parties namely Afeef Packaging, AAA and Gold Packages. Due to

frequent re-designing of boxes and deals offered by KFC, the inventory of these is kept at a

minimum.

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Bread and Buns

Since the last 4 or 5 years KFC has been producing their own buns in their own bakery. Their

plant is located at Sohrab goth, Karachi.

Fish

Information was not provided. Internationally, fish is bought from Thailand. But in Pakistan, fish

is bought from local vendors as it is a low selling item.

French Fries

These are imported directly from America. They are also imported to Pakistan by Yum company

through china where they also come from America.

Other miscellaneous items

Items Source

Oil IFFCO

Vegetables Local suppliers

Rice Makro

Salt Hub Salt

Toys Hong Kong

Corn America

STORAGE AND INVENTORY MANAGEMENT

Chicken

Inventory of chicken is for 15 days. The storage area for chicken is not in the warehouse itself

but in a separate cold storage area built right beside the warehouse in each region.

Before marinating, the chicken is stored in an organized form in six separate cold storage rooms

whose area is around 45 to 50 square feet, having a height of around 7 feet. The chicken is stored

in the same baskets which it comes in and stays there till its turn for marinating.

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Marination is

done in a

separate room

in the same cold

storage facility

where the

chicken is first

washed and

mixed with the

herbs and spices

it needs. The mixture is fed into a machine known as ‘Tumbler’ which marinates it. After this is

done the chicken is re packed into labeled clear plastic bags with stickers on them showing the

description of the item inside it and the expiry for it. These bags are then put into a separate cold

storage room, again in an organized form.

Sauces

Inventory for Sauces are stored for around 25 to 30 days depending on the forecasted sales and

the expiry dates for each.

Spices and Herbs

Inventory for these are stored according to forecasted sales and the three months lead time given

by the procurement department.

Bread and Buns

Buns are provided directly to the branches at KFC from the factory after every 4 days.

There is a weekly audit of every single inventory item at the warehouse to match it with the

numbers in the system as deviations are high due to high replenishment cycles.

ZONAL DISTRIBUTION

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Distribution is done on need basis. The cities are divided into zones and the routes taken are

accordingly. Karachi is divided into 3 zones:

Zone 1: Gulshan-e-Iqbal and Gulistan-e-Johar

Zone 2: Clifton and Defence

Zone 3: Bahadurabad, Tariq Road and Sindhi Muslim Society

Daily 5 to 6 vehicles are dispatched from the south warehouse for the interior Sindh (15 days

inventory) and Zonal distribution in Karachi (1 week inventory for normal-storage and 2 days

inventory for cold-storage goods).

Vehicles

Company: Hyundai Shehzore

Quantity: 4-5

Company: Hino Dutro Truck

Quantity: 4-5

Gross vehicle weight: 8.90 tons

Maximum capacity: 4 tons (reduced from 5 tons because of modifications)

Dimensions:

Wheelbase mm 3,870

Weight

Total kg 2,470

Front kg 1,545

Rear kg 925

Overall Length mm 6,675

Overall Width mm 1,995

Overall Height mm 2,235

Turning Radius On tire mm 6,300

Cab to axle mm 3,280

OverhangFront mm 1,045

Rear mm 1,760

Tread Front mm 1,655

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Rear mm 1,520

QUALITY ASSURANCE

There are multiple ways by which KFC assures the quality of its products. Some of the ones

which were disclosed to us were:

Surprise visits to branches

Planned visits to branches

Rigorous raw material inspection

Customer feedback

SOFTWARE

MRP/ERP

The company uses Supply Chain Management (SCM) Software to manage its inventory across

its whole supply chain. This software has been developed by Siddhat Haider. There is a weekly

physical count of the inventory to tally it with the figures in the softwares.

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Documents

KFC Supply Chain