The Colonel will not be happy!
KFC has closed 600 of its 900 UK outlets after delivery problems meant they ran out of chicken! It was only last week, that the fried chicken chain switched its delivery contract to DHL, which blamed "operational issues" for the supply disruption. It was unclear when the delivery problems would be rectified, a KFC spokesperson said.
For the brand, this has been an unmitigated disaster. The Sun this week has been running editorial exposure on where Fried Chicken enthusiasts can get their favourite food at other competitive outlets.
DHL said: "Due to operational issues, a number of deliveries in recent days have been incomplete or delayed. We are working with our partners, KFC and QSL, to rectify the situation as a priority and apologise for any inconvenience."
The GMB union whose members had been impacted said it had tried to warn KFC that switching from their previous logistics company Bidvest to DHL was a mistake. The alteration led to 255 job losses and the closure of a Bidvest depot. A spokesman for the GMB said, "Bidvest are specialists - a food distribution firm with years of experience. DHL are scratching around for any work they can get and undercut them. KFC are left with hundreds of restaurants closed while DHL try and run the whole operation out of one distribution centre. Three weeks ago, KFC knew they had made a terrible mistake, but by then it was too late”.
Can DHL save the situation? Hard to see how trust can be regained. KFC will no doubt be making a significant claim for compensation and, as the aggrieved party, we would certainly recommend that they propose a solution rather than wait for DHL to suggest one.
It also demonstrates the potential risk that companies take in chasing lower price or efficiencies. Recently Wetherspoons, the massive UK pub chain, had to withdraw Steak from its menu following concerns over the quality of its meat supplied by Russell Hume, who subsequently went into administration.
For an incumbent supplier recognizing the challenges to their customers of change should not be underestimated. That is not to suggest complacency and indeed trying to build value through innovation, product development and digital efficiencies must be embraced to keep clients competitive.
That takes vision, cooperation and an atmosphere of trust. Plus, dare I say it negotiation expertise.
I once spoke to a procurement manager at a large blue-chip company, who told me that he had never seen a procurement expert fired for not hitting excessive cost reductions, but he had when supply was compromised.
Seems like for KFC, some of their chickens have come home to roost.