What came first the chicken or the pre-contract award phase? (Risk management and supply chain diligence)
Thursday 22nd February 2018
The colonel is working on it was the humorous response from KFC recently when asked when and how they would resolve the supply issue of chicken as the shortages continue.
The issue stems from KFC switching its deliveries from Bidvest Logistics to DHL in a deal struck last year.
KFC's problem? - They're huge and the press loves a multimillion monumental screw-up. A similar situation happened at Burger King six years ago, so why aren't we learning?
Apparently, the issue is software malfunction and a shortage of staff. Doesn't this remind us of the Olympics when there was a dramatic shortage of security staff, as the customer of G4S wouldn't pay for training and development ahead of schedule, thus contributing to the problem?
Our response as a procurement professional? We should have been in on it from the beginning, from conception to project sign off and review. Proactive professionally qualified procurement holds the secret to effective risk management and effective supply chain project execution, not to mention effective due diligence in supply chain transparency in terms of costs and standards.
Two-thirds of KFC's 900 stores were closed on Tuesday and we can only begin to envisage the financial loss to KFC not to mention the knock to their own and DHL's reputation.
So what about liabilities, we could hazard a guess that KFC put all risk liability in the hands of the supplier, who then put a cap on liability to the value of the contract, so the real damage will not be recovered.
Disaster recovery seems completely ineffective as the situation continues to spiral out of control. Where is the Disaster Recovery Plan?
Amazingly this level of supply chain failure isn't the first of its kind, it is commonplace in supply chains globally.
Perhaps it is the time we quit the obsession with savings and focus on business imperatives including performance, risk management, and brand protection, It isn't all about price and cutting cost. KFC was actually warned about the switch from BIDVEST to DHL.
Mick Rix, the GMB's national officer said:
"I wrote to KFC. I alluded to Burger King trying to cut costs and ending up with poorer quality service and poorer distribution. They had shortages, too, but not on the scale we're seeing now at KFC. Within six months they [Burger King] were pleading with Bidvest Logistics to take it back."
Who was listening?
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