KFC Operation Management Issues.docx

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KFC Operation Management Issues
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Operation management constitutes process of identifying and addressing weaknesses in
an organization's to achieve long-term goals. Goals are set, progress is assessed, and workers'
skills, knowledge, and talents are developed. Any organization must have a system to track and
report its employees' performance. HR, managers, and employees all have a role in effective
operation management. It boosts morale and productivity, resulting in a more robust bottom line.
A practical and lucrative way to attain the organization's goals is made possible by this method.
Notably, operation management reduces the danger of miscommunication and ensures
that the most significant level of service is delivered to customers. Performance management is a
must for a firm to maximize its resources and accomplish its strategic goals in the timeframes
expected. Strategic planning is essential for a successful operation management system. An
organization's anticipated result may be achieved if the strategy is effectively implemented. The
strategic planning model, the performance management model, and the process of implementing
these models at KFC are all addressed in this assignment. In the following paragraphs, the
organization's implementation difficulties are discussed. This paper is based solely on secondary
sources.
Organizational Profile
Initially developed by Colonel Harland Sanders in 1930 and specialized in chicken. It is
among the largest restaurant chain globally in revenue, trailing McDonald's as of November
2011. Yum, currently owns KFC Brands, also operating food deliveries and Pizzas. KFC now
has 22,513 outlets in 140 different countries and 23,040 workers internationally. The brand KFC
is valued at slightly over US$ 5.6 billion. Transcom Foods Limited, a Transcom Group business,
successfully built a KFC store in Kenya in 2007 (KFC, 2021). Right now, 20 KFC outlets deliver
high-quality fast food in various parts of the continent.

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KFC's Performance and Strategic Management
A discussion of KFC's performance management system is centered on the strategic
planning model, the performance management model, and the process of implementing these
models in the fast-food company. The following is a summary of the debate: KFC's strategic
planning Strategic management is how an organization develops and implements policies that
support its goals and objectives (KFC, 2021). The organization sets specific objectives in a
strategic plan, which it hopes to achieve throughout its implementation. Strategic planning is all
about determining your company's long-term objectives and devising a game plan for achieving
them (Wang’anya, 2018). This encompasses the company's future and its aims. To achieve the
organization's goals, strategic planning is essential. In addition, this gives businesses a sense of
direction and enables them to be proactive rather than reactive. It improves efficiency. It
increases profitability and market share.
Good and Service Design
In today's increasingly competitive global economy, efficient operation management
relies heavily on having a strong product and service offering. Producing competitive advantages
over rivals is the ultimate objective of each product designer's career. KFC employs a selection,
definition, and design strategy for its products in the fried chicken industry.
Conceptualization of a Product
Go Global, Act Local' is KFC's new cultural strategy, gaining traction. For instance, KFC
in Malaysia and Indonesia now offers Muslim Halal Food, taking religious observance into
account. KFC has started serving rice as a side dish in both nations due to a scarcity of potatoes.
As a further consideration, KFC has introduced Halal meals over the globe (Nguyen, Nisar,
Knox, and Prabhakar, 2018). In addition, KFC has introduced drive-thru windows, kiosks, and

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express units, among other things halal. Product and mass customization is at the heart of KFC's
business model, as seen by all of the company's activities (Wilding, 2018). However, they are
sticking to the original formula to preserve the brand's reputation.
Inventing New Goods
One of the primary functions of KFC's product enhancement team is to generate ideas.
Afterward, check whether the proposal is viable or not. Create a product specification,
production process, and cooking technique after that. As a result of this process, new food may
be developed and an assessment of whether it fits customers' expectations (Maina, 2015). New
menu items are being launched in competitive markets. Product development encompasses all
aspects of the product.
Advice on How to Make Product DesignBetter
A mature business should make the most of this opportunity. KFC's local side dishes
need to be improved and innovated regularly to include new flavors and tastes. As an added
benefit, KFC could provide a breakfast menu to students. This benefit provides a fresh avenue
for arranging one's affairs. Finally, KFC may use the Six-Step Decision Model and avoid
unpredictable settings.
Proper Quality Management
Keeping customers happy is critical to a company's success, and quality management is a
crucial part of that process. Product or service's capacity to meet stated or inferred demands is
'The totality of qualities and attributes of a product.' Sail benefits and cost savings may be
achieved by improving quality (Wilding, 2018). On the other hand, the 'fat fingers syndrome'
plagued a financial institution like Swiss Bank in 2009. First quality and secondly global
business emphasize Deming's 14-point method. Continual improvement, six-sigma, evaluation,

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just-in-time, and the mastery of TQM tools may be broken down into seven principles, as per
Deming's 14 points of development.
Improvement Is An Ongoing Process.
KFC's specialty is chicken products, and it is continuously improving its offerings in this
area. For vegetarians, they've created an amazing meatless meal just for them. Brand appeal
increases as a result of this menu's vegetarian options. Using its drive-thru window, it speeds up
service. Huge sums of money were spent by Yum on R&D, reflecting the Shewharts' PDCA
methodology.
Involvement of Employees
Employees must be able to use their talents and abilities in the workplace. Here, the KFC
brand has a positive reputation. Yum initially develops employment opportunities for quality
enhancement, including pensions, retiree medical care, and retirement savings plans (Nguyen,
Nisar, Knox, and Prabhakar, 2018). Increased productivity may be achieved via the use of
training and motivating activities. By increasing worker efficiency, restaurants reduced their
serving times by more than half.
Policy and Guidelines for Quality
KFC has its quality standards guideline that outlines food safety and quality
requirements. As part of an integrated quality strategy, employees are rewarded for cleanliness,
hospitality, correctness, maintenance, and product quality. Customers get dissatisfied when their
expectations aren't met, and their perception of quality is lower than sufficient.

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Recommendations on How to Enhance the Output
Management of the Supply Chain
SCM, or supply chain management, refers to procuring, outsourcing, or hiring resources
to turn them into a finished product that may be sold to end-users. Due to the wide variety of
products, the warehouses are divided into standard and cold. Consumers may purchase the
products at the designated store(s) once they have been grounded. During the last stages of the
process, the warehouse replenishes inventory in the outlets three times each week (Maina, 2015).
Customers benefit from lower prices since they reduce quality and inventory costs and the cost
of administration. The purchase choice is ideal for a restaurant company. Furthermore, the
Kraljic portfolio buying model states that KFC uses leverage items.
KFC opted for the many-supplier approach after evaluating the six sourcing options.
Local poultry farmers account for the majority of the UK's chicken. KFC cooperated with DHL,
QSL, and Bidvest logistics to distribute their products. Selection, certification, and monitoring of
suppliers are different strategies to consider. UK suppliers meet welfare standards, and RSCS
selects suppliers and monitors their actions in the UK. However, the recent UK experience has
been less than ideal. In February 2018, a chicken shortage affected 900 outlets due to a shift in
the supply chain. Communication and relational issues were to blame for this. While working
with current or past partners, Uddin (2020) points out the need to maintain good connections and
consider the implications for potential new partners and partnerships.
Suggestions for Enhancing Efficiency
Stages include supplier assessment, supplier certification, supplier development,
negotiations contracts. Training may help suppliers become better integrated into the company's
operations. In addition, reducing supply risk necessitates diverse modes of transit and storage. In

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addition, they should set aside a sufficient amount of money for contingencies before
implementing a supply adjustment.
In essence, KFC's latest decision is an effort to negotiate a trade-off that any
manufacturer faces when expanding a manufacturing facility or selecting a logistics partner: the
trade-off between capacity and delivery lead times. One cannot have both at the same time to
optimize profitability. Short lead times prevailed in this situation, and hungry folks were left
without their buckets of chicken. Consider the underlying trade-off in further depth.
Centralization Equates to obtaining more for less.
In comparison to decentralized supply systems, centralized supply chains have two
benefits. A centralized approach enables considerable cost savings in operations via economies
of scale and lowers fixed overhead expenditures such as rent, insurance, and administration
(Wanja, 2015). Consequently, centralized supply systems often have more capacity for storage
and manufacturing than fragmented supply chains. The second benefit of a centralized strategy is
that since the single enormous warehouse does not need to be adjacent to the most important –
usually urban – markets, it may be erected on a relatively inexpensive location, lowering the cost
of land acquisition (Nguyen, Nisar, Knox, and Prabhakar, 2018). Extending capacity requires
expanding just one site, which is relatively inexpensive under the centralized approach.
Responsiveness
While a centralized approach may save operational expenses, being more removed from a
company's market bases impairs its responsiveness. This may become an issue when outlets need
regular replenishment – as is the case with fresh produce – and when demand varies
significantly. Working in a decentralized fashion, with warehouses positioned near markets,
enables businesses to shorten lead times and respond more quickly to unpredictable client

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demand (KFC, 2021). This method works well for companies whose profitability and survival
are contingent upon addressing extremely variable client demands. The disadvantage of this
strategy is that land costs per square meter are likely to be higher (Uddin, 2020). Rapidly
expanding businesses that follow a decentralized approach incur more significant extra
warehouse space expenditures. They may struggle to accommodate the additional demand
caused by their firms' expansion.
Porter's Generic Business Strategies
Porter asserts that there are five techniques that, when implemented successfully, should
have a beneficial influence on a business. Rivalry happens when players engage in competitive
activities or techniques such as pricing competition, advertising wars, product launches, and
improved customer service guarantees. It arises due to one or more rivals feeling the pinch or
seeing an opportunity to strengthen their position (Wang’anya, 2018). Substitute goods exert
pressure on an industry's potential returns by imposing limitations on the prices that businesses
in the sector may charge.
Suppliers might leverage participants' negotiating position by threatening to increase
prices or lower the quality of acquired products or services. They may suffocate an industry's
profitability. Additionally, cost leadership, differentiation, and market focus are examples of
these techniques, also referred to as strategies (Maina, 2015). Thus, the idea argues that, in
addition to franchising, firms might use these Porter techniques to improve their international
market penetration. Organizations function on procedures, and when those processes are out of
date, inefficiencies may emerge, resulting in decreased production, revenue, and profit margins.
According to Uddin (2020), organizations may lose up to 30% of income owing to process
inefficiencies, although many firms are ignorant of the inefficiencies that are harming them.

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KFC's concept of strategic planning
Issue-based strategic planning is KFC's preferred method of strategic planning. The
strategic planning paradigm based on issues is dynamic and adaptable. All of your organization's
internal and external influences are considered to ensure that your goals are met in strategic
planning. KFC uses SWOT analysis to identify internal and external influences.
SWOT analysis:
Differentiation/Uniqueness of the Product
To achieve differentiation, products and services must be differentiated from one another.
Increasing market share and customer satisfaction may be achieved by creating distinctly
different items from one another. KFC's original chicken recipe has remained constant since its
inception, making it a favorite among fast-food fans (Nguyen, Nisar, Knox, and Prabhakar,
2018). As a result of the uniqueness of this formula, the brand's image has been elevated, and its
competitive advantages strengthened. Brand image may also employ intellectual property as a
strategic tool.

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Cost Leadership
Delivering low-cost items to clients is a benefit for a business. KFC is not doing well
with this tactic. The cost of raw materials has an impacts product's pricing. If the cost of the
ingredients goes up, KFC will pass the additional cost on to the consumer. However, a price
might cause consumers to buy from competitors or stop purchasing the company’s product.
Quality Products and Quick Service
Today's business tactics need high-quality products and quick turnaround times. KFC
profit margins rose from 5% to 9%, and labor productivity increased by 12.3% in the test
program (Maina, 2015). KFC restaurants strive to provide superior service to their competitors to
build a long-term client base. However, chicken suppliers have been using too many antibiotics
and growth hormones in their fowl, which is immoral and unacceptable. KFC suppliers have also
come under fire for utilizing soybeans grown in the Amazon rain forest, a controversial
ingredient.
Significance of Efficient Operation Management
Administrative inefficiencies can originate during the development stage of a project.
Improper planning may vary from ignoring resource shortages or redundancy, both of which
result in inefficient operations, to failing to build operational contingencies in a crisis. Nguyen,
Nisar, Knox, and Prabhakar (2018) note that a superior project manager will understand that it is
prudent to devote significant time to the planning stage and evaluate every aspect.
KFC should identify which components are most susceptible to risk during the planning
stage. Spending time and money on planning ensures that your project's operations operate well
and minimizes the risk of several minor, preventable but bothersome hindrances ever being given
a chance. An organization's production objectives serve as a road map for its day-to-day

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operations (Wanja, 2015). Lean manufacturing techniques, clean manufacturing procedures, and
just-in-time supply strategies are part of the company's goal to cut costs and overhead: the
production objectives guide daily and long-term operations. An organization's approach to
unanticipated catastrophes is guided by its objectives (Wilding, 2018).Therefore, management
knows precisely what to do in the case of an emergency to minimize damage to facilities and risk
to workers.
Schedule for Production
To retain profitability, KFC relies on repeatable and predictable manufacturing processes.
A company's ability to meet its productivity goals is directly tied to its workforce. Planned staff
turnover, including retirements and promotions to important positions, is included in strategic
plans. A company's long-term success hinges on its ability to attract and retain top talent.
Operation Controls
Production processes must be monitored and controlled for KFC’s goals to succeed.
Managers use control procedures to guarantee that staff is operating production equipment
correctly and at their highest efficiency level. Production processes may be made more efficient
with the help of control protocols, which offer specific instructions on creating such
improvements (Uddin, 2020).However, Staff disagreements may impede productivity, but they
can also be addressed using control measures.
Cash Flow
Production managers and financial analysts develop strategic strategies for financing
production. Analyzing historical and present performance data, including return on assets, cash
flow, and retained profits, is essential for financial planning. Investment in manufacturing
processes may be financed without increasing debt thanks to the company's retained profitability

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and positive cash flow (Nguyen, Nisar, Knox, and Prabhakar, 2018). Equipment improvements,
facility development, growth into new markets, and the purchase of competitive company
activities may be financed via strategic planning.
Effective supplier sourcing
The supply chain disaster that followed KFC's switch to DHL was probably not foreseen.
Fast-food chain McDonald's faced a reported loss of $1 million per day when delivery issues
forced the closure of half of its UK stores. A few hiccups are unavoidable when a large business
switches the company managing its deliveries to its new logistics provider (Uddin, 2020).
Effective sourcing practices can help businesses reduce supply chain risk. Effective sourcing
relies heavily on identifying potential risks before they have a chance to become significant
issues.
The prospective supplier should be briefed during the tendering process to provide a
seamless transition. When switching suppliers, the procurement team should ensure that areas
prone to error are being addressed and that such risks are being minimized (Wanja, 2015). For a
successful working relationship, it is critical to understand how a new supplier operates and
whether or not that aligns with company’s working style(s). For example, KFC may value
quality over speed, hence the supplier should meet company’s expectations in line with KFC
quality standards. As the business grows and changes, so does the need for a supplier to be able
to adapt to those changes (Wilding, 2018). If KFC suppliers can respond quickly to changes in
demand, whether it is an increase in orders or the introduction of new products, the company can
ensure that the supply chain will not be disrupted. Therefore, the most reliable supplier will
involve the local source that is accessible and able to provide raw materials at an affordable
without compromising on quality standards.

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Conclusion
A competitive edge may be gained via the integration of operations and strategy. Each
area of decision-making and process has its unique characteristics. To reap the benefits, it is
critical to choose the correct decision areas and develop an effective strategy for each of them.
KFC should avoid association with unreliable logistic company, and suppliers to prevent
unfavorable publicity about food safety and quality. KFC could make a few tweaks to its quality
control procedures to raise the overall standard. As intellectual property, KFC's unique recipe
will provide the fast-food chain an edge over competitors. There should be a greater focus on
sources of raw materials as it has disrupted the business in several shortage scenarios. Thus, the
company should streamline its operation management to ensure all the departments are ready to
handle any challenges that may emerge, may it be sourcing or delivery related.

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References
KFC (2021). Company Information’s [Online] https://www.kfc.com. [2022, 21 March]
Maina, K. M. (2015). Sustainable supply chain management incentives and operational
performance of food franchising outlets in Kenya (Doctoral dissertation).
Nguyen, Q., Nisar, T., Knox, D., and Prabhakar, G. (2018). Understanding customer satisfaction
in the UK quick service restaurant industry: The influence of the tangible attributes of
perceived service quality, British Food Journal, 103 (1), 36-45. [2022, 21 March]
Uddin, S. M. (2020). Operational strategies and management of KFC: An enquiry. EPRA
International Journal of Research and Development (IJRD), 5(4), 172-179.
https://doi.org/10.36713/epra4262.[2022, 21 March]
Wang’anya, E. T. (2018). Supplier and Business Performance Measurement; A Study of the
Kenyan Restaurant Chains (Doctoral dissertation, United States International University-
Africa).
Wanja, L. O. R. N. A. (2015). Strategic management practices applied by fast food franchises in
Nairobi city county, Kenya to enhance performance. Unpublished MBA project, School of
Business University of Nairobi. http://hdl.handle.net/11295/93168.[2022, 21 March]
Wilding, R. (2018). Why did the chicken not cross the road? [Online], www.kilturk.org.uk
[2022, 21 March]

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