The ITV news clip about the irate KFC customer who exclaimed that she “had to go to Burger King” because her local KFC restaurant was closed due to a shortage of chicken has gone viral. It may well have raised a wry smile from many of us, but the commercial reality of the calamitous disruption to KFC’s supply chain is far from a laughing matter for the fast-food giant.
More than two thirds of the chain's 900 stores across its UK franchise network were forced to close because its supplier, DHL, had failed to deliver sufficient quantities of chicken. Clearly this poses quite a problem for a fried chicken restaurant. The financial damage caused by this logistics fiasco is likely to be enormous given the scale of KFC’s operations.
DHL has been quick to apologise to KFC and its customers for the interruption of supply in what they describe as a “complex service”, saying that normal service levels will be resumed as soon as possible.
Nonetheless, the incident will surely have kept senior staff at DHL awake at night as they contemplate the potential legal repercussions of the service failure, especially as KFC had only recently awarded the distribution contract to DHL, replacing the previous incumbent Bidvest, a specialist food distributor. The GMB trade union claims that it warned KFC about switching suppliers, describing it as a “penny-pinching” decision.
Managing such a diverse and widespread network will always have its logistical challenges. Whilst we don’t know the nature of the contracts in place, a supplier failure such as this could well result in KFC taking legal steps to recover its losses and/or terminate the relationship. With reports that senior KFC officials are flying over from the US to conduct a crisis investigation, we certainly don’t envy DHL nor KFC UK’s head of contract procurement!
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