What went wrong with KFC’s distribution partner switch?

KFC store front
HELENA DRAKAKIS discovers what went so badly wrong with KFC’s switch of distribution partner

Why did the chicken cross the road? If that joke had been told in February, the punchline would have been because it was safe to walk past a branch of Kentucky Fried Chicken (KFC), writes Helena Drakakis.

Why? The fast-food chain endured a period during which it could not offer its customers chicken, following a logistical meltdown. The problem started when new distribution partners DHL and QSL replaced Bidvest. At that time, DHL promised it would ‘rewrite the rule book and set a new benchmark for delivering fresh products’.

No one predicted the benchmark would be so low: to date, some restaurants remain shut and many are operating on a reduced menu, causing both DHL and KFC severe reputation damage.

Although reported as a ‘chicken shortage’, there are pictures of chicken decomposing on a warehouse floor. This unprecedented failure seemingly comes from moving the crates from DHL’s new Rugby depot to 600 of KFC’s 900 restaurants.

“It all points to a software glitch,” an insider tells BW. She also queries whether DHL had properly engaged in the transition process.

“Moving contract is not unusual. There is a project team on both sides who work out timings, movement of stock, etc. Has this fully happened? I would argue it has not,” she says.

Damage incorporated

One may think DHL is a foodservice rookie. In fact, it has been delivering time- and temperature-critical products to JD Wetherspoon pubs for 20 years.

However, BW also understands that chilled facilities at the Rugby depot were not signed off until the 11th hour. New staff were deployed, alongside new software from QSL – all on top of a new contract, the idiosyncrasies of which would only be understood by a company delivering over time.

“The contract will be complex but there will not be that many SKUs,” explains Parfetts’ chairman Steve Parfett. “There is a lesson here in introducing fundamental change gradually.”

Wholesale expert David Gilroy agrees that overload would have been a factor, but lack of leadership once the crisis unfolded also seems lacking, he says.

He adds: “In this situation, strong leadership that cuts across organisational silos is key. Every firm has a disaster plan, but either the leadership was not there or the plan was not implemented properly.”

Much, too, has been made of DHL’s single depot compared to Bidvest’s hub-and-spoke structure. But operating out of one depot is not unusual. On the other hand, putting all your eggs in one basket does make preparedness and decisive emergency response all the more critical.

While cost-cutting may have contributed to KFC curtailing its deal with Bidvest initially, there is a suggestion that rather than in distribution, KFC was looking to cut costs in waste disposal, where it believed DHL to have an edge.

Perhaps unsurprisingly, part of the DHL contract has now returned to Bidvest, with the rest expected to follow.

“Some big questions will be asked,” Parfett notes. “Short-termism does nobody any good, and long-term relationships and expertise mattered here.”

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Helena Drakakis
Helena Drakakis is a journalist for betterWholesaling. Liaising with some of the leading suppliers and industry experts, she aims to bring wholesalers the best advice, latest news and inspiration.

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