BM2212

Names DUMAGUING, SHANEIA FAYE G. Section BR601P Date04/04/24

ACTIVITY
Kentucky Fried Chicken (KFC)
In early 2018, Kentucky Fried Chicken, also known as KFC, significantly changed its supply chain system in
the United Kingdom. KFC wanted to transform the UK food service supply chain by partnering with DHL,
a logistics company, to modernize the supply network to improve the fast food chain’s efficiency.
Previously, KFC had worked with a different logistics service provider, Bidvest, to supply its restaurants
with fresh chicken. In going with DHL, the fast food chain moved from a regional distribution system that
used five (5) distribution sites to a single, national distribution center.
DHL applied the experience it had delivering durable products, such as auto parts, and found that
managing the logistics of fresh chicken was very different and challenging than expected. Numerous
delays and long queues at the distribution center in England led to the spoiling of tons of chicken and,
more dramatically, the closing of about two-thirds of KFC outlets across the UK for several days.
KFC found that its new supply system with DHL couldn’t get the chicken to all of its restaurants. The
experience reminded the executives of KFC that inbound logistics is a crucial link in the firm’s value chain.
The executives of KFC realized that when they switched logistics service providers, they saw the
company’s entire operation get bogged down, resulting in lost sales and a public relations black eye.
The KFC's mistake was to focus on the cost-saving opportunity it saw in nationalizing its supply system.
KFC had put the management of their supply chain system out to bid in 2017 and had picked DHL mainly
due to the cost savings DHL promised over other logistics company participants.
KFC’s solution was to bring its old partner, Bidvest, back into the game. To help build a more capable
supply chain system, KFC signed a long-term contract with Bidvest to supply most of KFCs outlets in
northern England. At the same time, DHL’s centralized warehouse continues to supply the other remaining
set of restaurants that Bidvest does not cover.
Answer the following items: (3 items x 10 points)
1. Identify and explain the VCA approach KFC employs to attain a competitive advantage.
Value Chain Analysis (VCA) is a strategy used by KFC to get a competitive edge. In this instance,
KFC prioritized incoming logistics along the value chain. KFC sought to obtain a competitive edge
by reassessing its supply chain structure and realizing how crucial it was to effectively manage the
flow of fresh chicken into its restaurants. The goal of moving DHL from a regional to a national
distribution facility was to maximize incoming logistics. However, they soon discovered that this
alteration had a detrimental effect on the whole value chain, emphasizing the importance of
inbound logistics to their competitive strategy.
2. Aside from bringing back Bidvest as a logistic partner, what additional actions can KFC take to
overcome its failure in supply chain management?
Besides bringing Bidvest back as a logistics partner, KFC may choose to swap its third-party
logistics provider from Bidvest to DHL to reduce the cost of the logistics service, or it may look for
new partners who will be willing to work with them during difficult times. Fried chicken eateries
have lately shifted to DHL, and the latter stated it was working with other supply chain partners to
find a solution. When DHL erred by acting in the same way toward KFC in this specific
circumstance, it vanished.

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Names DUMAGUING, SHANEIA FAYE G. Section BR601P Date04/04/24

3. Provide a sample VCA to assess the primary and support activities that could help KFC attain a
competitive advantage in the marketplace.

Primary Activities
Inbound Operations Outbound Marketing and Service
Logistics logistics Sales
- Raw - Checking - Arrange Orders - Promotions - Customer
Materials machines and - Warehousing of Company Support
- Collecting equipment - Delivery - Advertising - Service of
Information - Service Processing the Staff
Operations
- Manufacturing
Support Activities
Firm infrastructure Planning, Management, Investors
Human Resource Management Recruitment, Training, Salary
Technology Development Product Development, Products, Market Research
Procurement Machine Equipment and Supplies

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Rubric for essay (#1 & #2):

CRITERIA PERFORMANCE INDICATORS POINTS
Content Provided pieces of evidence, supporting details, and factual
8
scenarios
Organization Expressed the points in clear and logical arrangement of
1
of ideas ideas in the paragraph
TOTAL 10

Rubric for illustration (#3):

CRITERIA POINTS
Complete illustration with correct usage of components 10
Some minor parts of the illustration are incorrect 7
Half of the illustration is correct 5
Some minor parts of the illustration are correct 3
The illustration is entirely incorrect 1

References:
Dess, G., Eisner, A., Lee, S., McNamara, G. (2021) Strategic Management: Creating Competitive
Advantages (10th ed.) New York. McGraw-Hill Education.

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