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Friday
Feb232018

Tom Fox: KFC played chicken with the supply chain, and lost

What is risk? If your name was previously Kentucky Fried Chicken (now KFC) one might think that not having a ready supply of chicken to fry up would be about as important a risk as one could imagine.

How are you going to sell fried chicken if you don't have any chicken delivered to your restaurant?

Now consider this supply problem on a nation-wide scale. That is currently the situation for KFC in the United Kingdom, where half of the restaurants there are closed, and the other half are selling products other than fried chicken.

Leaving aside what might seem like a basic supply issue of not having chicken to sell, there is a significant financial hit to the company. As the New York Times reported, the UK is the fifth-biggest market for KFC, representing about 6 percent of its roughly $24.5 billion in global sales last year.

How chicken mad is the UK? There were reports that police and even members of Parliament were contacted by irate customers when they found their local KFC shops closed. And I thought we Southerners were fried chicken crazed.

These problems stem from a new supplier KFC contracted with to begin delivering chicken to KFC restaurants in the UK this week. The new supplier is DHL, owned by Germany's Deutsche Post, which blamed "operational issues" for the delays.

Until last week, chicken had been delivered to KFC restaurants by the South African-owned distributor Bidvest. Then KFC changed to DHL.

In one of the great blame-game sagas, DHL told the New York Times it isn't "the only party responsible for the supply chain to KFC," seemingly throwing their own supply chain partner QSL under the bus, and adding that DHL was working with QSL to "rectify the unforeseen interruption of this complex service."

KFC didn't do much better, saying in a statement, "Getting fresh chicken to 900 outlets across the country is pretty complex!" I guess KFC had forgotten it successfully supplied chicken to its restaurants for some 50 years before this week's fiasco.

This story points up that every company's risk is different. You must assess your risk, manage it and continually monitor your risk management program. Finally, if the words fried chicken do (or did) appear in your business name, make sure you have plenty of chicken on hand to fry up.

____

Tom Fox is the Compliance Evangelist™. He leads the social media discussion on compliance with his award-winning blog, The FCPA Compliance and Ethics Blog and eight podcasts; The FCPA Compliance Report, Compliance into the Weeds, Everything Compliance, This Week in FCPA, 12 O’clock High-a Podcast on Business Leadership, Compliance Report-International Edition, Countdown to GDPR and Across the Board. 

He's the author of 12 books on compliance, ethics and leadership, including the international best-selling “Lessons Learned on Compliance and Ethics” and “Best Practices Under the FCPA and Bribery Act” and his series Fox on Compliance. His book "The Complete Compliance Handbook" will be published by Compliance Week in April 2018. It is available for PreSale by clicking here.

Reader Comments (1)

Not sure if I should trust a Fox on the subject of chickens.
February 23, 2018 | Unregistered CommenterSFT
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