Lessons from KFC’s UK logistics crisis
- Published: Friday, 09 March 2018 08:38
KFC UK & Ireland has announced that following almost a month of supply chain issues in the UK it is reverting to its previous supplier, Bidvest, to supply many of its restaurants. Charlie Maclean Bristol looks at the KFC logistics crisis and the lessons that can be learned from it.
For the past three weeks KFC has never been far from the headlines in the UK media, with a high level of schadenfreude being generated by the news that a chicken restaurant chain had to temporarily close many of its outlets due to lack of chicken supplies.
The KFC crisis started when the company switched its contract from the Bidvest logistics company to DHL on 14th February. By the end of 18th February, only 266 of 900 restaurants were open, due to lack of fresh chicken being delivered. The chicken issues were followed by a gravy crisis, with supplies of gravy not getting through to the restaurants.
Despite considerable efforts the supply chain issues have continued, and KFC UK & Ireland announced on 8th March that it has partially reverted to its previous supplier, agreeing a contract with Bidvest to supply up to 350 of its 900 restaurants.
So, what can we learn from this incident?
1. I don’t think the loss of supply chain in this incident is a business continuity issue; more of an operational issue. Business continuity deals with a mature supply chain which fails. The implementation of a new supply chain is a failure of operational planning. Much has been made in the media of the move from six distribution hubs used by Bidvest, to the one distribution hub used by DHL and there has been emphasis on the little experience DHL has in moving perishable fresh chicken. For me, this shouldn’t have happened. The switch to a new provider for KFC should have been bombproof so there was no chance of it failing. Why this actually happened we may find out eventually. The simple lesson here is that if your organization is going through a critical change, you must make sure that there is no possibility of it going wrong.
2. If you fail to supply your customers, others will try and take advantage of this and those customers may not come back to you. I read a Guardian article which said that the British Takeaway Award’s winning restaurant from 2016, Chicken George in Luton, had doubled its number of customers during the KFC crisis and many of their new customers said they wouldn’t be going back to KFC. A number of other fast food restaurants have been trying to lure away KFC customers through social media and this has led to some humorous verbal sparring. The bottom line is, if you cannot serve your own customer’s during an incident and they can get what they want elsewhere, there is a very high chance that you will lose market share. The way to regain market share for many organizations is to cost-cut, which can bring the customers back, but consequently adds to the total cost of the incident.
3. KFC has used humour in this incident to engage with its customers and explain the irony of the situation - a chicken restaurant with no chicken. This has been done effectively on Twitter, but also by using full page adverts in newspapers. They showed an empty bucket of chicken with the logo rearranged to read FCK and just simply said ‘we are sorry’. When O2 had a major outage in 2014, they were also praised for their humour in responding, making their social media posts very human and replied to every angry text. If you want to see a master class in Twitter putdowns, look at the best of singer James Blunt’s Twitter feed. Humour can be very disarming in a crisis, but it needs to be appropriate to the incident. If this was about food safety or the death of a customer, then humour would be entirely inappropriate.
4. We are taught that there is always an opportunity in a crisis. I suspect this incident has done a lot to raise the KFC brand. Many people, I think, will say "I used to quite enjoy a KFC, I must go and get one as I haven’t had one for ages". I think the on-going gravy saga might start to blunt the goodwill to the organization, with customers tiring of the incident. Even the marketing team seem to have run out of steam. In their latest advert they said “we are knackered and can’t think of a funny headline…” There is an opportunity in an incident if you can fix it fairly quickly and don’t upset your customers too much. With some issues still on-going, the patience of KFC’s customers may be stretched.
5. Reflected in the ‘we are knackered’ headline, the sheer amount of time, effort and energy which goes into managing an incident should never be underestimated. The management of the incident goes on far after the incident has faded from the media, social media and the public’s awareness. Make sure you rotate your staff dealing with the incident, send staff home to get some rest, look out for signs of stress within your staff and don’t allow those who want to be heroes and work all hours to burn out. Recognising an incident is going to last for a long time is a key role of the crisis management team and they should ensure that they allocate sufficient staff to manage the incident.
Charlie Maclean-Bristol, FEPS, FBCI, is Director of Training at PlanB Consulting.