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Operations Management Practices of

Kentucky Fried Chicken (KFC Arabia)

By; Nirmal Gopal

(MBA WEEKEND)

Submission Date : 23 Aug 2018

Submission ID : 182032

File name : _OM_Assignmt.docx

Word count : 1544

Character count : 9925

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Table of Contents

1. Introduction ------------------------------------------------------------------------- 3-4

2. Storage And Inventory Management-------------------------------------------- 4-5

3. Supply Chain Management ------------------------------------------------------- 5

5. Operational Management -------------------------------------------------------- 5-7

6. Facility Location And Layout ---------------------------------------------------- 7-8

8. Suggestions ------------------------------------------------------------------------- 8-9

9. Bibliography------------------------------------------------------------------------- 9
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Nirmal Gopal

Professor Amjad khan

Operations Management

27 November 2018

Operations Management Of Kentucky Fried Chicken

Introduction

KFC is a major quick serving restaurant (QSR) serving over 12 million customers on a

daily basis through its 21,400 restaurants in 109 countries. This assignment views the operational

management practices that KFC implements in the UAE. Prior to that, the assignment gives an

introduction about KFC, its establishment and history. Throughout the years, KFC has lost a

large number of their market share to other healthier fast food restaurants due to the fact that

consumers have become more health conscious. In response to the consumer’s demands, KFC

introduced a healthier product that is mainly targeted at health conscious people.

KFC faced a variety of problems and issues in 2009. Still the UAE’s largest chicken

chain and third largest fast food chain in the world, it continued to grow at a healthy rate

worldwide. It also continued to control one-half of all chicken chain sales in the UAE, and had

one of the world’s most recognized brands. In addition, its new rotisserie chicken and buffet had

been tremendously successful in UAE markets where they had been introduced. However, while

prospects for continued growth internationally were bright, continued growth within the
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domestic markets was threatened by a number of industry and societal trends. Competition from

sandwich chains and new chicken chains, as well as consumer demand for a wider variety of

menu offerings, forced KFC to reanalyze its operational management practice. At the same time,

KFC and other fast-food competitors were forced to improve product offerings and to serve their

product faster and with better service to consumers who increasingly demanded greater value for

their money.

Furthermore, the assignment provides an insight into the organizational operational

structure of KFC. Current strategies and inventory management include the analysis of the

strategies that KFC is using to expand and maintain its market share.

The chosen organization for following the report is Kentucky Fried Chicken’s success is

coupled to the right software program of the ten preferences of operations administration (OM).

As a worldwide business, KFC addresses these 10 selections of operations administration by

means of totally precise procedures and policies. For instance, the commercial enterprise agency

applies its chicken and Farmer Equity utility in provide chain management. KFC Arabia

moreover exhibit off the firm’s shape subculture as a manner of optimizing great of service.

Thus, Starbucks has built-in techniques for streamlining the ten preferences of operations

management.

STORAGE AND INVENTORY MANAGEMENT

Chicken Inventory of chicken is for 15 days. The storage area for chicken is not in the

warehouse itself but in a separate cold storage area built right beside the warehouse in each

region. Before marinating, the chicken is stored in an organized form in six separate cold storage
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rooms whose area is around 45 to 50 square feet, having a height of around 7 feet. The chicken is

stored in the same baskets which it comes in and stays there till its turn for marinating

.Marination is done in a separate room in the same cold storage facility where the chicken is first

washed and mixed with the herbs and spices it needs. The mixture is fed into a machine known

as ‘Tumbler’ which marinates it. After this is done the chicken is re packed into labeled clear

storage room again in organized for the next usage.

Supply Chain Management of KFC

KFC has a very simple supply chain. As the operations are on a relatively small scale, all

the operations are performed by the company (i.e. Cupola) itself. The supply chain process can

be summed up as a 3 step process:

Step 1: Raw materials procured from various suppliers and stored at two warehouses; the normal-

storage and the cold-storage.

Step 2: All product preparation is done at the branch except for the marination of chicken and

sold to customers at the branch itself or delivered at the desired locations.

Step 3: Warehouses replenish each branch according to their requirement (usually three times a

week)using company’s own vehicles and drivers upon the request of the branch manager

Operation Management Analysis

KFC uses various tools and techniques to determine optimum selection for its location,

such as factor rating method, cost-profit-volume analysis, and transportation and simulation
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models (Matai, Singh and Mittal, 2013). KFC keeps a lot of factors in mind while designing their

facility.

They are as follows:

• They ensure their proximity to the consumers, so that they can be easily approached. This

is why they have opened so many locations in each city. They understand it is important

to remind the consumers about their presence.

• They always select a favorable location for its outlets, which will lead to increased sales.

They make sure that all the outlets are located on the main road, road, so that footfall

rises.

• Since they are operating in a saturated and a highly competitive market, they need to keep

the prices low. For this, they choose locations that are available at low costs. All these

decisions will help them to keep the price of their product low.

• They locate their outlets where proper infrastructure is available and where there is

abundance of skilled labor. This can reduce labor cost as they are easily available and

easy access to stores for consumers is possible.

Their most of the stores are franchised, which reduces their maintenance efforts. They

simply conduct regular quality checks to ensure that all the required standards are met.
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Their facility layout decisions are influence by the volume of production, fragility of the product,

nature of the service to be provided and the costs required to build the operations area. Their

outlets are brightly lit, with attractive color schemes and comfortable seating arrangement and a

warm and welcoming staff. Their suitable and quick cooking process, superior service makes it

desirable among consumers.

This effective layout helps them in easy supervision, smooth coordination which leads to

high flexibility and efficiency. This also reduces bottlenecks and reduces materials handling

costs.

FACILITY LOCATION AND LAYOUT

KFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken is a

chain of food fast restaurants based in Louis Ville, Kentucky. KFC is the third largest fast-food

chain with over 12,200 outlets in 119 countries. KFC has maintained its title, for the last 60

years, of being the chicken Experts. Opening the first KFC outlet in Dubai in 1990. KFC wore

the title of being the market leader in its industry. Serving delicious and hygienic food in a

relaxing environment made KFC everyone’s favorite. Since then, KFC has been constantly

introducing new products and opening new restaurants for its customers.

Presently KFC is branched out in seven emirates of UAE with more than 125 outlets

nation-wide. The outlets comprise of franchises, company owned and affiliated. They used the

proper method for facility location and layout analysis of new or existing outlets. Facility

location involves the evaluation of various sites for a new facility. Apart from fulfilling our

commitment of serving delicious, fresh and hygienic food and at the same time providing our
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customer with the ultimate entertainment; KFC also plays in the economics development of our

country.

Presently KFC has provided employment to over 1200 people is, which adds up to6000

individuals directly dependent in KFC UAE. The Government of UAE receives over Dhs.10

million per month from KFC UAE as direct taxes. 95% of all food and packing material used in

KFC UAE is procured locally, which sums up to a purchase of over Dhs.35 million per month.

Each new outlet developed by KFC UAE costs approximately Dhs.4 million, which is a huge

amount for the construction industry

KFC Facility Layout

Internal & External layout of KFC outlet is attractive and charming all over the world.

Ideal color schemes, pleasant lighting outlets, comfortable sitting arrangement,fully trained

employees and their proper work division, State of the art interior beautification, speedy &

appropriate cooking process, special club/block for kids, etc. are the chief characteristic of the

KFC layout

Suggestion

KFC can progress rapidly by identifying new facility locations and increasing existing

target market and facility locations by launching new competitive product chain at minimum

cost. KFC’s Unity Drive had a simple but essential message and objective. To bring together the

people of UAE by promoting in the words of KFC founder, “Unity, Faith & Discipline”. In a
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time of uncertainty and fear, KFC rose to the occasion and built a platform of solidarity and

togetherness for the people of UAE. The campaign proved to be a successful initiative in not just

providing hope for our patrons, but also allowed KFC UAE to take an effective step forward

during tough times and entrust other responsive companies to act in a similar manner.

References

• Narasimhan, R., Das, A. 2001. The impact of purchasing integration and practices on

manufacturing performance. Journal of Operations Management, 19 (5), 593609

• Abumaizar, R.J., Svestka, J.A. 1997. Rescheduling job shops under random disruptions.

International Journal of Production Research, 35 (7), 2065-2082.

• KFC, About Us (2014). Retrieved February 04,2014 from, http://www.kfc.com/about/

• Quality Management at Kentucky Fried Chicken (2001). Retrieved February25,2014from

http://sba.pdx.edu/faculty/melliep/339/QualityMgmtKFC.pdf