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

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 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 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 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.
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 1 9 9 0 . K FC wo r e th e title o f be in g th e m a rk e t
le a de r in its ind us tr y. S e rv ing delicious and hygienic food in a relaxing
environment made KFC everyone’s
favorite.S i n c e t h e n , K F C h a s b e e n c o n s t a n t l y i n t r o d u c i n g n e w
p r o d u c t s a n d o p e n i n g n e w restaurants for its customers.

Presently KFC is branched out in seven emirates of UAE

with m o r e th an 12 5 o u tle ts n a tio n- wid e . Th e o u tle ts 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 customer with the ultimate
entertainment; KFC also plays in the economics development of our country.
P r e se n tly K FC h a s p r ov id ed e mp lo ym e n t to ov e r 12 00 p eo p le is , wh ic h
a dd s u p to 6000 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,f u l l y t r a i n e d e m p l o y e e s a n d t h e i r p r o p e r w o r k d i v i s i o n ,
S t a t e o f t h e a r t i n t e r i o r 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,
“ U n ity, Fa ith & D is c ip lin e ” . In a tim e o f u n ce r ta in ty a nd fe a r , K FC r o se to
th e 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), 593-
609
• 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