Operation Management

Research Report on Supply Chain Analysis of KFC in Asia

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Assignment Criteria

  • Analyse the importance of supply chain people development and future supply chain innovation management.
  • Analyse the contribution that superior supply chain management makes to corporate performance.

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Assignment Solution

SUPPLY CHAIN ANALYSIS OF KFC(SOUTHEAST ASIA AND MALAYSIA)

INTRODUCTION

Kentucky Fried Chicken also famously known as KFC is a world renowned chain of fast food restaurant, especially chicken related items. It was founded by Harland Sanders and was incorporated inthe year 1955 .Todayit is headquartered in Louisville, Kentucky in the United States of America. Currently, it ranks as the second largest restaurant chain post McDonald. It is present in approximately 120 countries and has around 19000 outlets globally. The company though was an independent brand initially, but now comes under the Yum! Brand. Yum!Brand today also has Pizza Hut and Taco Bell chains under its umbrella. KFC is famous for its fried chicken made with herbs and spices. KFC restaurant chain today employs around 16000 employees. It initially started in a motel owned by Harland Sanders(PLATT, 2012). But seeing the popularity and love for his fried chicken, Sanders took his recipe to the roads to make it more famous. He then started franchising with restaurants to include the famous fried chicken in their menu. Within ten years of incorporation, by 1963 KFC had more than 600 franchised and rising. As the business grew it became too big for Sanders to handle. Thus, Sanders sold his business to investors by 1964 for $2 million and a per year salary of $40000 which later rose up to $200000 later. By the time Sanders sold KFC he was making a $300000 profit before tax. KFC soon became one of the fastest internationally growing fast food chains and expanded to Canada, Mexico, Britain and Jamaica inthe early 1970s. KFC now operates under the 'Yum! Brand'. Today, KFC operates across Asia, Africa, North and South America, Europe and Australia. It is like a synonym for fast food and a stiff competitor of McDonald. In 1986, KFC was officially sold to PepsiCo with an approximate value of $800 million. Later in 1997 PepsiCo spun off its complete restaurant group of business as a public company. The new company was called Tricon Global Restaurants and has an annual revenue generation of $14 billion today. This company also owns the famous Pizza Hut and Taco Bell. Tricon in 2002 got rebranded with the name Yum! brand. KFC today has the largest number of its restaurants and outlets in China, followed by its home country USA. Most of the outlets are either company owned or under franchise of KFC. KFC also has a strong presence in Asia. After China, KFC also has a strong presence in India and in Southeast Asia in Malaysia.  In this report, we will be discussing the supply chain of KFC from a Southeast Asian perspective. However, from Southeast Asia, we will mainly be focusing on Malaysia where it has the strongest presence in the region(kfc.com, 2011).  This will also help us in understanding the supply chain of KFC in much depth.

KFC AND SOUTHEAST ASIA (MALAYSIA)

The presence of China and India, often shadows the strength and importance of the Southeast Asian nations. The six of the biggest nations in this region are Malaysia, Indonesia, Thailand, Philippines, Singapore and Vietnam. All these six nations have huge potential to be an attractive market for KFC. The increasing per capita of the youth population in these nations provides a great opportunity for KFC .

COUNTRY    KFC outlets number by 2012
Malaysia        600
Indonesia       470
Thailand         530
Philippines     240
Singapore       83
Vietnam         140

The first KFC in Malaysia was opened in 1973. Between 2006 and 2010 KFC grew from some 450 to 600+ outlets. It also expanded to other southeast nations like Singapore, Brunei, etc. Today, KFC also has one of the highest KFC outlets per capita ratios. By 2011 KFC's revenue was more than $100 million. KFC today also has a strong presence in the small towns in

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