The international fast food chain KFC has recently been involved in a logistical and PR nightmare following a change in its Supply Chain provider.
Let us not dwell on the actors involved in this sorry saga but instead look behind the scenes of the issue and how it was dealt with.
The company had been using a specialist food distribution company but, following a reprocurement exercise, opted instead to use another supply chain solution putatively based on cost.
The result as many of you are aware was the mass closure of hundreds of KFC stores throughout the UK as they ran out of chicken due to issues with the distribution chain.
After an initial period of silence, the company then took out full page adverts in national newspapers to issue the amusing self-deprecating apology posted above.
They learned the hard way that ditching a specialist supplier based on cost has both financial and reputational consequences.
What is interesting though is that at no point did they seek to throw their new partner under the bus. Almost certainly the contract will contain penalty clauses to mitigate the financial impact but they at no stage made any negative public comment about their new partner.
They owned the problem in its entirety.
They also avoided the inclination to comment early without appropriate detail the minute things started going wrong, instead undertaking introspective review to rectify the problem.
In this regard they deserve credit and their humorous response is likely to like on longer than the memory of the angst of no chicken dinners.
The whole escapade reminded me of an incident many moons ago.
I led a Consultant Radiologist delivered community ultrasound service for a number of years.
It provided out of hours (evening and weekend) access to Radiologist Ultrasound Services within the community.
The service was well-received: wait times had reduced from 6 weeks to 6 days and reports were available the next morning day to the referring GP.
After a few years I was asked by the CCG to write the specification for the re-tendering exercise on the basis that ours was a model that worked and our service would in all likelihood be retained.
Instead, at interview stage the only aspect the CCG appeared interested in were the relative fee proposals of the shortlisted candidates; a firm submitted a highly attractive-seeming bid which consisted of impossible to deliver promises, and at the lowest fee proposal – and were thus selected.
When, not surprisingly, they failed to deliver on these promises and breached KPM after KPM, the CCG asked them to ask us to bail them out - suggesting a sub-tending of services under their contract (at our original fee structure). The pervading opinion allowed to flourish in the region was that the supplier had failed to adequately implement the required solution, and it was deemed important to ensure any remedial solution continued under the company banner.
So again, we have a working solution that was derailed by a chase to the bottom.
Reputation and efficiency sacrificed at the altar of parsimoniousness.
The difference however was failing to take responsibility for the situation even to the extent of seeking to mask the remedial measures. The supplier was allowed to carry all the blame and was allowed suffer reputational damage.
I’m sure you can supply myriad similar anecdotes.
So what lessons can we learn from the way KFC managed this problem?
- Do not ignore the benefits of specialist suppliers and base solutions purely on price
- Ensure that the proposals in any bid are realistic and deliverable
- Have a considered review of any adverse situation before making public comments
- Own the problem – do not sacrifice the provider to protect your own role in the situation