1.

Introduction:

1.1 Overview of KFC:

KFC Corporation, based in Louisville, Kentucky, is the world’s most popular chicken restaurant.
Every day, nearly eight million customers are served around the world. Kentucky fried chicken is
one of the largest fast food concepts of today; it is present in various countries around the world
and it has been able to establish a renowned international reputation in multiple continents.
Starting in the United States in the 1939, it has grown to become a true multi domestic company.
KFC has focused on foreign markets since 1960’s and has found a new challenge today in
conquering Asia. Their strength is their secret recipe, recognition and reputation, traditional
employee loyalty, high quality raw materials and pure and hygiene product. Their mission is to
maximize profitability, improve shareholder value and deliver sustainability growth year after
year.

1.2 KFC’s Mission

KFC’s mission statement is,

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“To be the leader in western style quick service restaurants through friendly service, good
quality food and clean atmosphere”

KFC Pakistan has contributed in providing Halal and Hygienic products to its customers and
managed this through proper training of its human resources. It has created competitive level for
other thus improving the overall industry standards.

1. KFC In Pakistan:
Food, fun & Festivity, this is what KFC is all leading the market since its inception;
KFC provides the ultimate chicken meals for a chicken loving nation. Be it colonel sanders
secret original recipe chicken or the hot & spicy version, every bite brings a yum on our face. At
KFC they say “​we do chicken right”. ​Apart from fulfilling their commitment to serving
delicious, fresh and hygienic food and at the same time providing their customer with the
ultimate entertainment; KFC also plays in the economics development of our country. Presently
KFC has provided to over 1200 Pakistanis, which adds up to 6000 individuals directly dependent
in KFC Pakistan. The Government of Pakistan receives over Rs.10 million per month from KFC
Pakistan as direct taxes. 95% of all food and packing material used in KFC Pakistan is procured
locally, which sums up to a purchase of over Rs.35 million per month. Each new outlet
developed by KFC Pakistan costs approximately Rs.40 million, which is a huge amount for our
construction industry. KFC and Pakistan are growing together. ​Presently KFC is branched out in
eighteen major cities of Pakistan (Karachi, Lahore, Gujranwala, Sukkur & Murree) with more
than 60 outlets nationwide.

2. Product line of KFC:

KFC Pakistan provides 100% Halal and Hygienic products to its customers. It offers a variety of
finger-licking products, some of which are as follows:

1. Crispy Fried Chicken

2. Zinger
3. Twister
4. Hotshots

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 5. Chicken Burger
6. Hot wings
7. Rice n Spice
8. Fish Zinger
9. Nuggets
10. French Fries

3. Supply Chain 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 cans 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.

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 4.1 Warehousing:
Pakistan is divided into two areas, namely North and South. The area below Multan falls under
the southern region whereas, Multan and the area above it falls under North region. Each region
hence has its own warehouse. The North region has its warehouse in Lahore. The south region
has its warehouse in Karachi.

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 4. Inventory Management of KFC:
Inventory of manufacturing companies is done by three stages:

1. Raw materials
2. Work in process
3. Finished goods

5.1 Raw Materials:​ (Procurement of Raw Materials)

Monthly budgets are made to plan purchasing activities. These comprise of dividing the allocated
budget into the inventory policies already defined at the warehouse from past data and
experience.

They procure these raw materials:

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 1. Chicken
2. Sauces
3. Spices and Herbs
4. Bread and Bun
5. Fish
6. French Fries
7. Other Miscellaneous items
● Chicken

Chicken is supplied by K&N’s in customized cut, packed and labeled packets directly to the
warehouses in each region. Labeling is necessary for inventory management and efficiency. KFC
gives a lead time to K&N’s of one week for them to deliver their order. The chicken arrives in
special freezer fitted van which keeps the chicken frozen while it is being transported. The
different types of pieces ordered by the warehouse are in baskets of 5 square feet and having a
height of 8 inches. The vehicles used for this are small trucks which have a maximum loading
capacity of five tons.

● Sauces:

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Unilever (Yum) provides all the sauces needed by KFC such as Ketchup, Chilly Sauce,
Mayonnaise, Tartar Sauce etc. Yum is a brand especially made for KFC and cannot be sold in
the market to the customers. These are delivered directly to each warehouse by Unilever
themselves. The lead time for this operation is about two weeks.

● Spices and Herbs:

These are imported directly from Dubai and Singapore. The lead time for these exceeds two
months as these are not untreated items and it takes a lot of time for transportation. All imports
are done through sea in dedicated 20” containers for KFC.

● Bread and Buns:

Since the last 4 or 5 years KFC has been producing their own buns in their own bakery. Their
plant is located at Sohrab goth, Karachi.

● Fish

Internationally, fish is bought from Thailand. But in Pakistan, fish is bought from local vendors
as it is a low selling item.

● French Fries

These are imported directly from America. They are also imported to Pakistan by Yum Company
through china where they also come from America.

● Other Miscellaneous items:

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 5.2 Work In Process:
● 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. Marinating 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 plastic bags with
stickers on them showing the description of the item inside it and the expiry for it. These bags
are then put into a separate cold storage room, again in an organized form.

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 ● Sauces

Inventory for Sauces are stored for around 25 to 30 days depending on the forecasted sales and the expiry
dates for each.

● Spices and Herbs

Inventory for these are stored according to forecasted sales and the three months lead time given by the
procurement department.

● Bread and Buns

Buns are provided directly to the branches at KFC from the factory after every 4 days.

There is a weekly audit of every single inventory item at the warehouse to match it with the numbers in
the system as deviations are high due to high replenishment cycles.

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 5.3 Finished Goods:
After purchasing of raw materials and preparation & packaging of items the products completely
done in many different items like:

Burgers, Rice, Chicken pieces, nuggets, and so many variations in these finished goods too.

5. Distribution:
Distribution is done on need basis. Karachi is divided into 3 zones.

Zone 1. Gulshan e Iqbal and Gulistan re Jauhar

Zone 2. Clifton and Defense

Zone 3. Bahadurabad, Tariq Road and Sindhi Muslim Society

Daily 5 to 6 vehicles are dispatched from the south warehouse for the interior Sindh (15 days
inventory) and Zonal distribution in Karachi (1 week inventory for normal-storage and 2 days
inventory for cold-storage goods).

6. Conclusion:
Kentucky fried chicken (KFC) is a leading manufacturing company is the world since ages and it
is one of the world famous fast food company popular for chicken items. Burgers, fries, rice,
chicken nuggets, chicken pieces etc are KFC’s main items, in which they had bring so many
innovations by launching different deals and combos to attract customers and increase sales.
Their promise is to provide hygienic food to customers because their health is more important for
them. They procure raw materials from well-known firms to decrease the doubt of unhygienic
items. In short they have worked hard from starting to reach at this position. This is not only
famous in abroad but in Pakistan too. It has many distribution centers in karachi as well as other
cities of Pakistan. Supply Chain of KFC is the best example on can easily understand.

References

https://www.scribd.com/document/177502142/76119764-KFC-Supply-Chain

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https://www.kfcpakistan.com/collections/drinks

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