KFC-lovers everywhere were left devastated last week when their favourite fast-food joint announced their closure after a supply-chain fiasco caused them to run out of chicken.

Issues in DHL’s delivery of chicken on February 20th, 2018 caused hundreds of outlets to close as they were unable to provide food to customers. Stores are now beginning to open once again, with an estimated 80% of branches now re-opened, but many are still running on limited menus. Estimations put the costs of closures at around £1million per day.

So, what caused the issues in the supply chain? KFC has accredited the blame to “teething problems” within the arrangement, yet a week into the disaster and either party cannot pinpoint the root cause of the issue. DHL has publicly apologised in a formal statement.

Of course, this wasn’t the best thing for DHL, who only just won the account in November, taking it from logistics provider Bidvest Group Ltd. Upon securing the “ground-breaking” partnership, DHL stated it was “committed to setting a new industry [service] benchmark”, something which clearly hasn’t materialised. This may provide both Bidvest and the Trade Union GMB with a chance to tell KFC “I told you so” as KFC review alternative suppliers. KFC has kept quiet about whether they will return the contract to Bidvest, who had successfully worked with the fast-food giant for eight years.

So, why did KFC move away from Bidvest in the first place? According to reports, KFC chose DHL for its expertise in other industries, known for delivering toys and books to the homes of online shoppers; yet, other media sources indicate that their lower costs in comparison to food industry experts Bidvest is what secured DHL the contract.

However, is it justified for the media to insinuate that cutting costs means a poorer service? In some instances, this may be the case, but if the failure is indeed 100% down to DHL, then it must be down to their lack of logistical planning.

What companies should be aware of though is the implications bad service from their suppliers can have on their own brand and customer perception.

Instances like this go to prove the importance of reliable suppliers.

At ERA, we conduct many projects like this one with the aim of lowering costs but without adversely affecting supply or service. For those looking to change their contracts to alternative suppliers, proper preparation and a staged implementation plan is essential, particularly if you are changing a critical supplier. We are on tenterhooks to see how this crisis will unfold for both KFC and DHL, what is evident is that DHL has taken a hard knock to their reputation.

To discuss and review your distribution costs and suppliers with one of the leading procurement companies, please get in touch with our specialist Charles Reid on c.reid@erauk.net