Fowl play

From the June 2018 issue.

At the end of February, a surprise shortage of fried chicken in the UK highlighted just how closely commercial road transport is tied to our everyday lives – and how quickly a small mistake can escalate.

Why didn’t the chicken cross the road? “Because of a…failure in the chicken restaurant’s supply chain and lack of contingency planning, that’s why.”

Wired journalist, Richard Priday, came straight to the point when reporting on a bizarre piece of news at the end of February that will likely remain in the transport industry’s collective memory for a long time – a surprise shortage of fresh chicken that forced almost two-thirds of all UK branches of KFC to temporarily cease operation. “To put it simply”, KFC tweeted at the time, “we’ve got the chicken, we’ve got the restaurants, but we are having issues getting them together.”

As news about the historic fast food fail spread across social media under the hashtag #shambles, Priday wasted no time finding out what would cause a chicken restaurant to run out of its most crucial ingredient – and quickly identified the culprit as German logistics company, DHL. The subsidy of Deutsche Post had only just signed a new supply chain deal with KFC, promising to set “a new benchmark” for service to the global fast food outlet by consolidating all behind-the-scenes operations at a single warehouse in Rugby, some 50km southeast of Birmingham. Rival Bidvest Logistics had previously dedicated six warehouses to the same job.

What likely stopped DHL from delivering on the promise was a “perfect storm” of several traffic incidents occurring at the same time in the same area, as Priday uncovered. “At around 1:40 (am, ed.) on Wednesday, 14 February, a collision involving seven vehicles took place between junctions two and three of the M6 (the longest motorway in the United Kingdom, ed.),” he found. “Police closed off the area between the two junctions to investigate. Shortly afterwards, a pair of lorries collided near junction one.

“[All] three junctions are in the vicinity of Rugby, where DHL’s warehouse is located. With [trucks] getting stuck in the traffic as soon as they left the depot, and no other locations to send deliveries from, the delays that would lead to the KFC chicken shortage began here.”

By lunchtime on Monday, four days after the M6 incident, more than 560 of KFC’s 900 UK restaurants were shut due to “incomplete or delayed” chicken deliveries – forcing DHL to issue a rare public apology. “Whilst we are not the only party responsible for the supply chain to KFC, we do apologise for the inconvenience and disappointment caused to KFC and their customers by this incident,” the company reacted to a flood of questions about the decision to opt for a single, new and allegedly untested distribution centre in a location vulnerable to traffic issues. “[Was] DHL wrong for using just one depot?” Priday asked.

Logistics experts around the globe were quick to come to DHL’s aid, pointing out that many British retail organisations have made the switch to a centralised system in the Rugby region. They also shifted part of the blame to KFC itself – not least for being naïve enough to underestimate the scale of a full-scale logistics switch.

Tony Harris, a supply management specialist at procurement business, SAP Ariba, told Financial Times journalist, Cat Rutter Pooley, that it was “shocking” to see a company like KFC ending up with a chicken shortage given the highly detailed, minute-by-minute logistics information that should have been available from current-day technology. “With that level of insight, this should just not happen, period.”

Analysts also agreed that a key variable that contributed to the crisis is KFC’s –honourable – commitment to only use fresh, not frozen, chicken from British and Irish farms on certain product lines. “Frozen food is one thing, but chilled food is something else. You can’t afford to make any mistakes. It’s easy to move a can of beans; it’s much more difficult to move chicken,” Rutter Pooley’s research found.

With KFC allegedly imposing even more rigorous conditions on transport businesses than those required by UK law, the company’s supply chain is widely considered one of the most challenging in the business, the Financial Times journalist continued – making it inherently more susceptible to disruption.

With that in mind, DHL and KFC’s bizarre chicken faux pas was ultimately a team effort, according to Samir Dani, Professor of Logistics and Supply Chain Management at the University of Huddersfield’s Business School. “I think in this scenario you cannot see any contingency planning in place,” he shared with multiple news outlets in the wake of the breakdown. “They [reacted] to the situation as a crisis rather than saying that they had thought about this scenario and were going to go back to stability very quickly. So I think it’s shown that they were not resilient enough.”

Priday’s research for Wired came to a similar conclusion after consulting Richard Wilding, Professor of Supply Chain Management at Cranfield School of Management. “Disruption is fairly common in supply chains, [but] normally these aren’t noticeable because only a small number of locations or a certain item would be affected. In KFC’s case however, with its specialised menu and single warehouse, the problem was amplified,” the expert explained.

To Wilding, the “key thing” to take away from the situation is therefore not necessarily the failure of a single organisation, but the realisation that competition is no longer between individual businesses, but between the supply chains they are part of. “Using a single location [was] not the lone cause of this particular problem at all,” he told Priday. “What makes up those supply chains is lots of different companies, lots of different relationships, all trying to manage processes, infrastructure, equipment, information systems and its staff, to make all of that perform in a synchronised way, so that the customer gets the chicken they want.”

Fast Fact
In November 2017, KFC UK – known as Kentucky Fried Chicken until 1991 and now owned by American fast food company, Yum Brands – ended a long-standing relationship with delivery company Bidvest and entered into a three-way partnership with DHL and previous partner, Quick Service Logistics (QSL), which has supplied the fried-chicken chain in Europe since 2011. At the time, DHL described the new contract as a “ground-breaking” move that would see the German company “re-write the rule book” and “set a new benchmark for delivering fresh products to KFC in a sustainable way”.

Fast Fact
KFC customers reacted with anger and frustration on social media to the company’s supply chain breakdown. “As if KFC have run out of chicken! One job! They have one job!” one tweet read. “KFC are left with hundreds of restaurants closed while DHL try and run the whole operation out of one distribution centre, where conditions are an utter shambles,” commented Mick Rix, National Officer for UK trade union GMB.

Fast Fact
According to Financial Times journalist, Cat Rutter Pooley, KFC’s 2018 chicken shortage revealed a much more complex issue facing the UK as whole. Even when logistics systems do work flawlessly, she mused, shortages elsewhere in Europe could directly impact a country that imports an estimated 90 per cent of its fruit and 50 per cent of its vegetables. The “great chicken run” should therefore resonate especially with UK and Irish companies concerned about the potential impact of border checks and customs delays after Brexit, she said.

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