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KFC - FACILITY LOCATION AND LAYOUT

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FACILITY LOCATION

FACILITY LOCATIONKFC & Facility Location:

KFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken is a chain of fast food restaurants based in Louisville, Kentucky. KFC is the third largest fast food chain with over 12,200 outlets in 99 countries. KFC has maintained its title, for the last 60 years, of being the chicken Experts. Opening the first KFC outlet in Gulshan-e- Iqbal in 1997. KFC wore the title of being the market leader in its industry. Serving delicious and hygienic food in a relaxing environment made KFC everyone’s favorite. Since then, KFC has been constantly introducing new products and opening new restaurants for its customers.

Presently KFC is branched out in eighteen major cities of Pakistan (Karachi, Lahore, Gujranwala, Sukkur & Muree) with more than 60 outlets nation-wide. The outlets comprise of franchises, company owned and affiliated. They used the proper method for facility location and layout analysis of new or existing outlets. Facility location involves the evaluation of various sites for a new facility.

FACILITY LOCATION

Existing Locations of KFC In Lahore:

• Barket Market• Defence• Cavalry Ground• Shadman• Mall Road• Thokar Niaz Baig• M.M. Alam Road• Y-Block• GT Road

FACILITY LOCATION

Factors That KFC Management Keep in Mind during Facility Location Analysis:

There are several factors that influence the Facility Location Decision.

• Proximity to Customers,• Business Climate,• Total Costs,• Infrastructure,• Quality of Labor,• Host Community, Etc.

FACILITY LOCATION

Facility Location Techniques:There are many analytical techniques that can be used in facility location decision. Some of these are:

1) Factor Rating2) Cost-Profit-Volume analysis3) Center of Gravity Method, and4) Transportation and Simulation Models.

But first two methods “Factor Rating” & “Cost Profit Volume Analysis” are more simple & suitable for KFC Because of easily understandable than “Center of Gravity” & “Simulation Method”.

FACILITY LOCATION

Method of Factor Rating:In factor rating method, first we must identify the Most

Important Factors in evaluating alternative sites for the new facility. Then we should assign a weight between 0 and 100 to each of these factors. Each alternative location will then be rated based on these factor weights. The most weighted alternative is selected as the best alternative.

Example:Suppose KFC is considering three alternative sites for its

new facility locations.

Site A. Moon MarketSite B. ShadraSite C. Chock Chu Burgi

FACILITY LOCATIONMethod of Factor Rating(Cont…)

After evaluating the firm’s Needs, the Managers have narrowed the list of Important Selection Criteria down into three major Factors.

- Availability of skilled labor- Availability of suitable Infrastructure, and-Proximity of target customers.

Weights reflecting the relative importance of each factor have been assigned as follows:

FACILITY LOCATIONMethod of Factor Rating(Cont…)

ow we will multiply each score by its corresponding factor weight:Weighted scores are calculated as: (Site Score) x (Factor Weight).

FACILITY LOCATIONMethod of Factor Rating(Cont…)

From these results, the largest total weight is for Site A. It appears to be the best location.What happens if we change the factor weights. Lets use the following factor weights:Skilled labor: 0.45; Raw Materials: 0.40; and Market: 0.15Then the following results are obtained:

In this case, Site “C” appears to be the best choice with largest weight score.Therefore, factor rating method is very sensitive to the weights assigned to each factor.

FACILITY LOCATIONCost-Profit-Volume Analysis:

When the fixed and variable costs for each site differ, Cost-profit-volume analysis can be used to identify the location with the lowest cost.Example:

Suppose KFC is considering three alternative sites for its new production facility.

Site A. Moon MarketSite B. ShadraSite C. Chock Chu Burgi

The Annual Production Cost associated with each alternative is a linear function of the production volume. That is:Total Production Cost = (Fixed Cost) + (variable unit cost) x (annual production volume)

FACILITY LOCATIONCost-Profit-Volume Analysis (Cont…):

Assume that the expected annual production volume is 250.000 units. And further assume that:

(x: production volume = 250)For Site A: Prod. Cost = 10,000 + 250 xFor Site B: Prod. Cost = 25,000 + 150 xFor Site C: Prod. Cost = 60,000 + 50 xBased on these information, Which site has the lowest cost?At a production volume of 250.000 units, site B has the lowest cost, because

For Site A: Prod. Cost = 10,000 + 250 (250) = 72,500For Site B: Prod. Cost = 25,000 + 150 (250) = 62,500For Site C: Prod. Cost = 60,000 + 50 (250) = 72,500

FACILITY LOCATIONCost-Profit-Volume Analysis (Cont…):

This graphic shows that annual production cost changes with different production volumes.- If the expected annual production volume is below 150 units, then choose site A.- If the expected annual production volume is between 150 and 350 units, then choose site B.- If the expected annual production volume is over 350 units, then choose site C.

FACILITY LAYOUTFacility layout:

Facility Layout means Planning And Arrangement of all

• Machines, • Utilities, • Employee workstations, • Customer service areas, • Material storage areas, • Aisles, • Restrooms, • Lunchrooms, • Internal walls, • Offices, and • Computer rooms,

for the smooth flow patterns of materials and people around, into, and within Buildings Infrastructure services.

FACILITY LAYOUT

Factors that influence layout:

- Volume, weight of items to be produced. - Nature of the service to be provided. - Cost of the building to house the operation. - The fragility of the product or component

KFC Facility Layout:

Internal & External layout of KFC outlet is attractive and charming all over the world. Ideal color schemes, pleasant lighting outlets, comfortable sitting arrangement, fully trained employees and their proper work division, State of the art interior beautification, speedy & appropriate cooking process, special club/block for kids, etc. are the chief characteristic of the KFC layout.

FACILITY LAYOUT

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FACILITY LAYOUTKFC Process Layout Map:

KFC fallow the standardized process for production. The facility layout process schematic diagram are presented blow.

KFC Old Process Layout:

KFC Modern (New) Process Layout:

Raw Materia

l

Raw Materia

l CookCook AssembleAssemble

Finished

Goods

Finished

Goods

Customer Place OrderCustomer

Place Order

DeliverDeliver

Raw Material

Raw Material CookCook AssembleAssembleW. I. P.W. I. P.

Customer Place OrderCustomer

Place Order

DeliverDeliver

FACILITY LAYOUTAdvantage of KFC’s Good Layout:

• Reduces bottlenecks in moving people or material.• Minimizes materials-handling costs.• Reduces hazards to personnel.• Utilizes labor efficiently.• Increases morale.• Utilizes available space effectively and efficiently.• Provides flexibility.• Provides ease of supervision.• Facilitates coordination and face-to-face communication where appropriate.

FACILITY LAYOUTConclusion And Recommendation:

KFC can progress rapidly by identifying new facility locations and increasing existing target market and facility locations by launching new competitive product chain at minimum cost. KFC’s Unity Drive had a simple but essential message and objective. To bring together the people of Pakistan by promoting in the words of KFC founder, “Unity, Faith & Discipline”. In a time of uncertainty and fear, KFC rose to the occasion and built a platform of solidarity and togetherness for the people of Pakistan. The campaign proved to be a successful initiative in not just providing hope for our patrons, but also allowed KFC Pakistan to take an effective step forward during tough times and entrust other responsive companies to act in a similar manner.