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PROJECT OPERATIONS MANAGEMENT PROJECT HEAD: SIR FARRUKH SUBMITTED BY: SHAZZA ZUBAIR BBA-05 ROLL NO#09
PROJECT
OPERATIONS MANAGEMENT
PROJECT HEAD: SIR FARRUKH
SUBMITTED BY: SHAZZA ZUBAIR
BBA-05
ROLL NO#09
ACKNOWLEDGEMENT
This project is a pure effort , I thank ALLAH ALMIGHTY that he gave me a strength and ability to perform my duties in a proper manner. Also, this acknowledgement would remain in complete without thanking the staff of KFC Islamabad and Peshawar for their whole-hearted and kind co-operation. I dedicate this effort to my extremely dedicating teacher SIR FARRUKH
TABLE OF CONTENTS
INTRODUCTION
i. Historyii. Strategy
iii. Target marketiv. Products
CURRENT OPERATIONS
i. Inventory managementii. Supply chain management
iii. Just in timeiv. Operational management
Summary
Conclusion
Recommendations
INTRODUCTION
COMPANY PROFILE
KFC Corporation
based in Louisville, Kentucky, is the world's most popular chicken restaurant chain, specializing in Original Recipe, Extra Crispy, Kentucky Grilled Chicken. Every day, more than 12 million customers are served at KFC restaurants in 109 countries and territories around the world. KFC operates more than 5,200 restaurants in the United States and more than 15,000 units around the world. It is the world’s largest and most well known chicken restaurant, with chains in more then 10 thousand locations and worldwide in 80 countries. KFC and its franchised employees are more than 200 thousand, all over the world. KFC is world famous for its Original Recipe fried chicken -- made with the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected more than a half-century ago. Customers around the globe also enjoy more than 300 other products -- from Kentucky Grilled Chicken in the United States to a salmon sandwich in Japan
PARENT COMPANY
CUPOLA PAKISTAN
Cupola is a Dubai based multinational company and has been at the forefront of development in Food & Retail sector for over a decade. Its flagship brand KFC has amassed itself as the dominant concept in the Quick Service Restaurant (QSR) business in the country
KFC 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”
KFC STRATEGY It’s primary objective is to take advantage of the potential growth in other countries. To establish a strong position and to develop their image .key success factors are
Continuing cost saving through R&D Use of new technology and innovation to work efficiently
Their key factors will lower the cost and increase profit industry.
TARGET MARKET KFC targets “HUNGER” ,and we know there are no compromises when it comes to “HUNGER”
PRODUCTS 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:
Kentucky fried chicken Zinger burger Krushers ·GameBox Twister Boxmaster Chicken Bucket Hot wings Fries Corn on the cob Zing Kong Snacker(chicken & veggie) Veggie Feast Soft Drink Coleslaw Chicken Thali Veg Finger Snack Box Sundae Soft Twirl Brownie Sundae
ORGANIZATINAL STRUCTURE
CURRENT OPERATIONS
KFC SUPPLY CHAIN
SUPPLIERS IN PAKISTAN There are two categories of suppliers.the DRY FOOD SUPPLY and the FROZEN FOOD SUPPLY. For a dry food supply like a ‘burger –bun’ they have established their own warehouses .where as for frozen food ‘chicken’ they have agreement with K &N chicken for suppling chicken and ‘fish’ is supplied by Thailand and spices are supplied by dubai to all over restaurants in Pakistan.
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WAREHOUSE
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
.PROCUREMENT
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. FIFO method is used for all items for the inventory at the warehouses.
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. TheSupply Chain Management 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 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 herbsThese are imported directly from Dubai and Singapore. The lead time for these exceeds two months as these are not perishable items and it takes a lot of time for transportation. All imports are done through sea in dedicated 20” containers for KFC.
Packing MaterialThis is purchased from local parties namely Afeef Packaging, AAA and Gold Packages. Due to frequent re-designing of boxes and deals offered by KFC, the inventory of these is kept at a minimum.
Bread and Buns Supply Chain Management 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 Information was not provided. 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.
STORAGE AND INVENTORYMANAGEMENT ChickenInventory 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. Marination 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
Supply Chain Management 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.
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.
ZONAL DISTRIBUTION Distribution is done on need basis. The cities are divided into zones and the routes taken are accordingly. Karachi is divided into 3 zones:
Zone 1: Gulshan-e-Iqbal and Gulistan-e-Johar Zone 2: Clifton and DefenceZone 3: Bahadurabad, Tariq Road and Sindhi Muslim SocietyDaily 5 to 6 vehicles are dispatched from the south warehouse for the interior Sindh (15 daysinventory) and Zonal distribution in Karachi (1 week inventory for normal-storage and 2 day inventory for cold-storage goods)
Vehicles
Company: Hyundai Shehzore Quantity: 4-5Company Hino Dutro Truck Quantity: 4-5Gross vehicle weight 8.90 tonsMaximum capacity:
4 tons (reduced from 5 tons because of modifications
QUALITY ASSURANCE
here are multiple ways by which KFC assures the quality of its products. Some of the ones which were disclosed to us were:
• Surprise visits to branches
Planned visits to branches
Rigorous raw material inspection
Customer feedback
SOFTWARE
MRP/ERPThe company uses Supply Chain Management (SCM) Software to manage its inventory acrossits whole supply chain. This software has been developed by Siddhat Haider. There is a weekly physical count of the inventory to tally it with the figures in the software
JUST IN TIME SYSTEM In controlling inventory and most importantly quality of the chicken, Kentucky Fried Chicken uses a variation of Just In Time (JIT) system, by receiving chicken two to three times a week. KFC starts to operate when a delivery truck arrives at the back door. The truck usually contains chicken, vegetables, and other needed materials to successfully operate a KFC restaurant. There are many steps involved in the successful unloading of a delivery truck. Frozen foods are taken off the truck first and immediately transferred to the freezer. This includes vegetables, deserts, and other food products. Next to be unloaded is the refrigerated goods. This is the part of the process where the world famous chicken is unloaded. Finally, the dry good and condiments are unloaded and stored in their appropriate Place.
The chicken is received with a kill date. The kill date represents the date the chicken was actually butchered. This kill date is also used as a measure of the freshness for the chicken. When taking the chicken off the truck it is placed on the “chicken-side” of the isle next to the refrigerator to prevent warming until it can be placed inside. Once the truck is unloaded, the refrigeration unit inside the truck must be inspected for satisfactory working order. For inventory accuracy all pieces aboard the truck are counted and checked against the bill of lading. Any shortages or surpluses are noted and called in to franchise headquarters. The cases in which the chicken arrives in must be damage free. This includes the box being sealed as well as being structurally stable. Any damages must be noted and relayed to the shipping agency. The kill dates must be checked on each individual chicken. No chicken will be accepted if it is received six days past the kill date. Printed with the kill date on each chicken is a label stating “Inspected for Wholesomeness by the U.S. Department of Agriculture” which must be attached or the chicken must be rejected. Acceptance sampling is done to ensure quality of the chicken during each shipment. At random at least five cases are selected, based on quantity of order. The middle bag of chicken is always used in each case for sampling purposes. To check for quality, a thermometer is used to check the temperature of the chicken by inserting it into the thickest part along the bone. Acceptable temperature is between twenty-eight and thirty-six degrees Fahrenheit. If one chicken fails to meet the quality inspection then the entire lot must be rejected. Upon rejecting a lot the market manager and or the franchise supervisor must be notified immediately. This is necessary to arrange for an immediate shipment to be scheduled. This is important due to the inventory control system in place to ensure quality to every customer. Once the sample testing is complete the chicken can be placed in the refrigerator. First In First Out (FIFO) Method is used in placing the chicken in order in the refrigerator. The earliest kill date is located at the front of the cooler such that it is the first one to be used when needed. This guarantees quality and freshness to each customer.
Conclusion
After analyzing KFC's operation and procedures it appears to be an effective and efficiently ran
restaurant. Customer relations are important assets to KFC, which builds repeat business and
reinforces their reputation as the leader in the chicken industry. As far as recommendations we
feel KFC needs to persevere with its already implemented procedures and continue to listen to
customer needs to ensure their success as an industry leader.
Recommendations
Even though it has defined the target market but stil need to redefine it KFC has to improve its R &D KFC has to look ahead for it’s health conscious customers They only focus high income level
