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Module Title: Operations Management
Module number: MBA7061

Submission details:
 Issued to students: 29.04.2020
 Returned to Students: One month after submission date
Learning objectives:
 Evaluate the nature, scope and extent of manufacturing and service operations
strategy;
 Critically evaluate the use of quality tools and techniques for a wide range of
organisational problems;
 Solve complex operational problems related to managing capacity and constraints
within organisations;
 Demonstrate the application of strategies, tools and techniques to improve
business operations and appraise and select appropriate methods for managing
supply bases for a variety of organisations.
2
STUDENT NAME: PROGRAMME: MBA
STUDENT NUMBER: YEAR: Spring 2020 GROUP:
Module Number: Semester:
March 2020
Module Title: Operations Management
Tutor Responsible For Marking This Assignment: Hassan AitAli
Module Leader: Hassan AitAli
Assignment Hand Out Date: 29.04.2020 Hand In Date: 20.06.2020
ASSIGNMENT TITLE: Coursework
FEEDBACK DATE(Return of assignments to students): One month after submission
SECTION A: SELF ASSESSMENT (TO BE COMPLETED BY THE STUDENT)
In relation to each of the set assessment criteria, please identify the areas in which you feel you have
strengths and those in which you need to improve. Provide evidence to support your self-assessment with
reference to the content of your assignment.
STRENGTHS AREAS FOR IMPROVEMENT
I certify that this assignment is a result of my own work and that all sources have been
acknowledged:
Signed:______________________________________________
Date___________________________
SECTION B: TUTOR FEEDBACK
(based on assignment criteria, key skills and where appropriate, reference to professional
standards)
STRENGTHS AREAS FOR IMPROVEMENT AND
TARGETS FOR FUTURE ASSIGNMENTS
MARK/GRADE AWARDED DATE: SIGNED
ASSIGNMENT MODERATED BY: DATE
MODERATOR’S COMMENTS:
3
Assignment brief:
One of the key aspects of any business (the business being considered in a
broad sense) is to provide services and/or products in line with customer
demands. Operations Management deals with the design and management of
delivery of these products and services including processes and supply chains.
The study of Operations Management involves every level i.e. strategic, tactical
and operational.
As business consultant, you have been chosen to lead a consultancy project to
support KFC UK senior management team during their 3PL switch project (from
dealing with Bidvest Logistics to DHL-QSL), and you’re required to prepare a
report (of 4000 words) upon taking this challenging assignment.
Questions / Key aspects that need to be covered within the report are:
 Map KFC both supply chains in the UK and make a comparison between the two
set-ups where you clearly report the key strengths and weaknesses of each one
of them.
 According to KFC senior management, the move to DHL and QSL was justified.
Do you research and explain the following:
a) What pushed KFC management team to give up on their historical
relationship with Bidvest logistics and get it replaced by two key logistics
service providers?
b) What are the key milestones to be achieved during the transition in order to
be fully ready for the go-live and thus, increase chances for successful
operations execution?
 Risk management is one of the key componenets in such a supply chain project.
As a consultant, you were requested to identify key risks that KFC may face in
this transition project and address a relevant mitigation plan for each and every
risk identified.
 As a business consultant, what are the key lessons learnt from this experience?
Report Structure and Layout and Marking criteria:
 Cover Page: Your Name and Student Number and the word count. 5%
 Introduction: Should explain the KFC crisis in details from tender award to the
go-live. 10%
4
 Map KFC both supply chains in the UK and make a comparison between the two
set-ups where you clearly report the key strengths and weaknesses of each one
of them. Graphs, maps, process flows or any other type of presentations are
encouraged to be used. 25%
A good response should include: a clear map of both supply chains along with
their relevant Distribution Networks across the UK and an explanation that
underlines both set-ups’ strengthes and weaknesses
 According to KFC senior management, the move to DHL and QSL was justified.
Do you research and explain the following:
a) What pushed KFC management team to give up on their historical
relationship with Bidvest logistics and get it replaced by two key logistics
service providers?
b) What are the key milestones to be achieved during the transition in order to
be fully ready for the go-live and thus, increase chances for successful
operations execution? 25%
A good response should provide a clear explanation of what are the real
reasons of making such a move, and according to students whether these
reasons are justified from operational and business perspective, the second part
of the response should include the key steps to be strictly followed in order to
ensure a smooth transition to the new 3PL and therefore avoid any negative
impact on the operations execution
 Risk management is one of the key componenets in such a supply chain project.
As a consultant, you were requested to identify key risks that KFC may face
during this transition and address a relevant mitigation plan for each and every
risk identified. 20%
A good answer should cover the following areas: a list of the key risks that
can be encountered by KFC on their way to go live, along with their impact on the
business performance. The second part of the answer should include a mitigation
plan to avoid the pointed out risks supported by a clear contingency plan.
 As a business consultant, what are the key lessons learnt from this experience?
15%
This answer should underline all the key take aways from this particular case to
help student capitalize on their learning and how to approach similar projects in a
different way in the future.
Further tips:
• Visual presentations (process flow, graphs, ..) are highly recommended along with their
respective detailed and clear comments/ They’re going to be considered in marking
system.
5

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WHAT MADE US GREAT IS STILL WHAT MAKES US GREAT

KFC Corporation, based in Louisville, Kentucky, is one of the few brands in America that can boast a rich, decades-long history of success and innovation. It all started with one cook who created a soon-to-be world-famous recipe more than 70 years ago, a list of secret herbs and spices scratched out on the back of the door to his kitchen. That cook was Colonel Harland Sanders, of course, and now KFC is the world’s most popular chicken restaurant chain, specializing in that same Original Recipe® along with Extra Crispy™ chicken, home-style sides and buttermilk biscuits. We’re at over 23,000 KFC outlets and more than 140 countries and territories around the world. And you know what? There’s still a cook in a kitchen in every last one of them, freshly preparing delicious, complete family meals at affordable prices.

 

BE YOUR OWN COLONEL

Based in Louisville, Kentucky, KFC Corporation is the franchisor of the world’s most popular chicken restaurant chain, specializing in Original Recipe®, Extra Crispy™, Kentucky Grilled Chicken® and Extra Crispy™ Tenders with home-style sides, Hot Wings™ pieces and freshly made chicken sandwiches. Famous for its Original Recipe® fried chicken, which is made with the same secret blend of 11 herbs & spices that Colonel Sanders perfected more than a half-century ago, KFC has been serving customers complete, freshly prepared family meals since Colonel Harland Sanders founded the concept in 1952.

It is estimated that, on average, more than 185 million people see a KFC commercial at least once a week—that’s more than half the U.S. population. The KFC system serves more than 12 million customers each day in more than 115 countries and territories around the world. KFC operates more than 17,000 restaurants in the United States and internationally. KFC’s parent company is Yum! Brands, Inc., the world’s largest restaurant company in terms of system restaurants, with more than 40,000 locations in more than 130 countries and territories and employing more than one million associates. Yum! is ranked number 201 on the Fortune 500 list, with revenues exceeding $13 billion in 2012.

THERE’S MORE TO US THAN GREAT FOOD

KENTUCKY FRIED CHICKEN FOUNDATION:

We believe in a world where educational opportunities are available to everyone, where we never give up on helping people achieve their dreams.

FOOD PROMISE

Throughout each day, our trained cooks freshly prepare fried chicken using the Colonel’s Secret Recipe of 11 herbs & spices. It takes more than 25 minutes to hand bread and cook our chicken before it’s ready for your bucket or boxed meal. That’s why KFC has the world’s best chicken.

  • We use 100 percent real chicken raised on U.S. farms.
  • Our chicken is USDA inspected for quality before it can be delivered to our kitchens.
  • Our chicken is free of added hormones and steroids. In fact, FDA regulations prohibit the addition of hormones in poultry in the U.S.
  • As of January 1, 2019, all chicken purchased by KFC U.S. is raised without antibiotics importantto human medicine, as defined by the World Health Organization (WHO).
  • All of our Core menu items are free of food dyes and artificial flavors (with the exception ofbeverages and third-party products). In addition, we have removed artificial colors from our Coreproducts (with the exception of caramel coloring).

 

DIVERSITY & INCLUSION

Diversity and inclusion are more than philosophies at KFC; they are part of our founding principles for “How We Work Together.” Our global culture is actively developing a workforce that is diverse in style and background, where everyone can make a difference.

THE PLANET

KFC is as committed to the planet as we are to our food and customers.This includes the development of a long-term plan to implement a more sustainable packaging strategy in our restaurants across the globe. In addition to KFC’s participation as a supporting partner with NextGen Consortium, which will help identify fiber packaging solutions that are recoverable across global infrastructures, KFC has committed to sourcing 100 percent of our fiber-based packaging from certified/or recycled sources by 2020. KFC has also committed that all consumer-facing, plastic-based packaging used in our restaurants around the globe will be recoverable or reusable by 2025.

ANIMAL WELFARE PROGRAM

Yum! Brands Inc., parent company of KFC, is committed to the humane treatment of animals.

FIGHTING HUNGER IN OUR COMMUNITIES

For 20 years, KFC restaurants have been fighting hunger in local communities by donating unsold product to those in need through the Harvest program. Since 1999, KFC has contributed more than 80 million meals across 3,500 nonprofit partners through the Harvest program.

COMMUNITY GRANTS

Through our Colonel’s Community Grants program, KFC U.S. Community Relations strives to make our community better by providing sponsorship, partnership and donation support for nonprofit organizations. We focus our outreach primarily on hunger relief efforts in and around KFC’s hometown of Louisville, KY.

 

ABOUT KFC GLOBAL

KFC is a global chicken restaurant brand with a rich, decades-long history of success and innovation

 

Our Franchisees in the UK:

OUR FRANCHISEES

At KFC we have a small number of Franchise partners who we have worked closely with since our inception in the UK in 1965. Our franchisees vary in size and location but all partners have great ambition to grow their business’ and the KFC brand.

All franchisees are part of the KFC family and collaborate closely with KFC to develop all aspects of the brand to deliver the best Finger Lickin’ Chicken to our customers. As a brand we are predominantly franchised with 95% of the UK owned and operated by franchisees. As a global brand we are moving towards 98% franchise ownership.

 

 

900 UK RESTAURANTS AND COUNTING

We have bold ambitions to have over 1,000 restaurants in the UK and Ireland by 2020. We have a number of different formats and designs that are suitable for all locations. We strive to work with local communities and businesses to bring some finger lickin’ chicken to towns and cities across the country.

 

 

 

COMMUNITY BENEFITS

Every new KFC will bring with it a range of local investments – in jobs and award-winning training, cutting-edge restaurant design plus a commitment to work alongside local partners to make a real difference in every community through our charity work and food donation scheme.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kentucky Fried Chicken ran out of … chicken

 

Last Feb 2018, even the Colonel couldn’t help KFC restaurants in the United Kingdom. Approximately 800 of the 900 KFCs in the U.K. temporarily closed because of a chicken shortage, according to CNN Money.

The supply problem was pinpointed to issues with the restaurant chain’s new distribution partner, DHL. A KFC spokesperson described the issue as “teething problems” related to the transition that happened just a week before. DHL leaders reported that many of its deliveries were incomplete or delayed because of operational issues.

Although the exact details of this disruption management plan were not outlined in the article, KFC’s explanation to its customers was quick. The restaurant chain first alerted consumers via social media with a post that read, “Some chickens have now crossed the road, the rest are waiting at the Pelican Crossing.” KFC also set up a landing page on its website to report store operations.

Then KFC purchased a full-page ad in British newspapers to apologize to its clientele. The ad featured an empty chicken bucket with the chain’s initials scrambled to read “FCK,” a nod to an expletive that, in this case, means oops or whoops, along with an apology note. The company continues to offer humor-filled updates via social media. Although 95 percent of the restaurants have reopened, some are still operating with limited menus because of the distribution disruptions.

 

 

 

Public relations expert Rupert Younger, director of the Oxford University Centre for Corporate Reputation, applauded KFC’s effort to apologize and explain the issue to the public. “It speaks to a business that understand[s] that mistakes were made and they’re prepared to have fun at their own expense,” he said. He also told CNN Money that he was impressed that KFC’s ad did not outright blame DHL for the issue. Younger expects that KFC will soon face an increased demand because of its open, authentic and humorous apology.

 

I think we can all learn a lesson from KFC here. Disruptions happen, and supply challenges can be a headache for everyone involved. But, while you’re fixing the problem and planning for the future, transparency and a bit of humor can go a long way with your customers. A positive attitude can foster positive relationships going forward”. APICS CEO Abe Eshkenazi, CSCP, CPA, CAEstated.

 

Pre-crisis insights

In October 2017, KFC awarded DHL and QSL the contract for supply and distribution of food

products, packaging and consumables to its UK restaurants. In the UK contract, DHL Supply Chain managed the physical warehouse and distribution service, while QSL handles operational purchasing, demand planning and stock management.

 

According to the BBC, KFC in Feb 2018 switched its 3PL operations from food specialist Bidvest Logistics to international heavyweight DHL – the latter being a company with operations in a number of different industries, now navigating a country-wide Supply Chain out of one distribution centre location. In short, DHL took over the contract on Valentine’s Day, and delivery failures started to happen on February 16th – an extraordinarily short time table for Supply Chain issues to get so dire that customers see disruptions.

 

While there’s some disagreement among experts about the exact cause of the failed deliveries, speculation is that many of the problems can be attributed to the fact that DHL has one distribution centre location serving the entire country – a bottleneck that wasn’t seen with the previous 3PL provider, who had six distribution centre locations.

 

Richard Wilding,a Logistics and Supply Chain professorat Cranfield University puts more insights on the subject in his following article:

 

Quote:

The KFC with no chicken story has been great fun for media and great for social media gossip – all those calls for a nationalisation of chicken distribution to ensure we’re never deprived of our fix of the nation’s favourite meat.

We enjoy a high-profile failure, and enjoy picking over the bones of who’s to blame.

But media discussion has tended to point a finger at the logistics provider DHL, and in the reliance on a single distribution centre. And on both counts, that’s wrong.

The most important thing about the story is that it’s broken the spell for consumers around how supply chains actually work. There’s no “magic” that gets just the right amount of fresh chicken from farms to outlets just when it’s needed, no fleet of KFC trucks and KFC drivers receiving orders from KFC stores. Modern supply chains are hugely complex, and critically, will involve a number of different organisations to make any system work all contributing different expertise and resources.

Using a single distribution centre in the ‘Golden Rectangle’ between Milton Keynes and Rugby on the M1/M6 is a well-established and proven means of getting products to a network of outlets anywhere in the UK. We know that a lorry that’s loaded up by 7pm in the evening will be able to deliver the needed supplies to anywhere by the morning, the Highlands of Scotland, to Northern Ireland. It works. Big name supermarkets have been working this way from warehouses in Daventry for many years.

The reason chicken didn’t get to KFC outlets was because there was a whole new system, involving a group of new partners, being put into place. Experience has shown that plugging together new software and technologies leads to teething problems, no matter how much more advanced and sophisticated the technology might be”Unquote.

 

Business impact

 

While Supply Chains gain a lot of their competitive advantage from offering lower costs and greater efficiencies, it seems that the shift in providers was a cost-cutting maneuver that’s ended up costing the company’s brand — with some analysts predicting something on the order of 20% of a hit to the company’s share prices once the disruption finishes shaking its way through the system. It underscores the importance of sound planning and reliability in Supply Chain Management in an era where companies are looking to gain an edge with margins wherever they can. It’s also great evidence for what many of us know: an approach that puts cost-cutting first can cause more problems than it solves.

KFC has described supply and distribution issues last year resulting from its contract with DHL and QSL as a “distribution crisis” after it led to a 6.8 per cent decline in same store sales growth.In its annual report for the year-ending 23 December 2018, filed to Companies House, Kentucky Fried Chicken (Great Britain) said: “2018 started with a strong same store sales growth performance in the weeks leading up to the distribution crisis.

“Closure of stores and operating on a limited menu during the height of the distribution crisis resulted in an overall sales decline for the year with the same store sales growth -6.8 per cent (2017: 3.8 per cent). The company steadily recovered transactions through the remainder of the year returning to positive sales growth by year end,” it added.

 

 

 

 

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