Purchasing and Supply Management Essay

1.0 IntroductionKentucky deep-fried Chicken fellowship (KFC) was the homos largerst chicken restaurant come up and third largest dissipated-food chain. KFC held invariablyywhere 55 percent of the U.S market in terms of sales and operated oer 10,200 restaurants worldwide in 1998. KFC start-off opened in Australia 1968. Present day KFC now serves oer 2million customers a week. With oer 600 stores Australia wide. This report will aim to analyse and go over KFCs acquire and slim down management activities. In particular(a) the legal, honorable, sustainability and social right issues in purchasing and bestow management, as well as standr selection, evaluation and contracting orders. This report will provide an in-depth analysis of the purchasing methods and hope to show areas open for continuous improvement through with(predicate) changes in supply management and purchasing initiatives. 1.1 Background of KFCKentucky deep-fried Chicken Corporation (KFC) was the worlds largest chicken restaurant chain and third largest fast-food chain. KFC held over 55 percent of the U.S market in terms of sales and operated over 10,200 restaurants worldwide in 1998. http//www.scribd.com/doc/53764758/Supply-Chain-Management-of-KFC. Since opening in Australia KFC has become always ontogenyly popular throughout the years, Though in recent epochs it has seen a gradual downf all(prenominal) which many believe is ascribable to the sudden holler in healthy food preferences. Due to this boom KFC has seen numbers fly and other fast food outlets like subway lead increased. Since at that placefore KFC has implemented a few pro environment social responsibilities initiatives such(prenominal) as Ditching the palm oil contract and opening its first ever energy efficient restaurant. When it comes to purchasing methods and supply management however there is always room for continuous improvement which is what this report aims to analyse. 1.1.1 Objectives & GoalsOne of the major objectives of KFC that they run their campaign in such a way that KFC creates and take in in the minds of customers that customers want to go in KFC and will be the first election for the customers. KFC wants to become the first choice beca employ its they become the first choice it is excellent for the health of the KFC business because if business is expands therefore there is pass on scope and the opportunity to get the maximum profit and utility. The Corporation has a vision KFCs vision is to bring people of all ages, races and backgrounds together to enjoy Soul Food proper food at middlingish prices at heart bright and fun interiors. KFC is designed to be perceived as a fun and inclusive brand (KFC, 2011). 2. Purchasing and Supply chain managementIn Recent years with a ever growing shift towards more environmental approach for multi national companies especially fast food giants, KFC has come under much scrutiny with such happenings as the Ind angiotensin- converting enzymesian chicken antibiotics incidental 2013, Green peace packaging incident when claims were do KFC packaging is coming from Indonesian forest in 2012 and the turn roam chicken incident 2011 where KFC quickly removed its free revolve chicken advertising after an investigation was launched into its providers.http//www.smh.com.au/business/media-and-marketing/kfc-pulls-free-roam-ads-after-watchdog-bites-chicken-suppliers-20110913-1k7tj.html. All these instances sparking world news articles and putting immense pressure on brand depict and reputation in the orbiculate market, this all comes down to the purchasing and supply management.At the moment KFC purchasing and supply management are political campaign at a low risk and avoiding any anticipated supply bottlenecks and building long term supplier relations. Though in nowadayss extremely competitive and lucrative market this is no weeklong enough, one selection is to reposition the purchasing supply management i nwardly the organisation to make a spherically acceptable change towards a more environmentally friendly purchasing and supply methods. This could be achieved by shifting towards a more hybrid structure with better global sourcing councils or corporate purchasing and steering committees and by shared resources in the midst of distributors and suppliers and possible implementation of fixed price incentives contracting. 2.1 Ethical standardKentucky Fried Chicken is very keen virtually ethical standards both within and without the club as asserted by their telephoner representatives. For instance the company is strict about is vendor engagements. Before a supplier potty secure a contract with Kentucky Fried Chicken, they have to comply to connatural ethical standards as KFC. This means that the supplier must not give under age labour to manufacturer their commodities, they must pay fair wages and must also avoid placing harmful chemicals in their commodities. These concepts ha ve governed the way KFC chooses other business partners too they include contractors and manufacturers. One option here is to implement contractual renewals and to review the contract specifications annually with regards to global market and ever-changing ethical ideologies. This could see that KFC is the leader in ethical and social responsibilities, however could bee seen to add significant economic hails, which could be made up in brand delineate value and community awareness. 2.2 supplier section & EvaluationKFC Australia franchise boasts that 97% of its chickens are delivered bracing not frozen, And that all of the chickens are suffered to grow naturally without any additives such as hormones or stediods, they source chickens from honorable Aussie suppliers like Inghams, steggles and baiada.http//www.kfc.com.au/kfc-australia/ In Australia in particular there is a ever growing tendency for local fresh produce and this is showing through all major supermarkets. Just 10 year s ago there were no farmers markets in SA or capital of Seychelles now there are more then 70 held regularly. (http//www.pir.sa.gov.au/__data/assets/pdf_file/0005/165974/safood_consumers_report.pdf) This trend has since had a knock on affect to the fast food effort and suppliers. With a majority of the main fast food distributors now pitiful to local markets and produce in hope to boost brand name whilst showing corporate responsibility and intern create profit margins for the company. Although KFC Australia already sources some of its supplies from local farmers there is more that could be done.One option could be to move towards a more local decentralized suppliers, though this would add logistical implications there is room to gain prize and cost through increased competition. Though considering huge infastrucal change that wouldbe demand to implement this the best option is to build on the supplier family relationship currently active and create a mutually beneficial parall elism with the implementation of 2.2.1 Supplier performance monitoring & evaluatement (Supplier code of conduct)- http//www.kfc.com/about/supplier.asp KFCs suppliers are all held to strict and stringent superior and project measures under contracts. Though this is a area that could be expanded on to create continuing control methods, as KFC is such a large name in the food industry and boast a reputable brand name. Such aspects as supplier quality monitoring and measurement really need to be looked at, currently it is up to the suppliers to monitor and measure their own quality.The importance of this was shown last year in shanghai when KFC cut over 1000 supplier contracts in Shanghai and their parent company Yum experienced a 6% market drop that year which was more then the 4% previously predicted due to high levels of antibiotics beingness rig in the chicken. http//www.businessinsider.com.au/kfc-cuts-more-than-1000-suppliers-after-china-chicken-scare-2013-2 When it comes to food giants such as KFC emphasizing prevention over detection is a must and one must aim and celestial orbit almost zero defects as the fast food industry is one of the most competitive quality driven industries in Australia. One recommendation is to implement a quality control team that goes out and measures the quality and performance of each of the suppliers on a regular basis. This could also tend on to within the restaurants themselves as currently KFC only audits a set portion of their restaurants each year and quality could be improved by auditing all of the companys venues at least annually. This could also provide vital supplier selection data and if collected and logged correctly a great monitoring and measurement system to judge suppliers by. 3. nub of Contracts3.1 Means used for the obtaining of contractsKFC has many suppliers from which Pilgrims Pride supplies them the huge amount of chicken and those chickens then go for further process and then to be served into K FC restaurants all most the globe. KFC must convey proper steps and methods to evaluate suppliers and their material as suppliers affect the overall operation of KFC. Furthermore Suppliers must focus ontheir improvement because if KFC is affected they would be affected too.There are ternion means whereby KFC, obtains its supply contracts from the suppliers. These three means are mentioned below instantly Purchase KFC franchises sometimes purchase directly from the suppliers in case of imperative supplies or when there supplier cannot deliver on time due to some reasons. This is only temporarily to meet the urgent demand and allow the operations to run without any abruption. Quotations The KFC management after going through and analysing the supply needs requests the suppliers to prepare their costing data and send a quotation for supplies of unsanded materials necessary for the operation of the restaurants. Tenders This is a process where KFC invites tenders to all the supplier s of food products out there in the market. Whichever supplier meets the product specifications, quality assurance and the cost set by KFC, gets the contract to supply raw materials to the KFC restaurants.3.2 Renewal, TerminationMost KFC outlets are owned by the franchisees, which operate the restaurants in accordance with the license issued to them by the KFC. The License Term shall expire on the 20th anniversary of the opening date subject to earlier limit pursuant to the understanding. Upon termination or expiration of the License, the Franchisee shall immediately discontinue use of all KFC tradetag, service marks, trade names, trade secrets, and know-how and processes developed and owned by KFC and shall immediately and at no cost to KFC remove signs, menu mature inserts, point-of-sale material, red and white stripes and any characteristically designed roof from the Outlet and otherwise change its exterior and interior show so that it is no longer confusingly corresponding to a Kentucky Fried Chicken outlet and no longer bears any KFC trademarks, service marks or trade names or designations or marks similar thereto.Renewal of Agreement at the expiration of the term here of, Franchisee may extend this Agreement for successive ten (10) year periods, provided that at the time of expiration of the term hereof or the then current panoptic term(a) Franchisee shall not have failed to remedy any breach stipulate by KFC.(b) Franchisee shall agree to make such capital expenditures as may be reasonably required to renovate and modernize the Outlet and its signs and equipment so as to reflect the image of Kentucky Fried Chicken outlets.(c) If renovation and modernisation of the Outlet is not possible or feasible, Franchisee shall relocate the outlet.(d) Franchisee shall execute a new license agreement on the form then being used by KFC, but without any increase in royal house fee or advertising(e) Franchisee shall not have engaged breaches of The Agreement wi thin the preceding twenty-four 24 Months prior to renewal.In the contracting and franchising of KFCs network the report has tack together that this is a efficient method of contracting and no economically feasible changes have been found that would be seen to improve or add value to business.ConclusionThis report found on its analysis of KFCs supply and purchasing network that there Is potential to increase sales and brand name and value whilst change magnitude social responsibility, Though the increase in environmental practices and local producer investments. By raising the local purchasing this could increase quality, and has potential to return lead-time. By going for a more green approach KFC could lessen brand name implications and negative media attention whilst increasing social responsibility. mentionKFC. (2011). Official Website, Retrieved From http//www.kfc.com.au/index.asp