Vendor-Relations Lessons from the KFC Chicken Crisis

By / Feb 21, 2018 (sanapadh/iStock/Getty Images Plus)

The shortages that have created some major issues for the fast food chain in the United Kingdom are being blamed on a vendor’s mess-ups. It’s a good reminder that good vendor management can be downright fundamental to your business needs.

Don’t laugh, but there’s a serious lesson to be taken from the misfortune of KFC’s British arm, which is suffering from a chicken shortage of historic proportions.

That lesson: Handle vendor transitions with care. KFC’s switch to a third-party shipper is being blamed for the headaches ailing the company this week.

DHL, the global shipping giant, was affected by a crash near one of its delivery depots on the day that it was supposed to take over the KFC contract, according to The Sun. This led to major delays and a significant backlog that prevented chicken from getting to most of KFC’s British locations. The supply-chain crisis was so serious that it forced 700 of KFC’s 870 U.K. stores to close, leading to issues that prevented employees at its stores from working.

KFC’s vendor move was controversial, with The Guardian noting that Bidvest, the company’s prior chicken supplier, was outbid by DHL, which planned to run its distribution apparatus through a single warehouse. The union that represented Bidvest employees reportedly warned of the risks of changing vendors.

But the crisis that happened to KFC isn’t unique.

After switching delivery providers in late 2015, The Boston Globe found itself in the unenviable position of having a serious shortage of drivers.

The paper, in a story on the problems, noted that the new vendor wanted delivery drivers to do more work for the same rate, which discouraged drivers from staying on board. The added complexity of the new vendor’s routes didn’t help matters, either. In the end, the problems became so serious that the company’s own journalists had to deliver newspapers.

Finger-Lickin’ Good Advice

So what should associations make of these concerns within their own walls? A 2008 paper from the Project Management Institute makes the case that working with a new vendor requires great care, as every new vendor has pluses and minuses that can affect the overall quality of the work in the end. And that requires doing your homework during the evaluation process to protect your organization in cases of failure.

Author Karen A. McIsaac notes that, even in a positive situation, vendors come with a variety of basic risks, including on issues of performance, culture, competency, capacity, reputation, and alignment with the primary organization as a whole. She recommends making sure that the contract is tightly written, that a statement of work is set up, and that someone is in charge of managing the vendor during the length of the contract.

Fara Francis, the CIO of Associated General Contractors of America, also made this point in a 2014 Associations Now article: “A good tip is to make sure that your contract is established properly, and make sure you establish a good working relationship with the vendor’s project manager.”

And that’s the case whether you’re working with chicken, newspapers, or your cloud infrastructure.

From Associations Now, a publication of the American Society of Association Executives.

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