Trade union GMB has criticised KFC for a “penny-pinching” decision to award DHL its distribution contract despite warnings the delivery firm would not be up to the job.
Nearly two thirds of KFC branches around the UK were forced to close yesterday after delivery problems led to a mass chicken shortage.
This morning the company’s website revealed that the problems had escalated, with more than 80% of its stores now closed. GMB’s website claims 750 out of 900 UK stores are closed.
The delivery issues arose after the fast food firm switched its delivery partner from food delivery specialists Bidvest Logistics to DHL Supply Chain last Tuesday.
The GMB union said it had voiced concerns about KFC’s decision last October to switch its deliveries from Bidvest to DHL, when the new partnership was announced.
Mick Rix, GMB’s national officer, said he told KFC that it could face a repeat of supply issues that hit Burger King when it dropped Bidvest in favour of DHL six years ago.
“We warned them a few months ago. I wrote to KFC. I alluded to Burger King trying to cut costs and ending up with poorer quality service and poorer distribution – they had shortages too but not on the scale we’re seeing now at KFC,” he said.
“Within six months they [Burger King] were pleading with Bidvest Logistics to take it back.”
Rix blamed the current crisis at KFC on dropping a supply system based on six warehouses run by Bidvest to a system of one distribution centre in Rugby, run by DHL.
He said the conditions at the Rugby warehouse were “an utter shambles”.
“They took a lower tender with a load of promises that have not materialised – the system can’t cope,” he said.
“My sources say KFC execs knew three weeks ago that there was a major problem with DHL – they were concerned about the set-up and the systems after testing and some of the answers from DHL were completely strange and worrying. It was clear it was going to fall flat on its face.”
He added that since losing the KFC contract, Bidvest had made 255 staff redundant and he urged KFC to reinstate Bidvest.
“We’ve never had redundancies at Bidvest before on this scale – some of those staff would come back. It is the only way of resolving the problem,” he said.
“DHL will not be able to provide the service they quoted for. Even if the industry experts piled into that depot now to sort out the mess at Rugby, it would take weeks and even months to sort the problems out.”
Responding to GBM’s claims, a KFC spokesman said DHL winning the contract had in fact created 300 new jobs.
“We feel for those who lost their jobs at Bidvest; the decision to change supplier wasn’t taken lightly,” he said.
“DHL have estimated that winning the KFC contract and opening the new distribution centre has created 300 new jobs.”
Virginia Spiegler, senior lecturer in operations and supply chain management at the University of Kent, said the case highlighted the importance of logistics operations, which are frequently and unfairly regarded by many companies as non-value adding.
“KFC’s decision to switch their third party logistics provider from Bidvest to DHL was a measure to reduce logistics service costs. However, having hundreds of restaurants closed could cost them millions in lost sales and low capacity utilisation. The problem could have been anticipated by comparing Bidvest and DHL capabilities.
“While Bidvest is specialised in food service distribution and operates a network of distribution centres across the UK, DHL is trying to run the same operation from a single distribution centre.”
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