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KFC not exactly a zinger for DHL

20 March 2018

In October, DHL was awarded the contract to supply food to the UK’s KFC outlets, and the food company’s supply chain director Jens Hentschel said: “To date there has been little variation in foodservice logistics, but we have specifically chosen DHL and QSL for their reputation for innovation in logistics across other industries. It’s an ambitious plan, but by working closely with DHL and QSL we’re confident we’ll be able to deliver against our strategic ambitions.”

What a difference six months makes.

Whatever innovations were planned, it’s now clear that many supply chain basics were not met. Without inside knowledge, it’s hard to pinpoint exactly what went wrong at DHL.

A number of possible factors have been suggested from mis-managing the changeover process, to underestimating the complexity of the tie-in with the order software provider QSL, to underbidding on the contract and allocating insufficient resources to follow through.

Perhaps there was also over-confidence that DHL’s  competence in general logistics would carry through seamlessly to a niche area such as food logistics. In terms of brand damage, DHL will take a bigger hit than KFC.

I’d imagine consumers are pretty forgiving when it comes to fast food. When weighing up whether to indulge in a zinger burger, the fact that some KFC outlets were closed recently won’t figure much. But people have longer memories in logistics, and are often risk averse.

The one positive for DHL, as I see it, is this isn’t the kind of thing you’d expect from them. This shows a strong core brand. That said, this is a serious setback for DHL in terms of breaking into new, niche logistics arenas such as food. We have comment on KFC’s logistics crisis here.

One interesting point raised by a consultant was the suggestion DHL’s Rugby facility did not initially have the correct licence to handle food, which led to food being dumped. This spooked me a little bit as I’m thinking about how the country will adjust to Brexit.

If we have a cliff-edge, no-deal Brexit, logistics operators will need to very quickly work out which regs and charges apply, and this could lead to delays, and perhaps even product wastage.

Let’s hope sense prevails before March 29, 2019 and logistics operators are briefed beforehand and given time to make an orderly transition.

 
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