The Colonels' Secrets: How KFC uses technology to optimise its supply chain and win in Africa

What you need to know

• KFC began its Africa expansion in the early 1990s.
• As of 2022, KFC has over 1200 restaurants in 28 African countries.
• KFCs food and beverage costs have consistently been lower than the industry average.
• KFC relies heavily on technology and automation to manage its supply chain.

KFC, a subsidiary of Yum! Brands began its expansion into Africa in the early 1990s. The first KFC restaurant on the continent was opened in Johannesburg, South Africa, in 1993. As of 2022, KFC has over 1,200 restaurants in 28 African countries, including South Africa, Kenya, Nigeria, Egypt, and Morocco.

KFC's expansion into Africa has not been without challenges, including issues related to supply chain management, competition from local fast-food chains, and navigating local regulations and cultural differences. Last year, KFC Kenya received a lot of attention because they ran out of potatoes. Despite this, KFC continues to outperform the market regarding cost discipline and consistency. Over the last ten years, its food and beverage cost as a revenue percentage has averaged 24.8%, compared to Mcdonald's 32%. KFC's ability to keep costs low is the key reason the chain has outperformed other global franchises in Africa and expanded to over 28 African countries.

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Our team examined how the company has implemented several technology-driven solutions to streamline its supply chain, improve efficiency, and maintain quality standards.

Electronic Data Interchange with Vendors

KFC uses Electronic Data Interchange (EDI) to exchange information with suppliers. EDI allows the company to exchange orders, invoices, and other documents electronically, reducing manual processes and eliminating errors. 

Supplier Relationship Management System

KFC has implemented a Supplier Relationship Management System (SRM) that allows the company to manage its suppliers and track their performance. The system provides a platform for suppliers to communicate with KFC and receive orders, manage inventory, and track deliveries. In addition, the SRM enables KFC to monitor supplier performance, identify risks, and ensure compliance with quality and safety standards.

Advanced Analytics

KFC uses advanced analytics to analyse data related to its supply chain and identify areas for improvement. The company tracks product quality, delivery times, and supplier performance data to optimise its supply chain. KFC uses predictive analytics to forecast demand, optimise inventory levels, and reduce waste.

Mobile Apps

KFC has developed mobile apps allowing its suppliers to manage orders, track deliveries, and receive real-time alerts. The mobile apps provide suppliers access to critical information about their orders and help them manage their inventory efficiently.

The benefits of technology-driven vendor management for KFC have been significant. The company has improved its supply chain efficiency, reduced waste, and enhanced product quality. KFC has also been able to manage its vendors effectively and maintain a high level of customer satisfaction.

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Tips for African Restaurant Chains

Here are some tips that African restaurant chains can use to manage their vendors effectively:

Adopt two-way vendor management technology.

African restaurant chains can leverage technology to manage their vendors and suppliers effectively. Implementing systems like Caantin provides African chain restaurants with a two-way vendor management system that enables them to access real-time pricing and availability from their vendors and streamline the accounts payable process by automating vendor invoicing. 

Develop Strong Relationships with Vendors

Developing solid relationships with vendors is essential to the success of any restaurant chain. Building trust and collaboration with suppliers can help ensure they deliver high-quality products on time.

Timely vendor payments

Vendors often embed late payments into their pricing to you. Food businesses can reduce their cost of goods by 10-20% by simply building a reputation for being good payers. Tools like Caantin help Restaurants keep track of bills and automate payments.

Monitor and Measure Vendor Performance

Monitoring and measuring vendor performance is essential to track supplier performance and identify areas for improvement. Metrics should include delivery time, product quality, and responsiveness to issues. 

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KFC has successfully used technology to manage its vendors and suppliers effectively. African restaurant chains can adopt similar technology-driven solutions to improve their supply chain management and increase efficiency. Developing solid relationships with vendors, implementing clear vendor selection criteria, and monitoring and measuring vendor performance is essential to the success of any restaurant looking to expand in Africa.

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