When KFC awarded a new contract to DHL for UK logistics, they probably expected to save a lot of money. Instead they were unable to keep their stores stocked with chicken. – Luckily, their marketing department used the opportunity to create some great adverts, averting negative press. Although the KFC problems stem from supply chain issues, there are lessons for many other project types – including ERP deployments. Here’s what KFC can teach you before attempting an ERP platform migration.
Cheap is not cheerful
KFC decided not to renew their existing logistics contract with food industry distribution specialist Bidvest. Instead they opted for a similar agreement with DHL. Was DHL chosen because their quote was significantly cheaper? As part of the cost saving, the KFC supply network shrank from six regional distribution centres (RDC) to one. Consolidation of RDCs is not necessarily a problem, but the merge must be carried out properly to avoid creating bottlenecks. There have been suggestions that DHL simply does not have enough staff to load trucks too, creating delivery backlogs. The old saying “you get what you pay for” has been around for a long time now – because in many cases it is completely true. Attempting to create unrealistic ERP project cost savings – shaving days off the project plan, selecting lower quality services/software – will inevitably cost more in the long run.
Testing will make or break your project
According to the GMB union, KFC was warned several months ago of potential supply chain issues, but pushed ahead regardless. The handover deadline was “set in stone”, while testing and troubleshooting was deprioritised. It is unclear whether KFC or DHL did any real-world testing before operations began. Testing is absolutely crucial to any major project, be it a change in logistics provider, or the deployment of a new ERP platform. Deadlines should never take precedence over line-of-business operations – testing must be completed in advance to avoid disaster. The later stages of a successful ERP project rely on a three-part formula: Time + Resources + System Readiness (Quality). Have you devoted enough time and resources to testing the system, and is the ERP platform actually ready for testing/deployment? Any project that skimps on these three factors will almost certainly run into problems.
KFC may get away with it – but will you?
For KFC, the disaster may have a happy ending. A nationwide shortage has raised the profile of KFC, reminding customers how much they actually miss fried chicken. And a cheeky print ad has helped to recover some of the damage done to the KFC brand. For B2B retailers, however, the outcome of a similar disaster may not be so positive. Without 11 secret herbs and spices to rely on, customers will quickly desert you for a better prepared competitor. A poorly managed ERP implementation project could be incredibly costly, and the damage may be permanent.
To learn more about properly planning and executing a deployment/migration – and avoiding a KFC-style disaster – please give our ERP experts a call on 020 3974 8812.