kfc tqm

Quality management in Kentucky Fried Chicken (KFC) Malaysia.

GRADUATE SCHOOL OF MANAGEMENT (GSM)

MASTER OF MANAGEMENT (MOM)

TOTAL QUALITY MANAGEMENT (MGT 6650)

GROUP PROJECT: Quality management and quality assurance in Kentucky fried chicken (KFC)

Malaysia.

PREPARED BY:

1. Ahmed Bashir G1324933

2. Amina Zilic G1330318

3. Abdirizak

4. Mohamed Abdirahman G1413317

5. Kaci Farouk G1216741

Lecturer: Dr. Abdul Rahman

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Table of Content

Titles Page numbers

Introduction3

Quality management system in KFC6

Service quality management system in KFC 7

Quality assurance & control in KFC 8

Quality issues 9

Elaboration of quality issues in KFC 10

Recommendations 12

Elaboration of the recommendations points 12

Limitations13

References14

2


Introduction

KFC is a Malaysian institution, leading the fast-food market since late 1970’s. In fact many

in Malaysia think of KFC as a local brand and not one from Kentucky. Since its launch the

brand has always enjoyed a youthful and forward-looking reputation. But in recent times,

with the aggressive approach of younger, urban, seemingly more exciting competitors, KFC

is losing its young consumers. KFC is the largest and most famous brand in quick service

restaurants of the fast food industry Malaysia. The firm opened its first outlets in Jalan Tungu

Abdul Rahman in 1973. Today the firm boasts 390 restaurants nationwide and controls 35%

market share of the fast food industry in Malaysia.

The next two tables will present the financial performance of KFC over 4 years (2011-2014)

and the financial highlight.

2011 2012 2013 2014

Revenue 2522.3 2798.8 3248.4 3482.4

Total Assets 1838.2 1975.2 2141.1 2318.4

Profit before

tax

215.5 191.1 199.7 227.5

Shareholders’

equity

1074.2 1167.2 1264.2 1374.9

ROE 14.0% 11.9% 11.4% 12.0%

ROA 8.4% 7.0% 6.7% 7.1%

Table 1: KFC annual financial report (2011-2014)

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Financial Highlights:

(RM million)

2011 2012 2013 2014Revenue 2798.8 3025.0 3248.4 3482.4

Total Assets 1838.2 1975.2 2141.1 2318.4

Profit before tax

215.5 191.1 199.7 227.5

Shareholders’ equity

1074.2 1167.2 1264.2 1374.9

ROE 14.0% 11.9% 11.4% 12.0%

ROA 8.4% 7.0% 6.7% 7.1%

Table 2: KFC financial highlights

KFC revenue increased by 6.3% to RM 189.5 mil and profit before tax increased by 12% to

RM 27.8 mil in 2014 in cycle with the higher sales and improved margins. There were

numerous new restaurants added during the last 12 months which increased the store count to

608 restaurants at the end of December 2014. Safety and health services with new products

and promotions that were launched during the last period which effect positively on the sales

revenue. A generally improving retail environment, higher levels of advertising expenditure

and some successful promotions all contributed to the strongest sales improvement for the

brand in four years. High sales growth was achieved in spite of the challenging economic

environment and the rising costs of supplies, commodities and energy.

.

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Total assets Revenue Profit before tax

A total asset was increased on the last years. The bulk of the increase has brought

significantly more control over supply chain and purchasing arrangements. In addition

property, plant and equipment increased with KFC transformation expenditure and also,

because of the expansion of the network of fast food stores including the establishment of the

new investments.

Return on total assets as a measure of how efficient the company employs the resources

under their control to generate income, as shown in the table, KFC has a positive return on

assets and equity because of its profitable operations and its capital structure

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Quality management system in KFC

Source: Stevenson, W.J. Operations Management: An Asian Perspective, 2012.

6

PERFORMANCE DIMENSION

The grading of materials and resources in KFC is complying with performance dimension as well as friendliness & courtesy of the sales personnel, officers, & waiters

AESTHETIC DIMENSION

The aesthetic dimension consist how the layout facility, outlets cleanliness, interior design as well as the food packaging in KFC

RELIABILITY DIMENSION

The reliability includes the ability of KFC's machine to be reliable into certain periods (infrequency of breakdown) and the food services are well done by right people

CONFORMANCE DIMENSION

This is the most essential dimension for KFC'scustomer since this is tangibly measure the how wellKFC's products & services conform with customer delight and expectations

SPECIAL FEATURES DIMENSION

The special features are mostly about KFC's additional product and services which are offered by KFC in fixed or seasonal period

SERVICE ABILITY DIMENSION

KFC's is considered as fast handler of customer problem about the service as well as product complaints.

PERCEIVED QUALITY DIMENSION

As known that KFC is ratified by ISO 9000 because their sustainable qualified quality of product and services which they provide.

DURABILITY DIMENSION

KFC's Durability for their processing machine (frying machine, utensils, frozen materials) are very important to be kept, since it determines their quality of maintaining their capitals.


Service quality management system in KFC

7

CONVENIENCE CRITERIA

RESPONSIVENESS CRITERIA

ASSURANCE CRITERIA

TANGIBILITY CRITERIA

COURTESY CRITERIA


Quality assurance & control in KFC

Quality control is a process through which a business seeks to ensure that product quality is

maintained or improved and manufacturing errors are reduced or eliminated. Quality control

requires the business to create an environment in which both management and employees

strive for perfection. This is done by training personnel, creating benchmarks for product

quality, and testing products to check for statistically significant variations.

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PRODUCT QUALITY ANAL YSIS

NutritionalQuality

CleanlinessQuality

Raw MaterialsQuality

Utensilsused Quality

Compliancewith HalalFoundation

SUPPLIER QUALITY

In-house inspectionsand control-

RawMaterials from AyamasQuality

Compliance with JAKIM

Veterinarian HealthLogo

ISO 9001 Certification

RESTAURANT QUALITY -CHAMPS

Concept ofResto Quality

Cleanliness ofSanitation and Facility

Friendlinessin Service Management

Personal Hygiene and Equipment

Maintenance and Convenience

FOOD SAFETYCONTROL

KFC HACCPProgram

Food HazardPreventionPhysical,Biological and Chemical AspectControlling

Critical ControlPoint Analysis

KFCDaily operationchecklist


QUALITY ISSUES

9

CLEANLINESS QUALITY

CUSTOMER SERVICE ASPECT FOOD QUALITY AND HYGIENE

DELIVERY AND LOGISTICS PEST CONTROL MANAGEMENT


CLEANLINESS QUALITY

CUSTOMER SERVICE ASPECT

DELIVERY AND LOGISTICS

FOOD QUALITY AND HYGIENE

PEST CONTROL MANAGEMENT

-Below standards

-Garbage

-Dirty floor, tables and

bathrooms

-Every order takes 20

minutes while in

competitors the order

takes 5 minutes

- Impolite and

inhospitable manner of

the staff

- Lack of passion for

serving KFC

management

-High traffic jam

and tropical

weather can cause

the delivered food

to be dry and not in

a good state

-Vegetarian or more

health conscious

products

-Purified oil

-Few cases reported

regarding

cockroaches

Table 3: Explanation of quality issues in KFC

ELABORATION OF QUALITY ISSUES IN KFC

CLEANLINESS: Most KFC outlets have fallen way below the standards when it comes to

cleanlinessand is characterized by distinct distasteful smell rather than the aroma of freshly

friendchicken. This phenomenon is due to reasons pointed below:Garbage of the entire outlet

is thrown either right outside or very near the entrancetherefore causing repulsion in

customers entering the arena. KFC sees a high rate of customers every hour, with more guests

coming in for breakfast, lunch or dinner more will be the need to maintain the floors and the

bathrooms due to increased frequency of guests.

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Most outlets cannot keep up with the equal rate of restaurant cleanliness when thenumber of

increase. Cloths used to clean the tables are greasy and unkempt with no glasscleaner or

appropriate substitute used to lighten the stench. Use of the same material over andover

makes the tables oily and installs a sense of apprehensiveness in the guest.

SERVICE ASPECT:Statistics have shown that every order takes 5 minutes to register and

another 15minutes before its carried on to the consumer while the competitors take 4.5

minutes to take the order to the customer. Employees face problems in understanding and

providing a basicorder within the time limit of what is considered appropriate. Also, many

guests havecomplained regarding the impolite and inhospitable manner of the staff and the

time taken toserve the guest when the order is not as asked or gets late. Employees are known

to show helpless attitude towards the regular guest problems. With the lack of passion for

serving KFCmanagement has a lot to work upon which must be enforced on following.

Manager does nottake appropriate measure to win over the customer in case a customer issue

arises.

FOOD QUALITY:As per the Quality assurance guide on the KFC page, KFC has been

ethically awareand health conscious when it comes to setting its food menu in Malaysia.

They have arrangeda balanced regime offering salad’s and rice with snack plates and 100plus

kinds of drinksrather than high carbonated soft drinks. However, with increased awareness

regarding healthyfood with least preservatives KFC often gets a demand for vegetarian or

more healthconscious products. There is an increasing demand for more purified oil and

addition of morehealthy variety to choose from.

DELIVERY:With the tropical weather in the region and high traffic jams during peak hours

KFCdelivery struggles to keep up with the hindrances and deliver not just the product in time

buthigh standards and goodwill with it.

PESTS:With all standards satisfactorily maintained within the outlet and every measure taken

to terminate pests there still have been a few cases reported regarding cockroaches. This

isdue to the external area around the outlet which however, affects KFC’s reputation.

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RECOMMENDATIONS

ELABORATION OF THE RECOMMENDATIONS POINTS

For Kentucky FriedChicken, the company must be able to ensure that the products that they

offer are healthy andnutritional, so as to ensure also that their gain customer trust, loyalty and

respect. KFC must also give importance to the management issues to build a

healthyatmosphere for their employees to work in ensuring best quality and excellent service.

Sincetoday’s generation is prone to hypertension induced by cholesterol it must prioritize

inincluding healthy options in its menu by adding more fresh products like fruits and

vegetables. They must also cater to the vegetarian market which is a huge and neglected.

Lastly, being a retail outlet in a fast progressing and technology affluent circumstances KFC

must consider investing in such technology which not only enhances consumer satisfaction

but sells a memorable experience. The idea should be to make things hyper convenient and

meaningful in order to nurture a satisfactory and enhancing customer relationship. KFC must

aim at providing not just the product but an entire experience whichwill be share via social

media encouraging one of the guests’ friends to walk down the same

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Quality management program needs to be more:

systematic and customer oriented

Cleanliness

Healthy atmosphere: Pest controls, friendly staff,

holistic oriented system


path in turn the KFC obtaining more consumers due to better basics such a quality,

cleanlinessand online security, hyper convenience such as ease-of-shop, home delivery,

online paymentsand experience such as edutainment and digital engagement.

The source of our data is mainly derived from the KFC global site and in Malaysia as well

from the studies about management operation in KFC.

Limitation

The limitation of this presentation is that the data is gathered through secondary method

which is by analysing the press release and provided information in theKFC’s website

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References

Stevenson, W.J. Operations Management: An Asian Perspective, 2012.

Jacobs, Chase, Aquilano.2012. Operations and Supply Management by McGrawHill, 2011

Suri, Rajan (1998a), Quick Response Manufacturing. A Companywide Approach

to ReducingLead Times, Productivity Press.McGraw-Hill, 9th Edition 2010. Doherty,

Jacqueline (12 May 2008).

Allen, S. (1986).The Experience of consumer behavior in digital marketing.

Macmillan inassociation with British Marketing Sociological Association.Baharin, N., Y.

Ishak & R. I. (2012).Factors Influencing Operation Management Applicationin Malaysia and

ASEAN Paper presented at the Prosiding Perkembangan Pengurusan danEkonomi

Kebangsaan Malaysia ke VII, Kuala Lumpur.KFC Malaysia Official

URL: www.kfc.com.my KFC World Official Site www.kfc.com (28/2/2015, 15:38)

URL: http://en.wikipedia.org/wiki/Quality_costs (1/3/2015, 11:42)

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kfc tqm

Documents

financial performance

references14 introduction

kfc transformation expenditure

kfc annual financial

quality assurance control

elaboration of quality

total assets1838

sales revenue