KFC - FACILITY LOCATION AND LAYOUT

FACILITY LOCATION LOCATION

KFC & Facility Location y y

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KFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken is a chain of fast food restaurants based in Louisville, Kentucky. KFC is the third largest fast food chain with over 12,200 outlets in 99 countries. KFC has maintained its title, for the last 60 years, of being the chicken Experts. Opening the first KFC outlet in Gulshan-e- Iqbal in 1997.KFC wore the title of being the market leader in its industry. Serving delicious and hygienic food in a relaxing environment made KFC everyone s favorite. Since then, KFC has been constantly introducing new products and opening new restaurants for its customers. Presently KFC is branched out in eighteen major cities of Pakistan(Karachi, Lahore, Gujranwala, Sukkur & Muree) with more than 60 outletsnation-wide. The outlets comprise franchises, company owned and affiliated. They used the proper method for facility location and layout analysis of new or existing outlets.Facility location involves the evaluation of various sites for a new facility.

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Existing Locations of KFC In Lahore:

Barket Market

Defence Cavalry Ground Shadman Mall Road Thokar Niaz Baig M.M. Alam Road Y-Block GT Roa

y There are several factors that influence the Facility Location y Decision. Proximity to Customers, Business Climate, Total Costs, Infrastructure, Quality of Labor, Host Community,

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Facility Location Techniques: There are many analytical techniques that can be used in facility location decision. Some of these are: 1) Factor Rating 2) Cost-Profit-Volume analysis 3) Center of Gravity Method, and 4) Transportation and Simulation Models. But first two methods Factor Rating & Cost Profit Volume.Analysis are more simple & suitable for KFC Because of easily understandable than Center of Gravity & Simulation Method .

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Method of Factor Rating: In factor rating method, first we must identify the Most Important Factors in evaluating alternative sites for the new facility. Then we should assign a weight between0 and100 to each of these factors. Each alternative location will then be rated based on these factor weights. The most weighted alternative is selected as the best alternative. Example:

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Suppose KFC is considering three alternative sites for its y new facility locations.y y y

Site A. Moon Market Site B.Sha dra Site C. Chock Chu Burg

y Method of Factor Rating(Cont ) y After evaluating the firm s Needs, the Managers have narrowed the list of

Important Selection Criteria down into three major Factors.y

Availability of skilled labor Availability of suitable Infrastructure, and Proximity of target customers.

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Continued.y

Weights reflecting the relative importance of each factor have been assigned as follows:

Factor

Site A

Site B

Site C

Available of skill labour Available of raw materials Proximity to the firms market

70

70

50

60

40

90

70

95

60

Now we will multiply each score by its corresponding factor weight: Weighted scores are calculated as: (Site Score)x (Factor Weight)

In this case, Site A appears to be the best choice with largest weight score. Therefore, factor rating method is very sensitive to the weights assigned to each factor

Column1 Factor

Column2 site A Score weighted 35

Column3 Site B Score

Column4 Site C weighted Score 35 50 12 90 19 60 66 weighted 25 27 12 64

Skilled labour Raw metrials material prox Total weighted scores

70

70

60

18 40 14 95 67

70

From these results, the largest total weight is for Site A. y

It appears to be the best location. What happens if we change the factor weights. Lets use the following factor weights: Skilled labor: 0.45; Raw Materials: 0.40; and Market: 0.15 Then the following results are obtained:

In this case, Site C appears to be the best choice with largest weight score. Therefore, factor rating method is very sensitive to the weights assigned to each factor

Column1 Factor

Column2 Site A Score Weighted 31.5 24 10.5 66

Column3 Site B Score Weighted 70 40 95 31.5 16 14.25 61.75

Column4 Site C score 50 90 60 weighted 22.5 36 9

Skillled labours Raw materials Market prox Total weighted scores

70 60 70

67.5

Facility layouty Cost-Profit-Volume Analysis:

When the fixed and variable costs for each site differ, Cost-profit-volume analysis can be used to identify the location with the lowest cost.

y Example:

Suppose KFC is considering three alternative sites for its new production facility. Site A. Moon Market Site B.Sh ad ra Site C. Chock Chu Burgi The Annual Production Cost associated with each alternative is a linear function of the production volume. That is: Total Production Cost = (Fixed Cost) + (variable unit cost) x (annual production volume)

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Facility layouty

Cost-Profit-Volume Analysis (Cont )

Assume that the expected annual production volume is 250.000 units. And further assume that: y (x: production volume = 250)y y y

For Site A:Prod. Cost = 10,000 + 250x For Site B:Prod. Cost = 25,000 + 150x For Site C:Prod. Cost = 60,000 + 50x Based on these information, Which site has the lowest cost? At a production volume of 250.000 units, site B has the lowest cost, because For Site A:Prod. Cost = 10,000 + 250 (250) = 72,500 For Site B:Prod. Cost = 25,000 + 150 (250) = 62,500 For Site C:Prod. Cost = 60,000 + 50 (250)= 72,500

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Facility layouty Facility layout: y Facility Layout means Planning And Arrangement of all y

Machines, Utilities, Employee workstations, Customer service areas, Material storage areas, Aisles, Restrooms, Lunchrooms, Internal walls, Offices, and Computer rooms,

y for the smooth flow patterns of materials and people around, into, and

within Buildings Infrastructure services

Facility layouty Factors that influence layout: y y y y y KFC Facility Layout: y Internal & External layout of KFC outlet is attractive and charming all over the

Volume, weight of items to be produced. Nature of the service to be provided. Cost of the building to house the operation. The fragility of the product or component

world. Ideal color schemes, pleasant lighting outlets, comfortable sitting arrangement, fully trained employees and their proper work division, State of the art interior beautification, speedy & appropriate cooking process, special club/block for kids, etc. are the chief characteristic of the KFC layout

Facility layout

Facility layouty Advantage of KFC s Good Layout:

Reduces bottlenecks in moving people or material. Minimizes materials-handling costs.

Reduces hazards to personnel. Utilizes labor efficiently. Increases moral. Utilizes available space effectively and efficiently. Provides flexibility. Provides ease of supervision. Facilitates coordination and face-to-face communication where appropriate

Conclusion And Recommendation:

KFC can progress rapidly by identifying new facility locations and increasing existing target market and facility locations by launching new competitive product chain at minimum cost. KFC s Unity Drive had a simple but essential message and objective. To bring together the people of Pakistan by promoting in the words of KFC founder, Unity, Faith & Discipline. The campaign proved to be a successful initiative in not just providing hope for our patrons, but also allowed KFC Pakistan to take an effective step forward during tough times and entrust other responsive companies to act in a similar manner.

THANK YOU