Supply Chain Management for Chick-Fil-A
SUPPLY CHAIN MANAGEMENT FOR CHICK-FIL-A 5
SupplyChain Management for Chick-Fil-A
Chick-Fil-Ais a fast food chain store whose headquarters are positioned inCollege Park, Georgia founded in 1946 by Truett S. Cathy under thename Dwarf grill because of its size (Cathy,2007. Pp 7). It later became the Dwarf house before adopting thecurrent name as a result of the invention of the chicken sandwich.The in-mall concept was however pioneered in 1967 (Cathy,2007. Pp 7). The chain stores are now well over 1500 in numberdistributed throughout the United States. They are second largestquick serve chicken restaurant with annual sales increasing at 18%annually and their reach expanding to the international marketspecifically 4 locations in South Africa however, the locations inSouth Africa have closed (Chick-fil-AInc.)
Themajor competitors of Chick-Fil-A are Kentucky Fried Chicken (KFC),whose annual sales stand at a gigantic $8.9 Billion Popeyes, whoseannual sales go up to $1.3 Billion McDonalds with an approximatedannual sale of $30 Billion, and Wendy’s whose annual sales areprojected to be approximately $2 Billion.
Initially,CFA distribution services were handled by Ameriserve FoodDistribution Inc. for the entire CFA restaurants, but later changedto MBM Corporation. This was because CFA needed a distributor whocould handle their entire system and with distribution capabilitiesthroughout the U.S. and internationally. MBM is a privately heldCorporation based in Rocky Mount, NC and with annual sales of $4Billion. It operates 29 distribution centers with distributioncapabilities both throughout the US and internationally. The MBM-CFAbusiness relationship is projected to provide 7% of MBM’s totalsales.
Chick-Fil-Akeeps an inventory of different products. Its inventories includechicken, waffle fries, carbonated drink syrups, condiments, eggs andother meat products. Deserts that include ice cream, brownies andHershey’s syrup are also inventories of CFA. Inventories alsoinclude fresh products such as lemons, lettuce, tomatoes, carrots,cabbage, onions and pickles.
Someof the common products that MBM supplies are chicken, waffle fries,and carbonated drink syrups. Other than that, it is also within theMBM operations to supply paper products, condiments, eggs and othermeat products. MBM also distribute deserts that include ice cream,brownies and Hershey’s syrup and also do cleaning supplies.
Thetypical operations in terms of order quantities of common productsper week include chicken, which is normally 60/35 lb boxes per week,chicken strips often 5/36 lb boxes per week and chicken nuggets thatis about 20/30 lb boxes. There is also 66 lbs per week of seasonedcoater (flour), 72 racks (32 burns per rack) per week, 3/30 lb bagsof lettuce (salad) are shredded per week and 5/15 lb boxes of lemonper week. When it comes to coke syrup, there are 7 boxes per monthand for the waffle fries, there are 90 (28 lb boxes per week).Finally, 24 (7 lb bags per week) of ice dream mix are also supplied.
Allshipments are transported via truck, where a typical truck has acapacity of 14 tons. All trucks are refrigerated andcompartmentalized and loaded in reverse order so that the next stop’sload is closest to the door. This is critical since it minimizes thestop time and saves cost (Banister &Berechman, 2003. Pp 181).In order to minimize transport costs, deliberate attempts are made tosend trucks out when having full load. Trucks with less than fullloads often serve multiple restaurants. In summary, trucks typicallycover distances of up to 400 miles.
CFAoften ensures the safety of stock up to 5 days for food products and1.5 weeks for paper products. Out of stock products are usuallypurchased from local vendors or from other Chick-Fil-A stores. Freshproduce are obtained from Alliant food distributors and includeproducts as lemons, lettuce, tomatoes and carrots. Cabbage, onionsand pickles are also obtained from the same distributor. Orders forall these are placed weekly and trucks arrive bi-weekly. Chickenstrips, chicken nuggets and chicken breasts (breakfast and sandwich)are provided for by Cagles.
Theproduct flow for CFA can be summarized in that manufacturers andlocal produce growers provide the products necessary to come up withthe Chick-Fil-A’s end products. These products are then distributedby MBM Corporation and Alliant, where for MBM the product window is a3 day lead time. For Alliant, is way shorter considering the productsthey distribute are very perishable explaining the one day lead time(Enz,2010). In exceptional isolated cases, local CFA stores or localexternal suppliers may lend a hand to CFA to allow them meetimmediate customer needs for instance, if stocks are out.
Therelationship between CFA and the distributors sees MBM Corporationbenefit with a 7% annual sales. MBM provides CFA with order quantitysoftware (Schermerhorn,2011). It uses a 4 week previous order quantity to predict the nextweek order quantity making provisions for operator adjustments ifneed be. Alliant benefits with 4% annual sales from theirrelationship with CFA and orders are placed using a weekly orderguide supplied by Alliant (Enz,2010). They use previous 2 weeks demand to predict next week’sdemand.
Chick-Fil-Ais one of the leading quick serve chicken restaurants (Chick-fil-A).MBM became selected as a supplier over Ameriserve so as to helpminimize costs by delivering supplies in a more efficient way. MBMsupplies CFA with software to help with the re-order process. Alliantand Cagles are also other suppliers of CFA.
Banister,D. & Berechman, J. (2003). Transport Investment and EconomicDevelopment. London: Routledge.
Cathy,S. T. (2007). Howdid you do it, Truett?: A recipe for success.Decatur, Ga: Looking Glass Books.
Chick-fil-A.Retrieved from http://www.chick-fil-a.com/
Chick-fil-AInc. Retrieved from http://www.encyclopedia.com/
Enz,C. A. (2010). Hospitalitystrategic management: Concepts and cases.Hoboken, N.J: John Wiley & Sons.
Schermerhorn,J. R. (2011). Exploringmanagement.Hoboken, N.J: Wiley.