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Service operations management at KFC



Dr. Preeti Malik

Karan Arora
Enrollment No.04821201714
BBA(Gen)-A , II shift

Affiliated to Guru Gobind Singh

Indraprastha University(GGSIPU),C-
4,Janakpuri,New Delhi-110059
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This is to certify that the project report entitled service operations

management at KFC which is submitted by KARAN ARORA in partial

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fulfillment of the requirement for the award degree of Bachelor of

Business Administration to Maharaja Surajmal Institute affiliated to
GGSIPU (Delhi) Is a record of the candidates on work carried out by him
under my supervision.

The matter embodied in this report is bonafide and has not been
submitted for the award of any other degree

Dr. Preeti Malik

(Assistant Professor)

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I am writing this fnal project for the programme of Bachelors Of

business administration on Operations management at KFC for

It has been a challenge but a plenty of learning and opportunities to

gain a huge amount of knowledge on the way of writing this project
report. I could not have completed my project without the constant
guidance of Dr. Preeti Malik, my Faculty gides, who helped me along
the way and was always prepared to give me feedback and guidelines
whenever I needed.



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1. Introduction
Objectives of the study
Limitations of the study
2. Company Profile
Company History
Company Overview
Company in India
Outlets in Delhi
3. Review of literature
4. Analysis and Interpretation
5. Conclusion and Recommendations
6. Bibliography

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KFC Corporation is the largest fast-food chicken operator, developer,

and franchiser in the world. KFC, a wholly owned subsidiary of PepsiCo,
Inc. until late 1997, operates over 5,000 units in the United States,
approximately 60 percent of which are franchises. Internationally, KFC
has more than 3,700 units, of which two-thirds are also franchised. In
addition to direct franchising and wholly owned operations, the
company participates in joint ventures, and continues investigating
alternative venues to gain market share in the increasingly competitive
fast-food market. In late 1997 the company expected to become a
wholly owned subsidiary of Tricon Global Restaurants, Inc., to be
formed from the spinoff of PepsiCo's restaurant holdings.

Headquartered in Louisville, Kentucky, it is the world's second-largest

restaurant chain (as measured by sales) after McDonald's, with almost
20,000 locations globally in 123 countries and territories as of
December 2015. The chain is a subsidiary of Yum! Brands, a restaurant
company that also owns the Pizza Hut and Taco Bell chains.

KFC was founded by Colonel Harland Sanders, an entrepreneur who

began selling fried chicken from his roadside restaurant in Corbin,
Kentucky during the Great Depression. Sanders identified the potential
of the restaurant franchising concept, and the first "Kentucky Fried
Chicken" franchise opened in Utah in 1952. KFC popularized chicken in
the fast food industry, diversifying the market by challenging the
established dominance of the hamburger. By branding himself as

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"Colonel Sanders", Harland became a prominent figure of American

cultural history, and his image remains widely used in KFC advertising.
However, the company's rapid expansion overwhelmed the aging
Sanders and he sold it to a group of investors led by John Y. Brown, Jr.
and Jack C. Massey in 1964.

KFC was one of the first American fast food chains to expand
internationally, opening outlets in Canada, the United Kingdom,
Mexico, and Jamaica by the mid-1960s. Throughout the 1970s and
1980s, it experienced mixed fortunes domestically, as it went through
a series of changes in corporate ownership with little or no experience
in the restaurant business. In the early-1970s, KFC was sold to the
spirits distributor Heublein, which was taken over by the R.J. Reynolds
food and tobacco conglomerate; that company sold the chain to
PepsiCo. The chain continued to expand overseas, however, and in
1987, it became the first Western restaurant chain to open in China. It
has since expanded rapidly in China, which is now the company's
single largest market. PepsiCo spun off its restaurants division as Tricon
Global Restaurants, which later changed its name to Yum! Brands.

KFC's original product is pressure fried chicken pieces, seasoned with

Sanders' recipe of 11 herbs and spices. The constituents of the recipe
represent a notable trade secret. Larger portions of fried chicken are
served in a cardboard "bucket", which has become a well-known
feature of the chain since it was first introduced by franchisee Pete
Harman in 1957. Since the early 1990s KFC is known for its former and
current slogan "Finger Lickin' Good", which was replaced by "Nobody
does chicken like KFC" and "So good" in the interim.

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To understand the differentiating key success factors of KFC varying

from its competitors in terms of price, service offered, extensive menu
and number of outlets. KFC has diversified in many geographic
locations, so the way their services have been made adaptive to the
respective geographic areas is one of the areas of our study and what
measures they could take to further enhance their services and
increase their profitability.

The main objectives of our study were:

1. To understand the flow of process in the plant.

2. To study the nature of production system.

3. Understand the key challenges associated with operations


4. To know the various quality control measures used.

5. Study the inventory- management at the site

6. Identify the specific areas of Operations Management at the site

where there is scope for improvement.

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Stage 1: Correct
the worst Step 2: Adopt Best Practices (SCM, CRM, Technology Implementation)
problems in

an Operation Advantage (Increase

Step 3:CSR
Linkvalue, competitive
Strategy advantage)
to Operations (Enhance customer experience, Better layout, M

Research Objectives:

1. To study consumer preferences with respect to sales promotion

in service sector.

2. To examine tradeoffs, relative importance of different attributes

while responding to a sales promotion offer.

3. To study the effect of sales promotions in service sector esp.

4. To study consumer behavior in purchase of non-veg item.


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Chapter II

Company Profile
KFC History

KFC is an internationally renowned fast food industry in the world. They

have the main ambition to increase & maintain the quality in fast food

industry. Their aim is to capture the fast food market. Basically they

want to provide their products to anyone that is why they expanding

their branches in all over the world. They want to increase their profit

through giving maximum satisfaction & other better facilities to people

that they want. Now after catching such a marvelous position in the

International Market, KFC is introducing a new item Boneless Fried

Chicken, with even more attractive and charming taste.

Company overview

Colonel Harland sanders, born September 9, 1890, actively began

franchising his chicken business at the age of 65. Now, the Kentucky

fried chicken business he started has grown to be one of the largest

retail food service systems in the world. And colonel sanders, a quick

service restaurant pioneer, have become a symbol of entrepreneurial

spirit. More than two billion of the colonels finger lickin good

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chicken dinners are served annually. And not just in America. The

colonels cooking is available in more then 82 countries around the


When the colonel was six, his father died. His mother was forced to go

to work, and young Harland had to take care of his three year old

brother and baby sister. This meant doing much of the family cooking.

By the age of seven, he was a master of a score of regional dishes. Ate

age 10, his first job working on a nearby farm for $2 a month. When he

was 12, his mother remarried and he left his home near Henryville,

Ind., for a job on a farm in Greenwood, Ind. He held a series of jobs

over the next few years, first as a 15-year-old streetcar conductor in

New Albany, Ind., and then as a 16-year-old private, soldiering for six

months in Cuba. After that he was a railroad fireman, studied law by

correspondence, practiced in justice of the peace court, sold insurance,

operated an Ohio River steamboat ferry, sold tires, and Operated

service station. When he was 40, the colonel began cooking for hungry

travelers who stopped at his service station in Corbin, KY. He didnt

have a restaurant then, but served folks on his own dining table in the

living quarters of his service station. As more people started coming

just for food, he moved across the street to a motel and restaurant that

seated 142 people. Over the next nine year, he perfected his secret

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blend of 11 herbs and spices and the basic cooking technique that is

still used today.

KFC In India

0In India KFC is losing out because of fewer number of outlets

India being a vegetarian dominated country , KFC needs to have
an extensive menu to increase customer footsteps

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KFC Outlets in Delhi

KFC in Central Delhi KFC in Noida

A-12, Inner Circle, Sector 18,

CP, Delhi-110001 Noida -201301

Store Timing:8:30am to Store Timing:11am to 11pm

Great India Place,


Store Timing:11am to 11pm

KFC in South Delhi KFC in West Delhi

Back Wing,
City Square Mall,
Select Citywalk Mall,
Rajouri Garden,
Saket, Delhi-110017

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Store Timing:11am to 11pm Delhi-10027

Store Timing:11am to 11pm

Vasant Square Mall,

Vasant Kunj-110070
Vikas Surya Plaza,
Store Timing:11a.m. to 11 p.m.
Sector 4, Dwarka,


Store Timing:11 am to 11 pm

Below Netaji Subhash Place

Metro Station,

Pitampura, Delhi-110034

Store Timing:11am to 11pm

KFC in East Delhi KFC in Gurgaon

Shipra Mall,
JMD Regent Mall,
Indirapuram, Delhi-201012
Mall Road,
Store Timing:11am to 11pm
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V3S Mall, Gurgaon-

Store Timing:11 am to 11 pm
Laxmi Nagar, Delhi-110092

Store Timing:11am to 11pm

Ambience Mall,


Store Timing:11am to 11pm

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1. CEO


There are five departments in the company.

1. Marketing Department
2. Finance Department
3. Operation Department
4. Human Resource Department
5. Quality Control Department

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It is very important department in the KFC. Operation manager is responsible for the
following operations and functions.

1. Cooking
2. Cleanliness
3. Administration of restaurant.
4. Complaint handling of the customers
5. Daily order to procurement Department
6. Day to day demand forecasting
7. Daily lectures to crew people
8. Trained the employees.


The aim of HRM department to provide highly qualified and competent employees to
the organization. The HRM Department performs the following functions:

1. Reviewing application form

2. Interviewing applicants
3. Inducting new employees
4. Appraising employees performance
5. Make a decision about the employees training
6. Provide a career advice to subordinates

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Kentucky Fried Chicken captures a maximum market share. This is only due to
excellent marketing strategies adopted by the organization.

Marketing department is the main and most active department of the Kentucky Fried
Chicken it perform all the key activities of the business. The basic purpose of the
marketing department is to advertise its products in the market and keep eye on the
competitors that what they are doing. The department introduces the new policies and
satisfying the customers.

The body of the department is comprised:

Marketing Manager

Assistant Marketing Manager

Planning Manager


The finance department provides close support the business manager on the financial
implication of business strategies that are formulated. Regular feedback is also given
to Departmental Heads to facilitate monitoring of cost at the department level.

In KFC finance department have to prepare two major accounts:

1. Statutory Accounts

2. Management Accounts

Finally the Finance Department deals with internal and external auditors, product
margins, variable cost and fixed assets within the business as well.

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Mc Donalds serves to 68million customers in 119 countries through

36615 outlets and they generate revenue of $25.41bllion. It is the
largest food chain with the highest revenue generation.

Wendeys serves a niche market of about 30 countries through 6503

outlets. Revenue generation of this food chain is about $1.8billion.

Subway had an entirely differentiated food product which they serve

across to 112 countries through 44882 outlets. Due to limited
customer base though there presence is in 112 countries but their
revenue generation is just about $1.11billion.

Burger King had revenue of about $4.05billion. They are slightly

increasing their presence in Indian as well as foreign market. Currently
they have a presence in about 100 countries.

KFC serves region specific fast food in about 118 countries across the
globe through 18875 outlets. They serve about 12million customers
and generate revenue of $23billion. They are mostly known for Fried
chicken. Initially KFC started with all non-veg product in India but were
not able to capitalize the market and hence felt the need to change it
strategy. They started serving veg products especially for Indian
region, this change in their strategy had paid off quite well on the
Indian turf.

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Here is the competitive advantage of KFC

Though KFC are the second largest food chain as of now but in near
future they might surpass Mc Donalds the current market leader at
least in Indian market.


Review of literature

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Supply Chain Management of KFC:

Value chain at KFC is a simple one and it comprises of vendors

supplying raw material which are stored in warehouses and from there
on the material is distributed to various branches.Raw chicken
procured from Venkys, Godrej and Suguna and vegetables from open
market are stored in a cold storage warehouse and the sauces and
other ingredients from HUL are stored in the other warehouse.
Preparation and packaging of the material stored in the cold storage is
done and distributed as per the requirement at various branches.


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Operation line at the branches:

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There are different operating lines for Chicken Bucket and Burger at
the branch level in order to serve the customers at a fast pace.

The Chicken Bucket line comprises of a freezer to store the chicken,

from there on the next station is where the next employee in the
kitchen will dip the chicken in the flour and then it moved onto the
oiling and cooking section. The cocked chicken is fried in the UHC dry
chicken machine and then it is finally served to the customer in the

The Burger line comprises of 4 stations. The first station is where the
burger base is grilled and then at the next station the tikki is added. At
the third station Cabbage, lettuce and other vegetables are added.
Finally at the fourth station burger is served with the various sauces.

This type of operating line will demand an employee to be trained only

about his work station and hence this type of structure will ensure the
high labor productivity.

Branch Layout:

Every branch of KFC has to have a specific layout prescribed by the

company itself. The layout encompasses a kitchen, a serving counter, a
store room and a sitting area.

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Identical layout helps the customers get accustomed to any branch of

the KFC in no time and hence the entire process from the customer
entering into the KFC branch, selecting and ordering food, having food
to finally leaving the KFC branch happens in efficient and smooth

Proposed System

Order winners and Order qualifiers

Order winners and order qualifiers are the competitive features of any
organization that the customers examine before making a purchase. So

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it is necessary for a company to analyse the same. The following are

the order winners and order qualifiers of KFC.

KFCs order winners and Order qualifiers

KFCs some order winning factors are important than others. For
instance, the unique taste of the fried chicken tops the list and makes
it an important order winner compared to the location of restaurant.
Also the customization of the menu geographically according to the
local taste is very effective and makes it so popular.

Apart from that the opening and closing time and wide range of veg
and non-veg items on the menu appeals large customer base. Some
basic qualities like quality of the food, consistent taste , quick take
away, lead time and cleanliness and hygiene are the order qualifiers.


The order winner, order qualifiers and competitive analysis helps to

draw out a graph describing how the delights could contribute to a
companys sales, profits and customer service. Adding value to
customer experience is considered to be very significant component in
todays business. A service operation which starts to perform
successfully in terms of its delights, could be very profitable. Delights

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are novel and also add value to the customers by improving customer
satisfaction. However, delights could be applied at one point of time as
they are very transparent to the competitors and easily imitable.

Figure -2 Order winners, qualifiers and delights

KFC must focus on its delight as a part of improvement processes. The

following are the few delights recommended to KFC:

Keep a track of Anniversary and birthday dates of customers

Special discount and Complementary cake on special occasions

Customize seating arrangements for kids and physically

challenged customers

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Return gifts on orders over particular amount

Treating kids with small gits like balloons and chocolates

Surprise customers with free meal after few number of

purchases. For instance if a customer has been visiting the store
on regular basis, then he should be given a adds on free after the
tenth meal

The Importance Performance Matrix

The importance performance matrix is applied of KFC to compare the

factors in terms its importance to customers and performance.Each
contributing factor is positioned according to its scores and rating.

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Figure -3 the importance performance matrix

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Urgent Action Zone

This zone holds very critical factors that impacts the consumers
directly. These factors are the major aspects of operation performance
contributing to the business. The following explains the factors set up
in the urgent action zone:

KFC has been facing challenges over its improper usage of

antibiotics in chicken.It is an alarming situation for the brandhas
an impact directly on the consumers and also on the business
and hence needs an immediate attention.

These days, people are more health conscious and invest a lot in
healthy lifestyle. KFC uses a lot of excessive oil in the food
items.Even though KFC has a big brand value, it must lower
down its oil usage to promote its healthy lifestyle.

KFC has franchises all over the world and these franchises work
with different suppliers for different raw materials. KFC was
highly criticized for working with unethical suppliers who used
high amount of antibiotics in chicken. There were protest by PETA
in multiple countries like India and the US (The telegraph, 2013).
The celebrities like Pamela Anderson, Sir Paul McCartney, His
Holiness the Dalai Lama and The Rev. Al Sharpton continue to
motivate people not to eat from KFC
( .This has a direct impact on the
business thereby losing consumers and lowering its sales. Many
KFC outlets were forced to shut down. In this scenario, KFC
should immediately stop their business with such unethical
suppliers and give contacts to suppliers who follow ethical way of
farming including organic farming.

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People are converting into vegetarians to achieve healthy way of

life. KFC must focus on expanding the veg menu depending upon
the region. It must start including the local cuisines in KFC style.
The vegetarians prefer McDonalds over KFC because of the wide
range of veg menu (The economic Times, 2013).

The Improve Zone

The factors falling in this zone are the non-urgent cases but are
necessary for the brand. The following are few of the factors:

Improve the CSR value: The Company should focus in

increasing the CSR value to enhance its brand value. The
companies with high CSR value has a better image rating there
by contributing to its sales and gaining new consumers. This
factor is placed at a position where it is important to the
customers and also gives a competitive advantage.

Better Layout: The outlets should be redesigned in order to

accommodate kids play zone and also to facilitate the physically
challenged consumers. The brand should display a great amount
of hospitality towards it customers.

Organic farming: KFC must should move towards the organic

food and drinks by growing its own organic farms or working with
suppliers having organic farms. The trend of consuming organic
food and drinks has been increasing from few years. Many fast-
food restaurants have started organic farming and are attracting
lots of health-conscious consumers. This factor indirectly impacts

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the consumer and hence it is placed at a position of a

comparatively high importance to the consumers and also at
competitive advantage in the market.

Reintroduce Breakfast: KFC is located majorly on high streets,

malls and busy areas. The location is an advantage giving it a
chance to draw customers. It should reintroduce breakfast with
healthy menu. People love to treat themselves on breakfast that
is healthy, quick and easily accessible.

Auditing for quality check: This factor is placed at a position

of medium importance to consumers and high rate of
performance against competitors. The auditing process should be
carried out with the suppliers as well as within the outlets to
ensure hygiene and cleanliness.

The Appropriate Zone

This zone is the minimum boundary zone for the company to perform
and satisfy its customers.

Factors like home delivery, drive away, take away contribute to this
factors. Also to keep in mind the lead-time of the operations does have
an impact on the customers. For instance, Dominos delivers pizza in 30
minutes and pizza hut takes more than an hour to do the same.
Consumers prefer Dominos over pizza hut for its quick delivery.

The Excess Zone

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The factors in this zone contribute to excessive usage of resources

which could be low importance to the customers but has a high
competitive advantage.

Chicken dominates the menu: KFC is known for the chicken recipes
which doesnt give much options to the consumers to select. It must
dilute its menu. KFC has a benchmark for the taste of fried chicken. Its
secret spices are the main attraction. It should continue to hold the
benchmark but should also expand into other options including
regional dishes and other meet products like egg, fish and ham. It must
balance its veg and non-veg menu.

Chicken is fried in batches: This factor is an advantage against

competitors because the fried chicken is always available in the outlet
and helps in lowering the lead-time of the consumers. But it doesnt do
any good to the consumers as it is not freshly fried.

Volume flexibility: KFC stores the frozen chicken in the outlets for a
week .Hence there is a weekly supply of chicken to the outlets. This
gives them the ability to provide extra capacity at short notice.

The Service Operation Strategy matrix

After analysing the various competitive factors of KFC, the focus should
be on the decision areas matching the performance objectives. This is
done by using the following matrix to collaborate the decision areas,
performance objective gaining the market competitiveness. Figure 4
displays various factors which contributes to the intersection of
decision areas and performance objectives.

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Figure 4. The Operation Strategy matrix

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The four -stage model of operation

The four-stage model of operation contribution, designed by Professor

Hayes and Wheelwright of Harvard University, captures the
organizational aims, expectations and aspirations of the operations
function that contributes the ability of any operation to open up
market potentials for the organization. This model is applied to KFC as
shown in the figure 5.

Figure 5-The four stage model of operations contribution

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Stage -1 Internally Neutrality

In this level, the operation is considered as a Necessary Evil because

this is the poorest level of contribution by the operation functions. At
this stage, the organization holds back its competitive attitude. The
expectations on it are to be internally neutral, a position where the
organization corrects its mistakes.

Discontinue working with unethical suppliers

Ensure food safety and zero antibiotics in food

Stage -2 External Neutrality

At this stage, even though the company does not contribute to

competitiveness, it adopts, the industry best practicesand ideas from
the rest of the industry. This is expected to be external neutral with
operation strategy similar to its competitors.

Work with ethical suppliers

Increase the usage of organic food

Introduce breakfast and heathy food in the menu.

Grow organic farms

Better layout in stores for kids and physically challenged


Stage -3 Internally Supportive

At this stage, KFC might not be as good as its competitors but the
brand is broadly up to their best. The company tries to achieve this
level by clearly understanding its market position and unambiguously

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the very best in the market. They organize and develop their
operations function to be internally supportive.

Enhance customer service delights

Regional and vegetarian menu

Create better working policy and environment for the staff

Flexible working hours.

Contract with ethical suppliers

Stage -4 Externally Supportive

At this stage, the company sees the operations functions as the

foundation base for its future success. From stage 3, the company has
grown in high competencies to place itself in the future market

Wide range of products at competitive prices.

Increase CSR value

Highly responsive to the consumer demand and taste.

Bonding with suppliers

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In manufacturing, facility layout consists of configuring the plant site
with lines, buildings, major facilities, work areas, aisles, and other
pertinent features such as department boundaries. While facility layout
for services may be similar to that for manufacturing, it also may be
somewhat differentas is the case with offices, retailers, and
warehouses. Because of its relative permanence, facility layout
probably is one of the most crucial elements affecting efficiency. An
efficient layout can reduce unnecessary material handling, help to
keep costs low, and maintain product flow through the facility.

Firms in the upper left-hand corner of the product-process matrix have

a process structure known as a jumbled flow or a disconnected or
intermittent line flow. Upper-left firms generally have a process layout.
Firms in the lower right-hand corner of the product-process matrix can
have a line or continuous flow. Firms in the lower-right part of the
matrix generally have a product layout. Other types of layouts include
fixed-position, combination, cellular, and certain types of service


Process layouts are found primarily in job shops, or firms that produce
customized, low-volume products that may require different processing
requirements and sequences of operations. Process layouts are facility
configurations in which operations of a similar nature or function are
grouped together. As such, they occasionally are referred to as
functional layouts. Their purpose is to process goods or provide
services that involve a variety of processing requirements. A
manufacturing example would be a machine shop. A machine shop

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generally has separate departments where general-purpose machines

are grouped together by function (e.g., milling, grinding, drilling,
hydraulic presses, and lathes). Therefore, facilities that are configured
according to individual functions or processes have a process layout.
This type of layout gives the firm the flexibility needed to handle a
variety of routes and process requirements. Services that utilize
process layouts include hospitals, banks, auto repair, libraries, and

Improving process layouts involves the minimization of transportation

cost, distance, or time.

Advantages of process layouts include:

1 Flexibility. The firm has the ability to handle a variety of

processing requirements.

2 Cost. Sometimes, the general-purpose equipment utilized may

be less costly to purchase and less costly and easier to maintain
than specialized equipment.

3 Motivation. Employees in this type of layout will probably be

able to perform a variety of tasks on multiple machines, as
opposed to the boredom of performing a repetitive task on an
assembly line. A process layout also allows the employer to use
some type of individual incentive system.

4 System protection. Since there are multiple machines available,

process layouts are not particularly vulnerable to equipment

Disadvantages of process layouts include:

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1 Utilization. Equipment utilization rates in process layout are

frequently very low, because machine usage is dependent upon
a variety of output requirements.

2 Cost. If batch processing is used, in-process inventory costs

could be high. Lower volume means higher per-unit costs. More
specialized attention is necessary for both products and
customers. Setups are more frequent, hence higher setup costs.
Material handling is slower and more inefficient. The span of
supervision is small due to job complexities (routing, setups,
etc.), so supervisory costs are higher. Additionally, in this type of
layout accounting, inventory control, and purchasing usually are
highly involved.

3 Confusion. Constantly changing schedules and routings make

juggling process requirements more difficult.

Product layouts are found in flow shops (repetitive assembly and
process or continuous flow industries). Flow shops produce high-
volume, highly standardized products that require highly standardized,
repetitive processes. In a product layout, resources are arranged
sequentially, based on the routing of the products. In theory, this

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sequential layout allows the entire process to be laid out in a straight

line, which at times may be totally dedicated to the production of only
one product or product version. The flow of the line can then be
subdivided so that labor and equipment are utilized smoothly
throughout the operation.

Two types of lines are used in product layouts: paced and unpaced.
Paced lines can use some sort of conveyor that moves output along at
a continuous rate so that workers can perform operations on the
product as it goes by. For longer operating times, the worker may have
to walk alongside the work as it moves until he or she is finished and
can walk back to the workstation to begin working on another part (this
essentially is how automobile manufacturing works).

On an unpaced line, workers build up queues between workstations to

allow a variable work pace. However, this type of line does not work
well with large, bulky products because too much storage space may
be required. Also, it is difficult to balance an extreme variety of output
rates without significant idle time. A technique known as assembly-line
balancing can be used to group the individual tasks performed into
workstations so that there will be a reasonable balance of work among
the workstations.

Product layout efficiency is often enhanced through the use of line

balancing. Line balancing is the assignment of tasks to workstations in
such a way that workstations have approximately equal time
requirements. This minimizes the amount of time that some
workstations are idle, due to waiting on parts from an upstream
process or to avoid building up an inventory queue in front of a
downstream process.

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Advantages of product layouts include:

1 Output: Product layouts can generate a large volume of

products in a short time.

2 Cost: Unit cost is low as a result of the high volume. Labor

specialization results in reduced training time and cost. A wider
span of supervision also reduces labor costs. Accounting,
purchasing, and inventory control are routine. Because routing is
fixed, less attention is required.

3 Utilization: There is a high degree of labor and equipment


Disadvantages of product layouts include:

1 Motivation: The system's inherent division of labor can result in

dull, repetitive jobs that can prove to be quite stressful. Also,
assembly-line layouts make it very hard to administer individual
incentive plans.

2 Flexibility: Product layouts are inflexible and cannot easily

respond to required system changesespecially changes in
product or process design.

3 System protection: The system is at risk from equipment

breakdown, absenteeism, and downtime due to preventive


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A fixed-position layout is appropriate for a product that is too large or

too heavy to move. For example, battleships are not produced on an
assembly line. For services, other reasons may dictate the fixed
position (e.g., a hospital operating room where doctors, nurses, and
medical equipment are brought to the patient). Other fixed-position
layout examples include construction (e.g., buildings, dams, and
electric or nuclear power plants), shipbuilding, aircraft, aerospace,
farming, drilling for oil, home repair, and automated car washes. In
order to make this work, required resources must be portable so that
they can be taken to the job for "on the spot" performance.

Due to the nature of the product, the user has little choice in the use of
a fixed-position layout.

Disadvantages of foxed position layout


1 Space: For many fixed-position layouts, the work area may be

crowded so that little storage space is available. This also can
cause material handling problems.

2 Administration: Oftentimes, the administrative burden is

higher for fixed-position layouts. The span of control can be
narrow, and coordination difficult.

Many situations call for a mixture of the three main layout types. These
mixtures are commonly called combination or hybrid layouts. For
example, one firm may utilize a process layout for the majority of its

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process along with an assembly in one area. Alternatively, a firm may

utilize a fixed-position layout for the assembly of its final product, but
use assembly lines to produce the components and subassemblies that
make up the final product (e.g., aircraft).

Cellular manufacturing is a type of layout where machines are grouped
according to the process requirements for a set of similar items (part
families) that require similar processing. These groups are called cells.
Therefore, a cellular layout is an equipment layout configured to
support cellular manufacturing.

Processes are grouped into cells using a technique known as group

technology (GT). Group technology involves identifying parts with
similar design characteristics (size, shape, and function) and similar
process characteristics (type of processing required, available
machinery that performs this type of process, and processing

Workers in cellular layouts are cross-trained so that they can operate

all the equipment within the cell and take responsibility for its output.
Sometimes the cells feed into an assembly line that produces the final
product. In some cases a cell is formed by dedicating certain
equipment to the production of a family of parts without actually
moving the equipment into a physical cell (these are called virtual or
nominal cells). In this way, the firm avoids the burden of rearranging its
current layout. However, physical cells are more common.

An automated version of cellular manufacturing is the flexible

manufacturing system (FMS). With an FMS, a computer controls the

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transfer of parts to the various processes, enabling manufacturers to

achieve some of the benefits of product layouts while maintaining the
flexibility of small batch production.

Advantages of cellular manufacturing


1 Cost: Cellular manufacturing provides for faster processing

time, less material handling, less work-in-process inventory, and
reduced setup time, all of which reduce costs.

2 Flexibility: Cellular manufacturing allows for the production of

small batches, which provides some degree of increased
flexibility. This aspect is greatly enhanced with FMSs.

3 Motivation: Since workers are cross-trained to run every

machine in the cell, boredom is less of a factor. Also, since
workers are responsible for their cells' output, more autonomy
and job ownership is present.

In addition to the aforementioned layouts, there are others that are
more appropriate for use in service organizations. These include
warehouse/storage layouts, retail layouts, and office layouts.

With warehouse/storage layouts, order frequency is a key factor. Items

that are ordered frequently should be placed close together near the
entrance of the facility, while those ordered less frequently remain in
the rear of the facility. Pareto analysis is an excellent method for

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determining which items to place near the entrance. Since 20 percent

of the items typically represent 80 percent of the items ordered, it is
not difficult to determine which 20 percent to place in the most
convenient location. In this way, order picking is made more efficient.

While layout design is much simpler for small retail establishments

(shoe repair, dry cleaner, etc.), retail stores, unlike manufacturers,
must take into consideration the presence of customers and the
accompanying opportunities to influence sales and customer attitudes.
For example, supermarkets place dairy products near the rear of the
store so that customers who run into the store for a quick gallon of
milk must travel through other sections of the store. This increases the
chance of the customer seeing an item of interest and making an
impulse buy. Additionally, expensive items such as meat are often
placed so that the customer will see them frequently (e.g., pass them
at the end of each aisle). Retail chains are able to take advantage of
standardized layouts, which give the customer more familiarity with
the store when shopping in a new location.

Office layouts must be configured so that the physical transfer of

information (paperwork) is optimized. Communication also can be
enhanced through the use of low-rise partitions and glass walls.

A number of changes taking in place in manufacturing have had a

direct effect on facility layout. One apparent manufacturing trend is to
build smaller and more compact facilities with more automation and
robotics. In these situations, machines need to be placed closer to
each other in order to reduce material handling. Another trend is an
increase in automated material handling systems, including automated
storage and retrieval systems (AS/AR) and automated guided vehicles
(AGVs). There also is movement toward the use of U-shaped lines,
which allow workers, material handlers, and supervisors to see the

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entire line easily and travel efficiently between workstations. So that

the view is not obstructed, fewer walls and partitions are incorporated
into the layout. Finally, thanks to lean manufacturing and just-in-time
production, less space is needed for inventory storage throughout the

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On the basis of above analysis, the following are the important

summarization of recommendations.

KFC faced lot of criticism because of its unethical suppliers who

provided them with chickens with high antibiotics. So KFC should
start working with ethical suppliers and create bonding with

It could also start Master Franchise where all the responsibilities

are given to a single franchise. The master Franchise would be
solely responsible for all the operations. This helps the brand to
focus on other issues rather than concentrating on the supply
chain network.

KFC should start growing its organic farms

Should have wide range of Veg menu along with seasonal and
regional items.

Redesigning the layout to accommodate kids play zone

Increase CSR activities to improve its image and attract


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Recycling process and Technology investment to increase

efficiency of operations

The auditing process should be carried out with suppliers as well

as within outlets to ensure cleanliness and hygiene

Breakfast menu should be re-customized with healthy menu and

not regular meals

Introduce mobile payment at its stores and launch its own app as
mobile users have exponentially grown

Invest in new technology to improve inventory and scheduling


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f. Reuters (2014)