Business Operations and Logistics Assignment Sample

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• Subject Name : Management

Use of CRM to Resolve the Problem of Lack of Connection with End Customers

Table of Contents

Executive Summary.

Introduction.

History.

Analysis of Operations and Logistics Management Practices.

Discussion and Conclusion.

Creating a custom CRM to launch KFC into the future of.

Customer-defined service.

Creating a comprehensive CRM...

Localization and tests.

Conclusion and Recommendation.

References.

Executive Summary of Business Operations and Logistics

The report discusses how the problem of lack of communication with end customers was solved by KFC using the CRM software solution. The customers are very important for the success of any brand. Using the CRM software, the company was able to know more closely about the preferences of its customers about the food items as well as their preferred drink at a different time of the day (Wu & Cheng, 2018). The app of KFC not only helped the company to know about the customer's location but also about their choices of outlets and on the other hand, it helped the customers to know about their nearby KFC outlets as well as the special discounts and offers of the company. It established a close connection with customers and using the app they could search for their choices easily and order their food while sitting at their places (Wu & Cheng, 2018).

The report analyses the use of loyalty programs using the KFC Colonel's Club mobile app. It was also used by the customers to look at the menu and participate in bonus programs and provide their feedback (Shibghaturahman & Saefuloh, 2018). Adding to it, there was a point system used by KFC which enabled the company in connecting with the customers based on their previous activity. There is also a chat feature in the app which helps the sales team to connect with the people by sending them text messages and addressing them using their first names and hence establish a close relationship with the customers. The use of CRM proved to be beneficial for the company as it helped to increase the frequency of repeated visitors in different KFC outlets which led to an increase in revenues (Shibghaturahman & Saefuloh, 2018). Different marketing strategies were used by KFC to attract the customers and the company used to run these marketing campaigns throughout the year as it helped to gain a more competitive edge over other rivals in the fast-food industry. Along with this, it improved customer satisfaction and build a good brand image of KFC through customer satisfaction (Wu & Cheng, 2018).

The CRM system has been developed but is still in the initial stage while it is currently being used in KFC outlets of Russia (Wu & Cheng, 2018). However, many more modifications are still in the process to implement the complete software which offers the fully automated processes using the CRM solution adapted to fit different countries as per the local laws of each country.

The report includes the history of the company, its operations, and competitors, then discusses the use of new technology of CRM for solving the problem of lack of connection with end-users.

Introduction to Business Operations and Logistics

KFC is a wholly-owned subsidiary of PepsiCo, Inc. Harland Sanders established Kentucky Fried Chicken in Corbin in 1995 (Randhir, Latasha, Tooraiven & Monishan, 2016). He is the biggest fast-food chicken retailer, producer and franchiser in the world. Until late 1997, over 5,000 units in the United States were operated by KFC, and out of them, approximately 60 per cent were franchises. KFC has more than 3.700 units in the world, which includes two-thirds of franchises (Panjaitan, 2018). The firm is also engaged in joint partnerships with foreign franchising and wholly-owned companies and aims to capture market share for its investment in solutions to a fast food industry which is getting increasingly dynamic and competitive. The number of employees working in KFC is around 24,000 and the revenue of KFC accounted for approximately 2.49 billion U.S. dollars in 2019 (Panjaitan, 2018).

History

The fast-food chain, now known as KFC started back in the '30s when Harland Sanders, began to serve chicken to the patrons of his service station in Corbin, KY. At that time, he did not own a restaurant but he served people on his dining table in his service station's living quarters (Odokorac, 2019). Gradually, the work expanded and moved from the street to a motel and a restaurant. In 1935, the governor Ruby Laffoon made him a Kentucky Colonel in recognition of his contributions to the state’s cuisine.

In 1952, the first franchisee of Kentucky Fried Chicken was Pete Harman and a store was built in the Salt City. The Colonel continued to be the company's spokesman which was publicly accepted in 1969 and then in 1971, it was bought by Heublein Inc. till he died in 1980 (Odokorac, 2019).

In 1986, it was acquired by PepsiCo, Inc and the name of Kentucky Fried Chicken and logo were eventually changed to KFC in 1991. Today, KFC has expanded to over 9,000 locations across the world including China, Russia, and Australia (Cavusoglu, 2019).

The company launched a program for kids which had premiums, it has been launched in the last few years. KFC keeps running its promotions for longer periods unlike its other competitors in the fast-food operations. The company promotes by running four to six programs throughout the year (Cavusoglu, 2019). It generates advantages through its approach to meal premiums for both KFC and collectors. The collectors had the merit of having more time to acquire their preferred toys while there was less traffic observed by the company which led to fewer expenses in operations and marketing. (Cavusoglu, 2019).

There are many competitors of KFC which are producing the same type of food and are located in the same places and share similar distribution channels (Agnihotri, Trainor, Itani & Rodriguez, 2017).

McDonald's, Burger King, Subway, and Texas are the main competitors of KFC. All of them are ranked most famous in the fast-food industry including the rate of sales, number of customers served in a month or year, profits generated, number of stores as well as total revenue (Agnihotri, Trainor, Itani & Rodriguez, 2017). These restaurants offer a collection of food products which include sandwiches, burgers, chickens, Desserts, and baking goods which is a similar range of products as served by KFC.

Analysis of Operations and Logistics Management Practices

Customers are the driving force for any company. The demands and expectations of the customers must form the objectives for developing innovative solutions. Customers like to have flexible options for ordering using online or offline platforms (Atanasova, 2018). They strive to get their package delivered or picked up in the store, and also want to have the ability to track their shipments at any point of time. Another crucial thing to work upon is faster delivery. Today’s customers want to get their order as soon as possible for which local storage is required and includes delivery complexities from logistics businesses (Atanasova, 2018).

The customers want to receive the relevant details about the delivery and for providing such details to help the customer; an efficient CRM system can be used. CRM tools can be used to analyze customer behaviour. Such systems function in logistics in a similar way as the POS systems installed in restaurants work (Odokorac, 2019).

Customers want more transparency when it comes to tracking their packages and orders.

Therefore, KFC decided to implement CRM software to automate its business operations and achieve the best outcomes in its business. CRM assisted KFC is expanding the business by attaining more customer satisfaction as well as the rate of retention (Chiang, 2018).

An operator of fast food and casual dining restaurants in Europe, AmRest operated the outlets of KFC located in that area (Chiang, 2018). It was fighting to uplift diners to patronize its KFC outlets. Hence, it decided to reform its strategies for the promotion of the brand.

AmRest decided to attract customers by providing them free Wi-Fi facility in late 2015 in all of its 648 outlets in the UK. The customers’ information was stored in a database as they signed into the WI-Fi at a KFC outlet, this information was then used by the company to notify the customers about the special offers or discounts as well as promotion schemes (Chiang, 2018).

Along with the data acquisition, KFC also presented a loyalty program through the mobile app of KFC’s Colonel Club (Nam, Lee & Lee, 2019). The app’s interface helped the users to look at the menu, locate the nearby KFC outlets, take part in the programs offering a bonus, using digital coupons, providing feedback, and so on. It provided them with stamps based on their food order at a KFC outlet. The app provided a point-based system that can be used by the company to communicate with different customers based on their past activity (Nam, Lee & Lee, 2019). The customers' location, as well as their preferred outlets and menu items information, was provided by the app. The app helps the customers to visit and order from their nearby KFC outlets (Nam, Lee & Lee, 2019).

Since the introduction of CRM in 2015, the KFC Colonel’s Club mobile app presented the following results by 2017:

• The app was downloaded by 5% people of participating cities (Panjaitan, 2018).
• 25% of customers used the app when they visited KFC outlets
• 12% increase was reported in revenue of outlets that used the app than those outlets that did not
• There was an incremental marginal profit of $16,736 in high performing location (Panjaitan, 2018).

As per a study in 2017, it was found that in 2016, there were more than 7 billion mobile users in the world (Panjaitan, 2018). This number has been increasing gradually every year leading to the increasing demand for smartphones. CRM software can help companies to make capital out of this aspect as they can motivate the customers and the potential customers to download their apps using which they can download their data to expand their business.

Discussion and Conclusion on Business Operations and Logistics

Creating a Custom CRM to Launch KFC into the Future of Customer-Defined Service

Everyone is helping KFC to transform it into a fast-food restaurant of the future. A restaurant that unifies CRM with technologies helps to identify and cater to the individual needs of the customer (Zamani et al, 2020). KFC is opening a restaurant in Moscow in which there are no cash desks and where the conveyor and a robot would bring the orders. Everyone has worked with major global companies in the past, however, it was a new challenge to personalize interactions with millions of customers of KFC.

The goal:

KFC is among the world's most popular fast-food restaurants today. However, the company wants to increase growth opportunities for its franchisees with the use of “big data” to know more precisely about the needs of the customers and increase personalized service (CHUVASHEV, 2018). The company can know about the customer’s preferences using the KFC loyalty program by learning about the answers to questions such as:

• What products are mostly ordered by the customer, what they prefer?
• Do they eat in the outlet or get a takeaway?
• What sauces do they like?
• What is their opinion about the current special deals?
• What drinks do they prefer during the morning and evening?

By using this customer information, through the loyalty program, KFC can provide personalization of the menu by providing each customer what they love the most and are willing to buy (CHUVASHEV, 2018). The booth of self-service will display the favourite items of customers, without forcing them to go through the monotonous inquiries and multiple pages of menus to look for what they want. Franchisees can optimize their menus using loyalty management software based on the customer's choices. This will help KFC in gaining new loyal customers and help the outlets to earn more.

Challenge:

To collect the customer data and achieve a high level of customized service, KFC needed to:

• Build a “Recognition” system to track customers’ history of visits and create unique profiles of regular customers (Law, Fong, Chan & Fong, 2018).
• Create and implement such a CRM solution for restaurants that would help in efficiently running potential sets of customer offers and link them to the technological database.

The development of Restaurant CRM software for a huge franchise such as KFC is like building a working airport. Every aspect of operations and infrastructure needs to be improved while keeping in mind that already existing work is not affected in the process.

At first, KFC was interested in selecting a suitable readymade CRM solution available in the market. They hoped to choose a CRM and then adding necessary modules to it will be suitable (Law, Fong, Chan & Fong, 2018).

Unfortunately, the customer’s needs were not satisfied using any solution. The vendors were not able to provide the required flexibility and did not provide the store's control of user data which was required to ensure that the personal information of customers would be protected (Law, Fong, Chan & Fong, 2018).

Therefore, KFC decided to move forward by taking the challenging task of building its own CRM.

Creating a Comprehensive CRM

CRM software was created and designed by Evrone to fulfil every need of individual restaurants and the franchise as a whole. 

The main modules of CRM system included:

• Menus, ingredients, and allergens: The menu included complete management of different modifiers such as dishes, variety, images, combo dishes, fillers, volume, and quantity. The timetable, as well as special offers of each restaurant, are included in this section (Zamani et al, 2020). This section's data can be shared with self-service kiosks and can be sent to the client's mobile applications. Hence, a menu can be created on the fly and orders can be managed by the customers.
• Reference books: all the information about each KFC Restaurants in every city and country was included in this module. It also contained the legal entities, languages, external systems, calorie content, and other properties of products as well as prices in the currencies of the countries (Zamani et al, 2020). The data were grouped based on the geographical principle so that the franchises will not have to search for information in different information systems.
• Placements and media repositories: There are several media platforms where KFC Restaurants display their information in the form of banners, billboards, and kiosks. There was a separate module facility provided by CRM to help in storing and managing this type of information and running the marketing campaign of the restaurant smoothly (Ibrahim et al, 2020). Each restaurant can bring changes in its present advertisement and promotional offers quickly and remotely.
• Segments: The CRM system will help the franchises to segment their audience based on different parameters. The parameters can be gender, age, frequency, and composition of purchases and other personal data. This would help the franchises in creating individual offers for each segment of customers. This will allow them in creating more customer engagement and satisfaction, increase the number of repeated customers, and hence in earning more money (Ibrahim et al, 2020).
• Stop Lists: Stop lists form an important part of the CRM as it resolves a major issue in foodservice management (Ibrahim et al, 2020). It helps to automatically remove those dishes from the menu which cannot be produced as the necessary ingredients or equipment are not available or breaks down.

These are the initial components of the system which have been developed so far. It is just the beginning of the journey as this project extends years into the future.

Localization and Tests

The CRM requirements are affected by the standard working schedule and the work laws related to each country. For instance, in Israel, the working week starts on Sunday and ends on Thursday (Wu & Cheng, 2018). Whereas, in Europe, the collection and storage of user's personal information are associated with very strict laws.

Therefore, there are different sequences of testing and launching of the CRM system in each country. The system is already in use in some restaurants in Russia. Other countries are also preparing for testing and waiting for its implementation. Thus, despite the universal applicability of CRM, it has been prepared with the possibility of locally using it in each country of presence (Wu & Cheng, 2018).

Conclusion and Recommendation on Business Operations and Logistics

It is a very challenging task to develop a CRM system for a foodservice industry that personalizes one of the largest food chains while considering all the complexities of local laws and work characteristics (Cavusoglu, 2019). The initial version of the CRM system has already been developed and is in the initial stages of the journey. KFC is continuing the process of creating itself the first fully customized fast food restaurant in the world. 

The restaurant is moving towards progress with the adoption of new technology, however, it must always ensure that the customer's data is not leaked and is stored safely for use without creating any problem for the customers.

Using the customer's information to know about them and their choices is a thing while using that information for some wrong practices can produce harm to the customer and lead to a reduction in brand value of KFC. Hence, data integrity must be considered by the company while using the customer's data. There must be transparency in the company’s operations which would lead to customer loyalty and improve customer satisfaction. These two things will not only increase the sales and revenue but also create a positive brand image and help in increasing market share in this competitive fast-food industry.

References for Business Operations and Logistics

Agnihotri, R., Trainor, K. J., Itani, O. S., & Rodriguez, M. (2017). Examining the role of sales-based CRM technology and social media use on post-sale service behaviours in India. Journal of Business Research, 81, 144-154.

Atanasova, V. (2018). Advantages and deficiencies in the use of CRM in hotels. Scientific Papers Series-Management, Economic Engineering in Agriculture and Rural Development, 18(4), 47-51.

Cavusoglu, M. (2019). An analysis of technology applications in the restaurant industry. Journal of Hospitality and Tourism Technology, 10(1), 45-72.

Chiang, W. Y. (2018). Applying data mining for online CRM marketing strategy. British Food Journal, 120 (3), 665-675.

Chuvashev, S. (2018). Mobile information technologies in the management of relations with hotel restaurant businessmen in the republic of Kazakhstan. ВЕСТНИК, 124 - 129.

Ibrahim, A., Alzaini, A., Wiranata, A., Sabrina, A. H., Dwazar, I., & Saputra, R. R. (2020). Implementation of Quick Response to Customer Relationship Management System Based on Mobile Application. In Sriwijaya International Conference on Information Technology and Its Applications (SICONIAN 2019) (pp. 382-385). Atlantis Press.

Law, R., Fong, D. K. C., Chan, I. C. C., & Fong, L. H. N. (2018). Systematic review of hospitality CRM research. International Journal of Contemporary Hospitality Management, 30(3), 1686-1704.

Nam, D., Lee, J., & Lee, H. (2019). Business analytics use in CRM: A nomological net from IT competence to CRM performance. International Journal of Information Management, 45, 233-245.

Odokorac, O. (2019). The impact of E-commerce on logistics performance. a case study; KFC (u) Ltd. Retrieved from https://ir.kiu.ac.ug/handle/20.500.12306/6062

Panjaitan, F. A. B. K. (2018). Effect of perception of price, perception of product quality, and customer relationship management, towards KFC customer satisfaction in Surabaya. Retrieved from http://repository.untag-sby.ac.id/1489/

Randhir, R., Latasha, K., Tooraiven, P., & Monishan, B. (2016). Analyzing the impact of sensory marketing on consumers: A case study of KFC. Journal of US-China Public Administration, 13(4), 278-292.

Shibghaturahman, M. I., & Saefuloh, D. (2018). The Comparison Between D’Besto and KFC Using Customer Satisfaction & Loyalty. In Prosiding Industrial Research Workshop and National Seminar,9, 914-920.

Srivastava, S. K., Chandra, B., & Srivastava, P. (2019). The impact of knowledge management and data mining on CRM in the service industry. In Nanoelectronics, Circuits and Communication Systems (pp. 37-52). Springer, Singapore.

Wu, H. C., & Cheng, C. C. (2018). What drives experiential loyalty toward smart restaurants? The case study of KFC in Beijing. Journal of Hospitality Marketing & Management, 27(2), 151-177.

Zamani, N., Bahrom, N. A., Fadzir, N. S. M., Ali, N. S. M., Fauzy, M., Anuar, N. F., ... & Isai, K. I. A. (2020). A Study on Customer Satisfaction Towards Ambiance, Service and Food Quality in Kentucky Fried Chicken (KFC), Petaling Jaya. Malaysian Journal of Social Sciences and Humanities (MJSSH), 5(4), 84-96.

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