KFC improves demand forecasting, inventory management with Fourth’s solutions
Better forecast accuracy leads to better inventory management, overall efficiency.
Understanding the demand-supply concept is easy, but efficiently managing supply to meet demand without sacrificing quality could be one of the most challenging tasks for businesses, including quick service restaurants (QSRs). That is why brands such as KFC recognise the importance of accurate demand forecasting as the key to efficiently manage production and inventory.
Aside from the ingredients that make KFC’s trademark chicken finger-lickin’ good, one of the secrets behind the QSR giant’s success is its focus on implementing reliable demand forecasting and inventory management processes, which have not always been an easy task.
KFC’s Jeff Monico, APAC chief digital & technology officer, shared that the brand’s stores in Asia Pacific typically use forecasts from either one of two sources: the head office, or the restaurant manager who manually creates forecasts using a spreadsheet based on restaurant sales and inventory usage. However, KFC found that these forecasting processes are not ideal.
“Firstly, this is a difficult, time-consuming process for the restaurant managers. Secondly, there are always local factors or special events that the head office may not be aware of that will affect the accuracy of a forecast. Having a potentially inaccurate forecast that the restaurant managers have no control over is incredibly frustrating for them,” Monico added.
Most of the targets that restaurant managers struggle to hit are affected by forecasting quality. Monico notes that forecasting too little can lead to running out of inventory or operating without sufficient staff, both of which impact sales. Forecasting too much, on the other hand, leads to increased inventory waste or inefficient labour, affecting profitability.
This is where Fourth comes in with its forecasting engine, Macromatix, which provides low-touch accurate forecasting at an inventory item level. “The forecast can easily be adjusted by managers to account for promotions and special events. Having a forecast you can trust is the first step in successful management cost of labour, food cost, and product availability and freshness,” said Matt Forsyth, APAC Restaurant Technology Partner.
Having an accurate forecasting system does not only improve KFC’s back-of-house efficiency but also plays a key role in keeping the food quality up to standard, ensuring a satisfying experience for the customers.
“We make our delicious fried chicken the hard way. Using fresh chicken that is delivered daily, we hand bread then fry the chicken continuously throughout the day to ensure our customers get the best tasting food. Some of these products take up to 20 minutes to prepare and cook. Given the time it takes to prepare our food, it’s really important for us to have an accurate forecast at a sales item level. This means that we can accurately predict down to 15-minute intervals how much and, more importantly, when we need to cook. It’s all about managing a delicate balance between freshness, availability and waste,” said Forsyth.
With Fourth’s solutions, KFC is now able to better manage its inventory, avoiding significant financial losses that poor inventory management causes. “Inventory management is a direct result of forecast accuracy. Our experience in Australia is that the MMX system forecast is consistently better than 90% accurate and, with the local knowledge and experience of our restaurant managers, the adjusted forecast typically runs at 95% or better,” said Forsyth.
Automated systems for overall operational efficiency
With Fourth's forecasting solutions, KFC avoids missing out on potential sales when inventory runs out or wasting products when the store holds too much supply. KFC is currently rolling out the MMX digital production system a digital, real-time version of the production forecast in its stores in Australia.
“Managers love how it frees up their time and makes it easy for our cooks to take control of production. The real-time depletion of cooked products from the production screen means the cooks get notified when they need to cook products sooner. This means our customers are less likely to have to wait,” Matt Forsyth shares.
Fourth has also enabled KFC to generate data and insights that help the restaurant’s overall operational efficiency through its data warehouse and BI solution, RDS.
“RDS is a highly reliable database that we use to pull data into our data warehouse and is used across the business to set targets for the various cost of sales and cost of labour KPI’s, and provide operational dashboards to enable the Restaurant Managers to better manage their business in near real-time” Monico added.
Now more than ever, brands need to ensure that the business runs seamlessly and efficiently. Task automation, along with a user-friendly interface and access to relevant information, are all important to make complex processes easy. To achieve this in the QSR industry, having a robust system that manages labour, inventory, and kitchen production are paramount.
“As more of our business comes through digital channels, the team member becomes slightly removed from some parts of the customer experience. For operators, task automation is key to ensuring we can redeploy labour to the activities that make the most customer impact. Having the systems to ensure they are set up for success is critical,” Monaco concluded.
Fourth provides end-to-end, best-in-class technology and services for the hospitality, leisure and retail industries. Its procurement, inventory, and workforce management solutions, coupled with a complete data and analytics suite, give businesses the actionable insights they need to increase efficiency within operations, control costs, scale profitability, improve employee engagement, and maintain compliance.
Since its merger with US-based HotSchedules/ MacromatiX, Fourth serves more than 7,000 customers across 120,000 locations globally.
Fourth works with multi-national companies across the hospitality, leisure and retail industries, including McDonalds, KFC, Pizza Hut, Hungry Jack’s, Nando’s, Oporto, Starbucks & Taco Bell.
For more information, please visit www.fourth.com/en-au