The document details KFC's implementation of a formalized Sales & Operations Planning (S&OP) process to enhance supply chain efficiency in South Africa. It highlights the challenges and complexities of forecasting demand in the quick-service restaurant industry, emphasizing the need for better planning and increased automation to improve stock availability and reduce waste. Key achievements include a significant reduction in write-offs by approximately 60% and improved out-of-stock occurrences despite growth in volume.

1. Formalised Sales & Operations Planning (S&OP)
– KFC Case Study
Elizbe Rohde
Implementation Project Manager
KFC Supply Chain Manager (South Africa)

2. Agenda
• About KFC
• Complexity in QSR
• The Project
• Lessons Learnt

3. Did you know the following about KFC?
Sell 400+ tons of chicken per day which
to give a visual representation, is equal
to the weight of 57 fully grown elephants
(1.3m birds/ week)
57x
Total Weight of KFC Mash sold per year
equivalent to 2 Boeing 747’s (total
dressings will fill up an Olympic sized
swimming pool)
2x
Add Hope feeds 100k children per day,
enough to fill Ellis park stadium
Yum! is the parent company of the
brands KFC, Pizza Hut and Taco Bell
which is the largest restaurant company
in the world with ~41k restaurants in 125
countries
KFC’s Original Recipe® chicken is still
prepared to Colonel Sanders’ exact
standards, using the secret blend of 11
herbs and spices he perfected back in
1940
Proud heritage in South Africa for the
past 40 years with ~800 restaurants
(~120 in the rest of Africa). Voted the
most loved fast food brand in South
Africa for the last 16 years

4. Agenda
• About KFC
• Complexity in QSR
• The Project
• Lessons Learnt

5. QSR Store Dynamics differ to other industries and the
way in which we need to forecast
Clear Menu Item Trends
• 800 Stores with similar menu items and trends (not multiple brands) sold directly to consumers
• Products sold directly to consumer with immediate consumption vs. buying for future use results in
clear POS sales data and trends
• Significant growth from new stores (40 opened in 2014), forecasting needs to consider volume and
store growth - forecast on Weekly Per Store Average (WPSA)
• Different store types i.e. breakfast stores
• Different menu types which include Permanent Items and Limited Time Offers (LTO’s) which adds
additional complexity
• Need to consider abnormal activities in the past that affects forecasts such as strikes impacting
supply
Easter Christmas

6. Large component of Limited Time Offers (LTO’s) or
Promotions that have a high level of uncertainty
• LTO = Promotion running for 7 – 15 weeks
• Combination of unique and existing
ingredients
• Unique lifecycle: Need to balance out-of-
stock vs. write-off’s through planning
• Challenge: All ingredients on time in stores
with high level of sales uncertainty which is
greatest within start-up and growth phases
• Consideration to impact on permanent
items (cannibalisation on other items)
LTO: Menu Item LTO: Ingredients
New Menu
Item
Unique Ingredient
(significant impact)
Existing Ingredient
(limited impact)

7. Menu Items are converted via a BOM to Ingredients
1 Bun
15g Sauce
6 Doritos
10g Lettuce
1 Fillet
BOM Menu ItemIngredients
• Menu Items are assembled from ingredients based on the Bill of Materials (BOM) or recipe
• Forecasting is based on menu item store sales
• Menu item sales are converted through the BOM to ingredients and gives a view of ingredient sales out of
the store
• Ingredient sales out of the store is compared to ingredients sales into the store from the 3PL supplier
• Ingredients to Menu items have a one-to-many relationship

8. Agenda
• About KFC
• Complexity in QSR
• The Project
• Lessons Learnt

9. Why the need for a formalised Sales & Operations
Planning (S&OP) process and system that balances
supply and demand

10. The importance of Planning to bridge the gap between
Strategy and Execution
TACTICAL SUPPLY CHAIN PLANNING
Plan supply Match demand and supply Plan demand
Return
OPERATIONAL EXECUTION
STRATEGIC PLANNINGSTRATEGIC PLANNING
Plan Source Make Deliver Sell

11. KFC South Africa S&OP journey and the way forward
20142013
Sustain the achievement and prepare for
the next step to be a best in class
organisation
Complete/ In Progress
Next focus areas
No S&OP
Processes and
ad-hoc LTO
Planning
Bi-Monthly Demand
Planning (with
Excel based LTO’s)
2015 2016 Time
Value
S&OP for all items with
supplier sharing and 3PL
replenishment (LTO’s &
permanent)
Integrated Business
Planning
Extend to New
Africa Markets
We are here
Select & Implement
Planning System
S&OP for current &
upcoming LTOs (with
Planning System)

12. A formal S&OP process and system allowing KFC to be
more pro-active and flexible with 3 main objectives
Planning
Forecast
-ing
Finance &
Marketing
Maintain good stock
availability (involving less
effort) especially with
increased marketing
complexity
Improved Supply Chain
control and pro-active
forward visibility
Increased visibility on
permanent items (not only
focused on LTO’s)
1
2
3
Main Objectives
Supply Chain,
Suppliers & 3PL
Re-align supply
with changing
demand
Stock
Availability &
Write-Offs
Actual vs.
Forecasted
Demand

13. We set detailed sub-objectives to guide our journey
and the implementation of the project
Good stock availability
Reduced effort to plan
(increased automation and
fewer resources required)
Improved Supply Chain control
Pro-Active visibility of supply
issues (LTO & permanent)
Supplier & 3PL plans
Forecasts and plans for
permanent items (not current)
Actual vs. Forecasted Demand
Improved storage capacity
planning visibility
Better write-off management
Integrated BOM management
Current Future

14. Planning for the KFC South Africa Supply Chain
3PL 5 DC’s 800 KFC’s100 Suppliers
Supply Planning Demand Planning

15. What the next level in the maturity curve required given
the multi-layered Supply Chain
Store Supply Chain
Source: Deliver: Make
Store Supply Chain
Source: Deliver: Make
3PL
Source: Deliver
3PL
Source: Deliver
Supplier Supply Chain
Source: Make: Deliver
Supplier Supply Chain
Source: Make: Deliver
Plan 1 week ahead
Forecast LTO’s Nationally
New Process
Old Process
Forecast all menu items at
regional level (some by store)
Forecast and plan all
ingredients by DC & Supplier
Menu Items
Converted
through BOM
to Ingredients

16. … with a tailored system
Interface
Master Data
Forecasting Tool
Demand Planning
Open PO’s &
Planning
Parameters (lead
time, minimum
order quantities)
> 3PL System
Stock on Hand
(SOH) from
> 3PL System
Ingredients/ DC
Sales
> 3PL System
BOM (recipe info)
> KFC System
Menu Item/ Store
Sales
> KFC System
(POS)
Reports and data
extraction
Statistical and
consensus
forecast by week
for menu items
and ingredients
Suggested
purchase orders
for ingredients by
DC and supplier
within constraints
Sales History (weekly)
SOH, PO’s, Planning Parameters (daily)
Planning Tool
Supply Planning

17. In Summary
Planning (Supply Plan)Forecasting (Demand Plan)
Store Sales
Sales
INTERFACE
Menu Item Forecasting (by Region, LTO
by Store)
Ingredients Forecasting (by DC)
DC and Supplier Planning for
Ingredients
BOM CONVERSION
S&OP Process
1
2
3
4

18. Agenda
• About KFC
• Complexity in QSR
• The Project
• Lessons Learnt

19. Choose the right service provider in accordance with
your requirements
Sample of Key Clients Barnton Competitive Edge
• Significant advanced forecasting & planning
experience
• Blue chip SA (incl. international) clients
• Only planning systems vendor with local QSR
experience (i.e. Famous Brands)
• Highly recommended by SA Supply Chain
practitioners
• Flexible, configurable systems
• “Simple” advanced planning system (not “overkill”)

20. Strong project management and a rigorous approach
with strong governance is a critical success factor
20
Project Charter
Governance & Stakeholder Management
Approach & Timeline
Project Plan

21. What worked well and what didn’t
What Worked Well Areas for Improvement
• Interface effort and complexity underestimated
• Data cleansing effort underestimated
• Clearly defined scope i.e. BOM module
development
• Availability of key stakeholders
• Implement consensus S&OP (Demand Planning)
process prior to systems implementation
• Project leadership very involved in understanding
and guiding solution design
• Strong project manager with good methodology &
governance
• Good buy-in through Cross Functional Team and
stakeholder involvement and communication
• Choose the right demand & supply planning
solution with flexibility to tailor for KFC specific
functional needs
• Defined new roles and responsibilities in line with
S&OP process (one new role)
• Hands-on training with KFC’s real data and on-the-
job coaching

22. Since formalising the S&OP process, write-off spend
has reduced by ~60% whilst doubling the number of
promotions
7
10
14
0
2
4
6
8
10
12
14
16
0
100
200
300
400
500
600
700
2012 2013 2014
Thousands
Promo Performance: Execution vs Write Off (ZAR)
Write Offs Promos
Effective write off cost per promo has been improving

23. 0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
2013 2014
Out of Stock Occurance at Order Line Level
… and Out of Stocks at DC’s have reduced by 48%
(despite 6% volume growth in the last year)
48%
Our journey has already yielded benefits, but at
substantial effort (permanent items on auto-
pilot)

24. Q&A and Contact Details for more information
For more
information please
contact:
Thinus Hermann
Implementation Partner
Barnton Consulting
Mobile: +27 (0) 79 502 7515
Email: thinus@barnton-consulting.co.za
Elizbe Rohde
Implementation Project Manager
KFC Supply Chain Manager (South
Africa)
Landline: +27 (0) 11 790 9149
Mobile: +27 (0) 82 416 7029
Email: elizbe.rohde@yum.com