A Research Report on

“Enterprise Resource Planning (ERP)Systems used for Kentucky Fried Chicken”

Final Project for MIS 310

Course Instructor:

Dr. Maher Bakri

Prepared By:

Zeina Saleh

American University of Culture and Education – Tyre CampusFaculty of Business - Spring Semester/ 2010

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“Enterprise Resource Planning (ERP)Systems used for Kentucky Fried Chicken”

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Dedications

I would like to dedicate this project to the course instructor Dr. Maher Bakri. And I would like to thank him for guiding me through every step of it. It is he who helped me develop the skills and knowledge necessary for completing this

project.

TABLE OF CONTENTS Page

Abstract……………………………………………………………………………..…………………………………….4

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General Information……………………………………………………………………………………..……………...5 Kentucky Fried Chicken’s Famous Story……………………………………………………………..……………6Basis for Success……………………………………………….…………………………….…..………..…………..8

The Colonel’s Promise and Vision…………………………..…………………………..……………………The C.H.A.M.P.S. Program.....................................................................................................................

Corporate Overview…………………………………………………………………………………………..………...9Facts and Figures………………………………………….……………….…………..………….……………Type of Restaurant / Outlet……………………………………………...……………………………………..Franchise Model……………………………………..…….……………………………………..….………….

Organizational Structure……………………………………………………..………………………….…….…………Head Office Departments……………………………………………………………………..………………………10Enterprise Resource Planning System (ERP).................................................................................................12

ERP Key Functions………………………………………………………………………...……………………ERP Software Applications Include…………………………………………………….……………………..Objectives for Implementing an ERP System…………………………………..……….………………...13Advantages of an ERP System………………………………………………………………………………...ERP Systems Centralize Data……………………………………………………………………………….14Disadvantages of an ERP System…………………………………………………….……………………….

KFC Before Implementing an ERP System………………………………………………………………………….15 KFC’s Implementation of an ERP System………………………………………………..……………………JD Edwards EnterpriseOne 8.10 benefits the company…………………………………….………………..

Conclusion and Recommendation………………………………………………………………..……………………..Key features of JD Edwards EnterpriseOne 9.0 include…………………………………………………………..16References………………………………………………………………………………………………………………….17

Abstract

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An Enterprise Resource Planning (ERP) system has an enormous effect on a business. It is intended to facilitate information sharing, business planning, and decision making on an enterprise-wide basis therefore, allowing each department to communicate and share information easier with the rest of the company. The ERP system is also responsible for

connecting the organization with its suppliers and customers.

KFC is a major quick serving restaurant (QSR) serving over 12 million customers on a daily basis through its 21,400 restaurants in 109 countries. This report investigates the

Enterprise Resource Planning (ERP) system being implemented at Kentucky Fried Chicken, the reasons for its implementation; the benefits obtained from it my and my personal recommendations to enhance it. The report also gives an introduction about

KFC, its establishment and its history.

General Information

KFC Corporation, also known as Kentucky Fried Chicken is the world's most popular chicken restaurant chain. KFC primarily sells chicken pieces, chicken sandwiches, chicken pot pies, crispy chicken strips, wraps and salads. KFC is part of Yum! Brands, Inc., the world's largest restaurant company in terms of system restaurants, with more than 36,000 locations around the world.

Type Fast Food Chain

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Founded 1930 (North Corbin, Kentucky)

First Franchise 1952 (South Salt Lake, Utah)

Founder Harland Sanders

Headquarter Louisville, Kentucky

Industry Quick Service Restaurant (QSR) industry

Revenues $ 520.3 million (2007)

Employees 24000 (2007)

Parents Yum! Brands

Key People Roger Eaton, President

Harvey R. Brownlea, COO

James O'Reilly, VP for Marketing

Kentucky Fried Chicken’s Famous Story

Pete Harman was building a successful burger business in Utah when a white-haired, goateed acquaintance from Kentucky showed up unexpectedly and offered to cook a fried chicken dinner.

Colonel Harland Sanders had a business proposition. He was certain that one helping of his specialty chicken, coated with a blend of 11 herbs and spices, would persuade Mr. Harman to add chicken to his menu.

Mr. Harman was hooked after a few bites. Soon, his restaurant was promoting the dish, called Kentucky Fried Chicken.

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The chicken became an instant hit in that August of 1952 as customers lined up outside the Salt Lake City eatery to take home dinners by the bucketful. For $3.50, they got 14 pieces of chicken, mashed potatoes, rolls and gravy.

From humble beginnings, Kentucky Fried Chicken became a fast-food staple and its originator one of the world's most recognizable faces.

Fifty years later, the chain built on Mr. Sanders' salesmanship and home-style cooking boasts nearly 12,000 restaurants worldwide generating sales of nearly $10 billion a year.

For Mr. Sanders, success was a long time coming. He drifted from job to job, including stints as a railroad fireman, insurance salesman, steamboat ferry operator, tire salesman and service station operator. He perfected his chicken and the cooking technique in the late 1930s while serving hungry customers who stopped at his service station — now a historic landmark in Corbin, Ky. The title “colonel” was an honorific bestowed on Mr. Sanders by a Kentucky governor.

He decided to take his chicken from a handful of local restaurants to a national stage at the age of 62, a time when most people are thinking of retiring.

He crisscrossed the country by car, his cookware and herbs and spices in the back, to whip up batches of chicken for restaurateurs and their employees. The demonstrations sealed many handshake deals in which restaurant operators agreed to pay Mr. Sanders a nickel for each chicken sold.

By 1964, Mr. Sanders had signed up more than 600 franchised outlets when he sold the company for $2 million to a group headed by Jack Massey and Mr. Brown, who later became governor of Kentucky.

Kentucky Fried Chicken took flight under Mr. Brown and his partners. By 1971, when they sold the company for $285 million to Heublein Inc., it had more than 3,500 franchised and company-owned restaurants.

Mr. Brown attributed the company's success to its emphasis on take-home dinners that resembled the kind mother made, a revolutionary concept in the restaurant industry.

The company also capitalized on Mr. Sanders' popularity. The colonel always looked the part of the Southern gentleman, wearing his trademark white suit and black string tie while pitching chicken or dishing out homespun wisdom on television shows.

Mr. Sanders stayed on as company spokesman, promoting the chicken in folksy television commercials, until his death in 1980 at the age of 90.

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KFC changed hands a few more times. It became a subsidiary of R.J. Reynolds Industries — later RJR Nabisco — when Heublein sold it in 1982. PepsiCo acquired KFC from RJR Nabisco in 1986 for about $840 million.

In 1997, PepsiCo's three fast-food restaurant chains — KFC, Taco Bell and Pizza Hut — spun off to form Tricon Global Restaurants Inc. This year, Louisville-based Tricon changed its name to Yum! Brands Inc.

Kentucky Fried Chicken’s Basis for Success

Is owed much to the vision, energy, and heart of its founder and corporate icon, Colonel Sanders. Colonel Sanders developed the special cooking process and created the blend of 11 secret herbs and spices known to the world today as Original Recipe Kentucky Fried Chicken. The Colonel’s Promise and vision which states the following:

To Serve Our Valued Customers Hot, Great Tasting Meals Great Value for Your Money Quickly and Accurately In a Clean, Comfortable Environment In a Friendly, Courteous Manner

Today, the company continues to maintain rigorous quality control programs to ensure that its customers around the world enjoy the highest possible quality restaurant services and food products. KFC employees are trained to deliver this promise to each and every customer that is served.

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The C.H.A.M.P.S ProgramIt is a program that backs up the Colonel’s promise to the customers.C.H.A.M.P.S stands for the six universal areas of customer expectation common to all cultures and all restaurants concepts which are:

Cleanliness Hospitality Accuracy Maintenance of Facilities Product Quality Speed of Service

C.H.A.M.P.S is the operating platform used to ensure that the customer has the consistent quality experience in every restaurant, everyday and on every occasion.

Corporate Overview

Facts and Figures

KFC restaurants are located in 109 countries and territories around the world and serves over 12 million customers every day generating sales of nearly $10 billion a year. KFC operates more than 5,200 restaurants in the United States and more than 16,200 units around the world, employing more than 24,000 people worldwide.

Type of Restaurant

Its locations can be found operating as free-standing units and kiosks in high-traffic areas. Many KFC locations are co-located with one or more of Yum Restaurants including Long John Silver's, Taco Bell, Pizza Hut, or A&W Restaurants. Many of these locations behave like a single restaurant, offering a single menu with food items from both restaurants.

Franchise ModelMore than 20% of the restaurants are company-operated; the remaining 80% are either franchised or licensed. Franchisees are required to meet certain operating standards as part of their franchise agreement.

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KFC’s Organizational Structure

KFC has adopted a traditional fast food chain restaurant structure.

Chief Executive Officer: The CEO has control over departments and employees. Regional Manager: Monitors and Controls the Area Manager. Area Manager: The Area Manager drives excellence in day-to-day operations of all company

owned restaurants in the market; trains, coaches, supports managers; plans and sets goals; focuses on in-store problem solving/process improvement; sets standards; recognizes and motivates Restaurant Managers, Assistant Managers and Restaurant Teams.

Restaurant General Manager: The Restaurant General Manager is accountable for creating and running an energetic and valuable work environment, which is committed to serving the best chicken at the fastest speed and with a smile. The Restaurant General Manager reports directly to an Area Manager and is accountable for successfully implementing and maintaining all company policies and procedures in relation to operations, customer service, cash handling, marketing, purchasing, human resources, health & safety, administration, training and development.

Assistant Manager: The Assistant Manager is responsible for assisting the Restaurant General Manager in creating an energetic and valuable work environment. Assistant Managers are also responsible for ensuring all company policies and procedures are followed in relation to operations, customer service, cash handling, marketing, purchasing, human resources, health & safety, administration, training and development

Trainee Manager: Trainee Manager is responsible for assisting the Restaurant General Manager and Assistant Manager in creating an energetic and valuable work environment. Trainee Managers help with day-to-day running of the restaurant, and need to ensure that all operations, customer service, cash handling, marketing, purchasing, human resources, administration and training & development policies are followed.

Customer Service Team Members: Are responsible for working the service areas and ensuring quality product, service and cleanliness is delivered to all customers at top speed and with a smile!

Food Service Team Members: Are responsible for putting the crunch in the coating and the zing in the Zinger…the cook’s main task is to prepare and cook the irresistible KFC products! The cook must also maintain the cleanliness of the cooking area as well as the quality of product and speed of preparation.

Head Office Departments Company support functions are listed below:

Business Development The Development team finds, builds and maintains KFC Restaurants. The Team is set up in four key areas; network planning, acquisition, store design & construction and estate management. The team works closely with the Finance team to ensure that the new restaurant is not only optimizing

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the customer experience but also driving industry leading returns for the shareholders. They are also responsible for ensuring KFC’s high standards of convenience, comfort and safety are maintained in all KFC restaurants and facilities through an extensive annual refurbishment program.

Finance Meaningful and insightful analysis of their performance is central to ensuring their continued business success. In the first instance this requires accurate and timely accounting. Whether it be paying the suppliers, billing the franchisees, managing cash and asset purchases or paying salaries for the employees, each member of the Financial Control team is dedicated to ensure all business transactions are accurately and efficiently recorded. This provides a robust platform for the Business Control and Commercial teams to analyze results and partner with key stakeholders to set and drive the strategic direction of the business.

Human Resources The people’s culture is key to KFC’s success and finding the right people who will thrive in the job they do is paramount. Their HR Practices are second to none and they thrive on giving employees the opportunity to grow and develop within the business. Their vision is “To Build a World Class Organization”, which will be achieved through: Managing Talent, Building People Capability, Creating Engagement and Driving Organization Effectiveness.

Information Technology The IT team at KFC select, develop, implement and maintain professional technologysolutions that support, and enable, the strategic goals of the business. The team supports restaurants throughout the area with a robust and standard framework of applications and infrastructure. The team has a passion for the provision of world class solutions and support, from the in-store technology that enables their stores to sell great chicken, to the timely, relevant and accurate reporting to the management team that enable clear decisions to be made.

Marketing The driving force behind the KFC Marketing team is a shared passion to deliver a constant pipeline of irresistible tasting meals. The process starts with defining consumer needs and exploring new ways to deliver consumer led innovation. The Marketing team work cross functionally with Product Excellence and Operations to develop and implement new ideas and with Finance to measure their contribution to the business. The Marketing team is also the heart of communication, both within the business and most importantly to the consumers. The multi million pound Marketing budget is divided between media buying and advertising production to ensure a year round calendar of new news to drive consumers back to KFC Restaurants again and again.

Operations The Operations team is the hub of the company, running KFC stores and delivering to the customers fantastic quality food and outstanding levels of service. The function covers the

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leadership, management and evaluation of all the stores and above store support staff. Operations works alongside all KFC functions to ensure that their restaurants look good, their teams are motivated and well trained and all of their delicious products are hot and fresh giving all their customers a reason to return. They partner all other functions to ensure that standards are set and maintained. Operations is a people business. They recruit, train and coach their teams. They take pride in providing great career development opportunities for their teams, enabling people who have joined them for their first job at the age of 16 to progress to become Restaurant General Managers and Area Managers.

Franchise Operations The Operational support for the KFC Franchisees is a key focus for their business. They have a dedicated team working with their Franchise partners on delivering exceptional excellence.

Enterprise Resource Planning System (ERP)

ERP is a software that consists of multiple applications such as customer relationship management (CRM) software; inventory control software; accounting applications; sales software; order-tracking tools; invoicing software; project-management and payroll programs, among others. By consolidating all these tasks into one over-arching software suite, businesses can dramatically cut training and maintenance costs, ensure all data is consistent and up-to-date, and reduce software expenses. It integrates information across the company and eliminates complex links between computer systems.

ERP Key Functions: ERP Systems typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting for a company. ERP software can aid in the control of many business activities, including sales, marketing, delivery, billing, production, inventory management, quality management, and human resource management.

ERP Software Applications Include: EDI (Electronic Data Interchange): Is the structured transmission of data between

organizations by electronic means. It is used to transfer electronic documents from one computer system to another, eg. from one branch in an organization to another. It is more than mere e-mail; for instance, organizations might replace bills of lading and even cheques with appropriate EDI messages.

AMS (Attendance Monitoring System): The attendance monitoring system provides registration and complete processing of the employees’ attendance. It is intended for all organization types, ranging from state administration bodies to banks to industrial companies. Data is stored in an SQL server database, allowing distributed data processing within a computer network.

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CAD/CAM/CAE (Computer Aided Design/ Computer Aided Manufacturing/ Computer Aided Engineering): This system handles the design, manufacturing and engineering functions in the organization. This provides drawing and design engineering information to ERP in the execution of manufacturing and purchase functions.

DMS (Document Management System): Provides storage, versioning, metadata, security, as well as indexing and retrieval capabilities of electronic documents and images of paper documents e.g., records of transactions handled. The system also provides text edit facilities, cross checking, confirmation of authenticity of documentation.

CMS (Communication Management Systems): ERP uses CMS as a tool for its communication needs. CMS controls overall communication within the organization.

SMS (Security Management System): It handles security aspects of the organization. It tracks the movement of man, material and vehicle. Access by unauthorized or unidentified means are monitored and warned. Therefore the entire business operation can be safeguarded.

Objectives for Implementing an ERP System: Performance Management & Reporting: Report and manage the performance of enterprise

business solutions. Purchasing: Automate the steps from procurement to payment. Materials Management: Manage inventory receipts, shipments, moves and counts across your

warehouses, suppliers and customers. Manufacturing: Control manufacturing operations with material planning, production scheduling

and shop floor execution capabilities. Order Management: Create quotes, book orders, manage materials, generate invoices and

collect cash. Sales: Control your valuable customer relationship management solutions. Service: Manage the entire Service delivery lifecycle. E-Commerce: Create and run a secure web store front. Point of Sale: Automate cash sales and inventory management. Financial Management: One system automates the processes of your business solution and

manages your financial records. Projects: Project management, planning and execution. Track costs associated with multi-

phase projects across your business solution.

Advantages of an ERP System: ERP systems connect the necessary software in order for accurate forecasting to be done.

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Integration among different functional areas in an organization to ensure proper communication, productivity and efficiency.

Order tracking, from acceptance through fulfillment. The revenue cycle, from invoice through cash receipt. Tracking the three-way match between purchase orders (what was ordered), inventory receipts

(what arrived), and costing (what the vendor invoiced). Reduce paper documents by providing on-line formats for quickly entering and retrieving

information. Improves timeliness of information by permitting, posting daily instead of monthly. Greater accuracy of information with detailed content, better presentation, fully satisfactory for

the Auditors. Improved Cost Control. Faster response and follow up on customers. More efficient cash collection and reduction in delay in payments by customers. Better monitoring and quicker resolution of queries. Enables quick response to change in business operations and market conditions. Helps to achieve competitive advantage by improving its business process. Improves supply-demand linkage with remote locations and branches in different countries. Provides a unified customer database usable by all applications. Improves international operations by supporting a variety of tax structures, invoicing schemes,

multiple currencies, multiple period accounting and languages. Improves information access and management throughout the enterprise.

ERP Systems Centralize DataBenefits of this include: Eliminates the problem of synchronizing changes between multiple systems - consolidation of

finance, marketing and sales, human resource, and manufacturing applications Permits control of business processes. Provides real time information to management anywhere, anytime to make proper decisions. Reduces the risk of loss of sensitive data by consolidating multiple permissions and security

models into a single structure. Shorten production lead-time and delivery time.

Disadvantages of an ERP System: Customization of the ERP software is limited. Re-engineering of business processes to fit the "industry standard" prescribed by the ERP

system may lead to a loss of competitive advantage. ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business

process of some companies—this is cited as one of the main causes of their failure. Many of the integrated links need high accuracy in other applications to work effectively. Resistance in sharing sensitive internal information between departments can reduce the

effectiveness of the software. Some large organizations may have multiple departments with separate, independent

resources, missions, chains-of-command, etc, and consolidation into a single enterprise may yield limited benefits.

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KFC Before Implementing an ERP System

KFC was using multiple IT solutions to address their business requirements. Because of this, the integrity of the reports became difficult to validate and management had a hard time tracking down their stocks. They became burdened by multiple data sources that didn’t integrate. Lots of time and money was lost from duplication of order entries and business processes throughout the outlets. Numerous hours were being spent each month manually creating reports, tracking invoices, and handling payroll to provide the Head Office with their month end financial reports. The reason behind these problems was evident: the systems could not communicate with one another. The KFC IT Team updated KFC’s enterprise IT structure with JD Edwards EnterpriseOne 8.10 to be able to solve KFC’s growing problem of misinformation and inaccurate reports.

KFC’s Implementation of an ERP SystemThis Enterprise Resource Planning (ERP) system assists with managing finance, assets, people, projects, suppliers and the fulfillment and manufacturing processes.JD Edwards EnterpriseOne 8.10 offers both the foundation and operational components, including:

Financial Management Technical Foundation Inventory Management Asset Management (Equipment, vehicles) Forecasting Workforce Management Time and Expense Management Procurement

JD Edwards EnterpriseOne 8.10 benefits the company with the following:• Greater efficiencies - reducing duplicate data entry/maintenance• Standardizes business processes• Tracks and manages key data• Greater level of insight into how the business works• Enables to plan ahead • Provides business applications for now, and into the future

Conclusion and Recommendation:The proposed system will not be a different system but, an upgrade to the existing one. After an evaluation of various ERP solutions, I came to conclusion that an upgrade to JD Edwards EnterpriseOne 8.10 to JD Edwards EnterpriseOne 9.0 would be the best choice.

JD Edwards EnterpriseOne 9.0 includes enhancements for financial management, supply chain management and human resource management. The latest release also includes industry-specific capabilities for engineering and construction, food and beverage, commercial real estate, industrial manufacturing and professional services.

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The new Web-based system enables quicker generation of inventory, sales and revenue reports – going from 1 hour to 20 minutes. This helps the KFC management to make more accurate and quicker decisions in response to demand changes.

The system also enables centralized data repository, XML-based integration, and smooth integration with other applications. Also leverages JD Edwards EnterpriseOne XML Publisher to print and distribute formatted documents, results in savings on third-party software licensing costs.

The system supports the company to automate inter-company invoicing and business workflows between the US Head Office and the rest of the company owned outlets, helping to ensure consistency and enhancing operational efficiency. It potentially saves 20 to 30 additional headcount to process these routine transactions.

Key features of JD Edwards EnterpriseOne 9.0 include:

Deployment to enjoy enhanced functionalities, user-friendliness, multi-language and multi-currency support, as well as ease of management. As the new version is unicode-compliant and Web-enabled, it helps to save a lot of time and resources for deployment and training across various countries. Accounting module provides advanced project accounting integrated to an enterprise's general ledger to help deliver better data quality for improved compliance and financial management and multiple options for expense allocation on projects. New functionality handles detailed client-required payroll and time card reporting, report generation and invoice printing to specific client formats, and different financial burden and allocation methods for meeting client needs. Enhanced financial compliance capabilities through new data relationship functionality for assigning correct values to entered information. Now, data can be entered correctly using customer-defined rules to help eliminate the possibility that inconsistencies, abbreviations or incorrect spellings are captured. Dynamic configuration capabilities enable sales and customer service representatives to correctly enter sales order combinations comprised of products and service offerings. New industry-specific enhancements for food and beverage producers. JD Edwards EnterpriseOne Tools 8.98 supports JD Edwards EnterpriseOne applications 8.10, 8.11, 8.11 SP1, 8.12 and 9.0. Key features for reducing total cost of ownership include: New User Interface that incorporates customer-driven user interface improvements and adopts a consistent Oracle standard to enhance productivity and improve the visual experience. More standards adoption, including support for Web Services for Remote Portlets (WSRP) and Java Database Connectivity (JDBC), increases IT staff flexibility and reduces learning curves for effective use. Enhanced Batch Process Management with out-of-the-box functionality to improve the management and monitoring of JD Edwards EnterpriseOne batch processes and reports.

References

www.kfc.comwww.yum.comhttp://www.oracle.com/us/corporate/press/017527_EN

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http://www.gtslb.com/solutions/jdedwards.htmhttp://it.toolbox.com/home/search/?r=jd+edwardshttp://www.sap.com/index.epx

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