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KFC - FACILITY

LOCATION AND LAYOUT

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FACILITY LOCATION

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FACILITY LOCATIONKFC & Facility Location:KFC Corporation, or KFC, founded and also known as Kentucky FriedChickenis a chain of fast food restaurants based in Louisville, Kentucky.KFC is the third largest fast food chain with over 12,200 outletsin 99countries. KFC has maintained its title, for the last 60 years, of being thechicken Experts. Opening the first KFC outletin Gulshan-e- Iqbal in 1997.

KFC wore the title of being the market leader in its industry. Servingdelicious and hygienic food in a relaxing environment made KFC everyonesfavorite. Since then, KFC has been constantly introducing new products andopening new restaurants for its customers.Presently KFC is branched out in eighteen major cities of Pakistan(Karachi,

Lahore, Gujranwala, Sukkur & Muree) with more than 60 outletsnation-wide.The outlets comprise of franchises, company owned and affiliated. Theyused the proper method for facility location and layout analysisof new orexisting outlets. Facility location involves the evaluation of various sites for anew facility.

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FACILITY LOCATION

Existing Locations of KFC In Lahore:

Barket Market Defence Cavalry Ground Shadman Mall Road Thokar Niaz Baig M.M. Alam Road Y-Block

GT Road

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FACILITY LOCATION

Factors That KFC Management Keep in Mind during Facility LocationAnalysis:There are several factors that influence the Facility Location Decision.

Proximity to Customers, Business Climate, Total Costs, Infrastructure, Quality of Labor, Host Community,

Etc.

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FACILITY LOCATION

Facility Location Techniques:There are many analytical techniques that can be used in facilitylocation decision. Some of these are:

1) Factor Rating2) Cost-Profit-Volume analysis3) Center of Gravity Method, and4) Transportation and Simulation Models.

But first twomethods Factor Rating & Cost Profit VolumeAnalysis are more simple & suitable for KFC Because of easilyunderstandable than Center of Gravity & Simulation Method.

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FACILITY LOCATION

Method of Factor Rating:In factor rating method, first we must identify the Most ImportantFactors in evaluating alternative sites for the new facility. Then weshould assign a weight between 0 and 100 to each of these factors.Each alternative location will then be rated based on these factor

weights. The most weighted alternative is selected as the bestalternative.Example:Suppose KFC is considering three alternative sites for its new

facility locations.

Site A. Moon MarketSite B. ShadraSite C. Chock Chu Burgi

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FACILITY LOCATIONMethod of Factor Rating(Cont)After evaluating the firms Needs, the Managers have narrowed thelist of Important Selection Criteria down into three major Factors.

- Availability of skilled labor- Availability of suitable Infrastructure, and

o Proximity of target customers.Weights reflecting the relative importance of each factor have beenassigned as follows:

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FACILITY LOCATIONMethod of Factor Rating(Cont)

ow we will multiply each score by its corresponding factor weight:Weighted scores are calculated as: (Site Score)x (Factor Weight).

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FACILITY LOCATIONMethod of Factor Rating(Cont)From these results, the largest total weight is for Site A. It appears to bethe best location.What happens if we change the factor weights. Lets use the followingfactor weights:Skilled labor: 0.45; Raw Materials: 0.40; and Market: 0.15Then the following results are obtained:

In this case, Site C appears to be the best choice with largest weightscore.Therefore, factor rating method is very sensitive to the weights assignedto each factor.

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FACILITY LOCATIONCost-Profit-Volume Analysis:

When the fixed and variable costs for each site differ, Cost-profit-volume analysiscan be used to identify the location with the lowestcost.Example:Suppose KFC is considering three alternative sites for its new

production facility.

Site A. Moon MarketSite B. ShadraSite C. Chock Chu Burgi

The Annual Production Cost associated with each alternative is alinear function of the production volume. That is:Total Production Cost = (Fixed Cost) + (variable unit cost) x (annualproduction volume)

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FACILITY LOCATIONCost-Profit-Volume Analysis (Cont):Assume that the expected annual production volume is 250.000units. And further assume that:

(x: production volume = 250)For Site A: Prod. Cost = 10,000 + 250 xFor Site B: Prod. Cost = 25,000 + 150 xFor Site C: Prod. Cost = 60,000 + 50 xBased on these information, Which site has the lowest cost?At a production volume of 250.000 units, site B has the lowest cost,because

For Site A: Prod. Cost = 10,000 + 250 (250) = 72,500For Site B: Prod. Cost = 25,000 + 150 (250) = 62,500For Site C: Prod. Cost = 60,000 + 50 (250) = 72,500

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FACILITY LOCATIONCost-Profit-Volume Analysis (Cont):

This graphic shows that annual production cost changes with differentproduction volumes.- If the expected annual production volume is below 150 units, then choose siteA.- If the expected annual production volume is between 150 and 350 units, thenchoose site B.- If the expected annual production volume is over 350 units, then choosesite C.

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FACILITY LAYOUTFacility layout:

Facility Layout means Planning And Arrangement of all

Machines, Utilities, Employee workstations, Customer service areas,

Material storage areas, Aisles, Restrooms, Lunchrooms, Internal walls, Offices, and Computer rooms,

for the smooth flow patterns of materials and people around, into, and withinBuildings Infrastructure services.

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FACILITY LAYOUT

Factors that influence layout:- Volume, weight of items to be produced.- Nature of the service to be provided.- Cost of the building to house the operation.- The fragility of the product or component

KFC Facility Layout:Internal & External layout of KFC outlet is attractive and charming all overthe world. Ideal color schemes, pleasant lighting outlets, comfortablesitting arrangement, fully trained employees and their proper work

division, State of the art interior beautification, speedy & appropriatecooking process, special club/block for kids, etc. are the chiefcharacteristic of the KFC layout.

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FACILITY LAYOUT

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FACILITY LAYOUTKFC Process Layout Map:KFC fallow the standardizedprocess for production. The facilitylayout process schematic diagram are presented blow.KFC Old Process Layout:

KFC Modern (New) Process Layout:

RawMaterial

Cook Assemble

FinishedGoods

Customer PlaceOrder

Deliver

RawMaterial Cook Assemble

W. I. P.

CustomerPlace Order

Deliver

C O

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FACILITY LAYOUTAdvantage of KFCs Good Layout: Reduces bottlenecks in moving people or material. Minimizes materials-handling costs. Reduces hazards to personnel. Utilizes labor efficiently. Increases morale.

Utilizes available space effectively and efficiently. Provides flexibility. Provides ease of supervision. Facilitates coordination and face-to-face

communication where appropriate.

FACILITY LAYOUT

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FACILITY LAYOUTConclusion And Recommendation:KFC can progress rapidly by identifying new facility locationsand increasing existing target market and facility locations bylaunching new competitive product chain at minimum cost.KFCs Unity Drive had a simple but essential message and

objective. To bring together the people of Pakistan by promotingin the words of KFC founder, Unity, Faith & Discipline. In atime of uncertainty and fear, KFC rose to the occasion and builta platform of solidarity and togetherness for the people ofPakistan. The campaign proved to be a successful initiative in

not just providing hope for our patrons, but also allowed KFCPakistan to take an effective step forward during tough timesand entrust other responsive companies to act in a similarmanner.

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