We often underestimate how important supply chain is to our daily lives. While it’s not a surprise to supply chain managers, most consumers don’t consider folks like Chris Ward, who are out there sourcing things like 80,000 cases of jalapenos for Church’s Chicken so you can get peppers on the side with your combo meal.
Since Chris was brought on as supply chain manger for Church’s Chicken, he’s implemented initiatives that have streamlined Church’s supply chain process by reducing costs and increasing efficiency in sub-processes throughout the organization and its vendors.
This post will focus on a few of the areas Chris has spearheaded that are worth discussing. Most of the information for this post came from a recent SupplyChainDrive interview with Chris Ward; great source for industry news and articles.
Where are your DCs located in relation to your profit centers?
Church’s uses two different food service distributors. Performance Food Group (PFG) and Service Systems of America (SSA). PFG operates 12 distribution centers (DCs) which covers roughly 900 of the 1,100 quick service restaurants (QSRs) within Church’s portfolio. SSA operates two distribution centers and covers the remaining 200 QSRs on the west coast.
See the map below illustrating Church’s QSRs located throughout the US.
One example of a change came after analyzing a few of their DCs in the southeast. Church’s DC in Milton, Georgia, services 140 restaurants. The next closest distribution centers are in Mississippi and Louisiana. “Ward’s team analyzed their restaurant lanes to see if any were crossing over each other, and whether it made sense for another of PFG’s distribution centers to pick up a few extra restaurants. It turns out it’s more profitable for Church’s and PFG to do that, and after talking with the affected distribution center presidents, they made the change.”
It is important to note that Chris and Church’s Chicken made the effort to effectively communicate with the distribution center presidents. Not only did it create a more lucrative outcome for both parties, but it also helped build a long term relationship with their distributors which will pay off in the long run.
Phase out direct delivery.
Church’s had roughly 300 QSRs that still utilized direct delivery for chicken products from Tyson. A Tyson truck pulls in, dropping off chicken and later, PFG would bring in the other groceries like coleslaw, french fries, biscuits etc…
The problem with this method was that the cost for delivering the 20 boxes of chicken directly from Tyson is more expensive. Church’s realized that if they have the chicken delivered to PFG, the cost can be spread over 80-120 boxes per QSR instead of 20. It’s much more efficient to deliver 120 boxes using one truck. This is especially true for individual QSRs and in essence cuts logistical traffic in half.
Now Church’s orders all its product from one source instead of multiple vendors. Additionally, there is no sacrifice in quality, since it’s the same chicken product being delivered.
As a result of this initiative, Church’s realized reduced deliveries and overall decrease in supply chain costs.
Changing the commitment model for promotional products.
Church’s used to run with a more centralized ordering process where ordering would be based on forecasts and projections from QSRs. However, it quickly became clear that this process was putting the DCs and QSRs in a tough spot. In the case Ward described, there was a regular promotion for chicken nuggets. After corporate made their orders, they ran into two major hiccups:
- Too much product was ordered and QSRs had to deal with DCs to find a place to store leftover stock.
- Too little product was ordered and DC’s had to scramble to keep product flowing to QSRs.
Obviously, there was a disconnect between corporate and the QSRs. It seems they were relying too much on the forecasts and not communicating effectively with the profit centers. The solution was a simple one—decentralize the ordering process, and allow the QSRs to determine what they need.
Now the process involves requisition from franchise and corporate QSRs. Once all orders are received, corporate places one large order and each store’s order for product is fulfilled. Ward says, “We get exactly what we need.”
The decentralized process eliminates second guessing and reduces friction between the restaurants and the DCs. Additionally, Church’s sees increase in profits when they only order what is needed, when it is needed. The inherent on demand efficiency reduces exposure from dead inventory after promotion has ended, which also results in smaller overall footprint for each DC.
Chris Ward and Church’s Chicken are a great example of effective communication across an organization and how small, simple changes can have a big impact across the board.
Thanks for reading!