Examining The IS System Of KFC

Purpose of the report: The Management of KFC Parramatta has requested an investigation regarding the use of their Information System in relation to their business’ decision making for competitive advantage and to make recommendations for changes and/or improvements as required.

KFC Parramatta is one of the branches of a huge franchise that is famous worldwide. Being a fast food restaurant it faces competition from many other similar restaurants for instance Hungry Jacks, McDonalds, Dominos and every single restaurant be it small or big. Therefore their information system plays a big role in their decision making process and their competitive advantage over their rivals. Knowing how to make improvements in their business using information systems is a major advantage and it is what a the profitability of a business relies on (J.A Senn 1996). Many retail businesses lack an information system making it quite difficult for them to make critical decisions therefore their competitors have a complete advantage over them and in most cases the retail business loses many customers due to the lack of correct information. According to Tutor2u (2010) competitive advantage is “an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.” Information systems help achieve this because they help the business know what is required and when it is required (Barney 1995) and by using this the business can make decisions such as how many staff to employ during a specific day for instance on Christmas; how much stock is required; what product to stock most; the average business profit during a certain period and its trend i.e. whether the business is going at a profit or lost and such information. The decision making process usually relies on the higher level management not the manager of the branch itself, however without information from the smaller branches it is almost impossible for the top level management to make a decision and that’s why a good information system has to exist.

Methodology:

Taking the above information in mind a research was conducted on KFC Parramatta. A weekly interview was organised with one of the managers, Vinod Patel, mostly on Fridays and Saturdays just outside the restaurant. The information collected was carefully analysed and organised and some of it is presented in this report in the form of graphs and diagrams.

Research site:

KFC Parramatta is a local restaurant located at Westfield Shopping centre in Parramatta, New South Wales. Being a fast food restaurant, all they sale is food products such as chicken burgers, chicken nuggets, fries and other related products. It is very close to other food courts in the same area and faces a lot of competition from nearby fast food restaurants hance the need for a good IS system.

Findings:

From the interviews it was found that KFC Parramatta has an information system in place. The information system was used almost in all instances of the business. The following are the key areas where their information system is used:

Recording sales data (the product sold, time it was sold , cost of the product, number of products sold and amount sold)

Calculating the daily pay for staff members depending on their number of hours.

Analysing the performances of the shift supervisor and other staff members ( this is done automatically in the computer where it calculates the total sales and divides it by the number of hours giving a sales per hour figure)

Generating the daily, weekly and monthly reports on the performance of the business.

It was found that the decisions are made in three levels and as follows:

Operational level (store managers): they make the decision on how many staff to employ, assigning jobs to employees, responsible for the daily management of the business and they handle customer complaints.

Middle level of management (area managers): they overlook the running of the stores and ensure that nothing is going wrong.

Top level of management (executive managers): they are the ones that decide what product to remove from the market, what product to add to the market (as an example the manager illustrated the grilled chicken), at what price to sell it and where to locate new restaurants.

Analysis of findings:

The sales are done on cash or credit card basis but everything is automated. The cash process is simple and less time consuming as a staff member can easily take cash and give back the required change. The credit card sale basis is a little more time consuming but almost similar to the cash system. Additionally the staff member has to wait till the transaction is approved since the credit card has to be checked to see whether the customer has money in it or not. The order data (the product sold, time it was sold, cost of the product, number of products sold and amount sold) all goes into the server once it is approved and it is stored there. The staff members collecting the data from customers can only input data and once an order is placed modifications to the order can only be done by the authorisation from managers. This acts as a security measure and prevents the staff member from editing any data after it is approved. Another security measure was the existence of a safe to keep all the cash and every staff member is supposed to keep the cash in the safe once it reaches a certain amount. Additionally being located in a shopping mall there are security cameras and even security guards around and this helps keep surveillance around the restaurant. The data stored on the web server can only be accessed by managers of that store (operational level management), the executor management and the administrative level management since they are only ones that have a password needed to log in to access the data. Since the data is all being stored directly on the web server there is a rare chance of the data being inaccurate if any.

Figure 1: An example of a monthly sales report of KFC Parramatta

From the report it can be seen that KFC Parramatta makes more sales on Thursdays. One of the main reasons for this is because of the long hours they are open. This graph is just one of the few generated by their information system. Without the information system, it would be so hard to analyse data and make a sales graph and therefore it is important that an information system exists.

Figure 2: An example of the business operation and decision making process

Data is automatically recorded on to the main server

Graphs

Reports are analysed used to make decisionsuntitledj0196400

sales

Data is automatically converted into:

Daily, weekly and monthly Reports

Stock reports

Main problems with the system:

Although the information system at KFC Parramatta is designed perfectly, there are minor flaws that could prove critical if not addressed.

1) One of them is the manual ordering of stock. Stock at KFC Parramatta is ordered twice a week on Tuesday and Saturday and this is done manually. The store manager counts the stock manually and orders as required. This leads to time consumption as the store manager has to manually count each and every box. Additionally, during the research it was also found out that during one of the busy days they had run out of stock for fries and chicken because the manager had forgotten to count the stock the day before and failed to place an order. This lead to delays with customer orders since they had to wait get stock from another store nearby. How did this affect the business? Many customers left angrily as they could not withstand the waiting delays. A few of the patient ones waited for an hour before they could get what they ordered. Loss of customers meant loss of profits and even a one hour delay in such a big restaurant causes a major crisis and leads to loss of profits. Located next to many other similar restaurants, some of the customers even bought from nearby restaurants as they could not withstand delays. This meant the other restaurants gained a slight competitive advantage over them during that period.

2) Another key area is the preparation of the daily roster. The daily roster is prepared manually by the store managers. They do this by calling a team member and confirming their shifts for the next day. The problems associated with this? Firstly, every team member has to be called and this means an added expense. Moreover the roster is not available online and as one incident happened two team members may report for a single shift.

Recommendations

Figure 3: Example of automatic stock ordering systemKFC Parramatta should get there ordering system automated. They should monitor their stock using barcode scanners, how much goes in and how much goes out. When the stock goes below a certain level the system automatically orders stock. This would help them in getting their stock in time and before the need for it, keeping them on the safer side. According to me below is an example of what I would preferably implement something as follows:

Estimated required stock

(8 boxes)

Current stock

(8 boxes)

System orders more stock (3 boxes)

Stock goes below estimated required level (5 boxes)

Additionally they should have a system where the rosters are prepared online and this way team members can see what day their shifts are on, plan their timetable from a convenient location, notify everyone of last minute changes and this way they can prevent many problems. This keeps the other team members aware of their duties and who they work with.

Finally they should establish a customer relationship management system (CRM). “CRM, or Customer Relationship Management, is a company-wide business strategy designed to reduce costs and increase profitability by solidifying customer satisfaction, loyalty, and advocacy” (Reynolds, 2010) .In case a delay happens their customers are loyal to them. This can be established by bringing in a point system for instance buying at KFC Parramatta earns you some points and after you have collected enough points you get to select a meal of your choice and use your points to buy it.

Conclusion

In conclusion, KFC Parramatta has the potential of being the best restaurant in their area if they slightly modify their current information system. Adapting to some new changes in the information system, an automated ordering process and customer relationship management systems they can gain an absolute competitive advantage over their rivals. Using the information system wisely has lead to it being one of the supreme commanders and with a little more changes they can make decisions more quickly and accurately, and this can lead them to having more customers than other local restaurants. The automated ordering system will ensure they get the goods on time and with customers being loyal to them they can maximise their current profits.

(2110 words)