Keeping it cool at Yum!

2006-02-06 From Shanghai Daily

Yum! Restaurants China, a subsidiary of the NYSE (New York Stock Exchange) listed Yum! Brands Inc., is the largest restaurant group in China. It provides operations, development, marketing, financial, human resources, public affairs and franchise support to all Yum! branded restaurants, including KFC, Pizza Hut, Pizza Hut Delivery, Taco Bell Grande and East Dawning company-owned, joint venture and franchise stores in Chinese mainland, Taiwan and Thailand.

In terms of logistics strategy, China is the only country where the US restaurant chain giant has built its own distribution centers to handle its logistics services. It outsources this business in all of its other overseas markets.

"There is no local logistic company that can offer such a large service for us. So we set up a logistic group ourselves to be sure to make it the best," said Todd Nelson, the general manager of Yum! Logistics China.

Different from other third party logistics providers, Yum! China only provides service for Yum! restaurant brands. They are not looking for new customers. KFC, Pizza Hut, East Dawning and Taco Bell are their only customers.

Nelson believes logistics is all about moving goods from one location to another location in as efficient and safe a manner as possible. This, he said, is not easy unless you have the right methods, great people and good facilities.

Yum! China's logistics solutions focus mostly on food safety and protecting the cold chain to assure the food's quality.

"Features like fully enclosed refrigerated loading docks, improved refrigeration systems and automatic dock shelters give us the capacity to maintain the cold chain while handling frozen and refrigerated food items," said Nelson.

The company has already established new distribution centers in Beijing and Shanghai. Yum! China also plans to build or upgrade distribution centers in five more locations, including those in Guangzhou, Nanjing and Wuhan, in the coming 18 months.

It currently operates 16 distribution centers across China. Various goods, such as fresh vegetables, chicken, cooking utensils and edible oil flow through the distribution centers, which are being expanded to grow in line with the pace of Yum! China's restaurant development.

Yum! Restaurant China is the biggest restaurant chain operator in China, with more than 1,500 KFC and 200 Pizza Hut outlets, and has been opening an average of about 400 new stores per year over the last two years.

Nelson said the logistics group is not only responsible for moving goods, but also handling them in a way that ensures they stay fresh and of a high quality. State of the art facilities allow food items to be stored at different temperatures in the refrigeration units in Yum! China's trucks.

In terms of logistics strategy, the company will continue to upgrade its deliveries, human resources and facilities to better satisfy their customers.

The biggest challenge the company faces is protecting the quality of food items, and Nelson says they take this task very seriously. Their goal is to establish a world class logistics operation here in China on par with any worldwide. In 2006, upgrades will take place at five distributions centers in different areas of China.

Deliveries to restaurants in 2005 numbered 400,000 and this figure is expected to increase to 500,000 deliveries in 2006. Nelson said the logistics market in China will further mature in the future, and the company is committed to ensuring it stays at the cutting edge.