Baman’s Strategies on Product Demand and Supply

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Table of Contents

Introduction
Boundaryless Dining
Excessive Inventory
Supply Chain Reflections
Supply Chain Segmentation
Conclusion
Reference

Introduction

Baman is a company in Beijing, China, which deals with the supply of rice noodles. The CEO of the company Zhang Tianyi planned for its expansion plans in November 2019. The firm was founded in 2014 and ran more than 60 restaurants in China’s northern Beijing-Tianjin region; its retail business grew steadily (Xiande et al., 2020). It started building its status and popularity using online community marketing. Later, the company started experiencing pressure through excessive inventory, which forced the CEO to survey the significance of supply chain management (Xiande et al., 2020). He began integrating supply chain management with the business strategy. This paper will analyze the approaches of Baman’s retail supply chains and restaurants from the perception of product supply and demand characteristics.

Boundaryless Dining

Baman first removed limitations on the restaurant practice through traditional constraints of limited opening times and seating. The firm intended to cut reliance on actual football, which was susceptible to variations while giving consumers a choice to enjoy beef rice noodles anywhere and anytime. This approach commenced with the addition of take-out service, offering customers the opportunity to eat noodles at their office or home, so long as their location was within the radius of the Baman eatery (Xiande et al., 2020). The company redesigned its takeaway packaging by separating broth and noodles during transit and preserving the taste for about one hour after dispatch. The carryout was an essential extension of its fresh food business. Baman laid down a foundation for standardized production and developed pre-packed food that would stay fresh for up to 120 days.

Procession of dried rice noodles, sealed broth, cubed beef, and side dishes was done in the factory and then packed in cardboard boxes and distributed to retailers across China. The product provided the convenience of storage and cooking, minimizing the consumer’s time they took while cooking. The online community was the first consumer and promoter of pre-packaged foods (Xiande et al., 2020). The business expanded in the whole country, and the sales increased as the company began cross-marketing campaigns. Restaurant staff would recommend internet channels for pre-packaged goods, driving offline traffic to online sales. CEO believed that cross-selling would boost online and offline growth for both restaurants and retail.

Excessive Inventory

Baman expanded the retail products where it upheld that consumers who adored Hunan beef rice noodles would also desire to buy other emblematic refreshments from the jurisdiction. The company noted that the marketplace was highly devolved with the absence of an excellent leading product. Baman had developed a concrete reputation, and the name of the business comes from the dialect of Hunan, which contributes to the brand’s credibility and authenticity (Xiande et al., 2020). The management identified several snacks sold on Taobao that any significant retailer did not distribute. Baman engaged many manufacturers to make products under its name, which quickly increased sales of its retail product line.

Supply Chain Reflections

The CEO did not think that supply chain issues could prevent Baman as there were plenty of devoted dealers accessible in the food business. In late 2017, Zhang re-examined supply chain management at Baman from a strategic perspective. The company’s comparative advantages in the catering and food industry lay at each end with a positive curve, product R&D, branding, and customer relationship management (Xiande et al., 2020). Zhang aimed to strategically position Baman as a brand owner and virtual manufacturer in the supply chain.

Supply Chain Segmentation

Reducing Stock-Keeping Units (SKUs) to Boost Efficiency

Baman reduced its retail SKUs in 2018 from nearly 40 to less than ten to eliminate excess inventory and free up working capital. It also decreased some SKUs that produced sales, nevertheless, at the charge of higher capital occupation as they required high minimum order levels. The SKUs that were in demand were only retained. The company had economies of scale through discounts from larger bulk orders, allowing it to forge better links with suppliers. The best-selling SKUs ended up effectively with improved inventory turnover, faster sales cycles, and less stocking. The firm also avoided frequent retail updates, including production barcodes and the replacement of raw materials, leading to complexity and waste (Xiande et al., 2020). The strategy for increasing efficiency and minimizing complications was an impeccable match for Bamans retail business.

Increasing SKUs to Hedge Risk

The company ultimately adopted a different supply chain strategy for the restaurant business. The company was now more experienced as it offered up to 30 products, 30% of which were yearly adjustments (Xiande et al., 2020). There was the replacement of poor performers and a slight innovation to the top product, such as creating new selling points with ingredients popular online. The greater supply chain flexibility for the eateries allowed the enterprise to place lower-volume orders from time to time and get faster responses from suppliers. Baman forged closer ties with key players to reduce the cost of maintaining relationships with multiple suppliers (Xiande et al., 2020). The firm had a good approach that provided a roadmap for supply chain deployment and collaboration with upstream and downstream resources. This way, Baman resolved supply chain problems that stemmed from treating the restaurant and retail businesses in the same way and gradually refined the management of its dual-segment supply chains.

Conclusion

In conclusion, Baman started building its status and popularity using online community marketing. It removed limitations on the restaurant practice: the traditional constraints of limited opening times and seating. The company redesigned its takeaway packaging by separating broth and noodles during transit and preserving the taste for about one hour after dispatch. The carryout was an essential extension of its fresh food business. The strategy for increasing efficiency and minimizing complexity was an impeccable match for the company.

Reference

Xiande, Z., Liyang, R., & Liang, W. (2020). Baman technology: Building supply chains for boundaryless dining.

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