Baman’s Strategies for Restaurant and Retail Supply Chains Case Study

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Summary

Baman is a highly innovative and competitive food supply organization based in China. Started in 2014 by Zhang, the entity currently exhibits over sixty outlets in the nation’s northern section of Hunan province. Accordingly, Baman specializes in providing a typical Chinese dish with significant fondness. The product is beef rice noodles, which flow to the customers through three distinct channels: restaurant sit-ins, takeaways, and pre-packaged meals for home preparation and consumption. Zhang’s business idea is substantially new in China, making the product innovative instead of formal. Equally, the investor adopts significantly new distribution tactics that rely on the Internet and other dynamic platforms. Baman operates as a ground-breaking organization with pioneering merchandise, thus requiring a highly crafted stock chain. Therefore, the following discussion analyzes Baman’s restaurant and retail supply chains based on the segmentation, uncertainty, and product demand and supply viewpoints.

Segmentation

Supply chain management refers to the proper administration of products’ movement between the suppliers and the end consumers for optimal profitability and customer satisfaction. Supply chain segmentation is one of the crucial strategies adopted by organizations to promote patrons’ satisfaction and business profitability through lean operations. The strategy (segmentation) works by focusing on commercially viable items in specific regions that exhibit higher demand and supply for the offered items. Baman utilizes the segmentation approach to reach Chinese areas whose culture recognizes the value of beef rice noodles. The matter forces the organization to mainly operate within the Beijing and Tianjin regions, where the food is culture-supported.

Moreover, Zhang uses online marketing platforms to expand the product’s demand across China, with the firm using established e-commerce stores such as Alibaba and Tmall to make sales. The segmentation approach informs Zhang’s maintenance that Baman will only establish physical outlets without its original location after creating over sixty outlets within the Beijing and Tianjin locality. The investor’s argument is significantly informed based on the understanding that offering a commercial product in areas where the culture does not support it leads to significant failure (Katsikouli et al., 2021). Furthermore, Baman’s current concentration within Hunan province comes from the business’s already established supply chain systems within the area. Consequently, Zhang knows that rushing to initiate sites outside the region attracts additional challenges that may hinder or disrupt the business’s receipt of necessary supplies.

Uncertainty

The food industry generally offers formal products with functional demand and stable supply traits. People usually eat food for nourishment and survival, making the sector essential and stable (Guiné et al., 2020). However, differentiation and technology utilization to create a unique business, formulations, and products shift food-based organizations and their items toward innovative demand and evolving supply traits (Arenas-Jal et al., 2020). Subsequently, Baman’s reliance on the internet and highly crafted formulations expose the entity to immeasurable supply chain uncertainties. For example, opting to utilize e-commerce sites to sell pre-packaged beef rice noodles when the product’s actual demand is unknown makes it hard for Baman to realize stable demand. Moreover, Zhang’s maintenance that his suppliers adopt highly innovative technologies and methodologies introduces uncertainty in the supply domain. The organization often suffers supply contract breaches as partners fail to meet the set high innovativeness, making the supply vulnerable to breakdown.

Product Demand and Supply

Baman’s products are meaningfully new in the Chinese market based on the organization’s youngness and undeveloped systems. The company started in 2014 and operates based on Zhang’s theoretical knowledge. Accordingly, making brilliant decisions, such as choosing a culture-backed food product, adopting technology-based operations, and establishing working collaborations with partners, makes Baman appear successful. However, looking at the entity’s supply chain effectiveness based on the demand and supply viewpoints depicts significant issues worth addressing. The entity relies on the Hunan province’s purchases to measure its demand, which never clearly illustrates the national demand for beef rice noodles. The outcome of such a mistake is the resultant excess inventories reported in 2017, jeopardizing the firm’s ability to control capital utilization (Zhao et al., 2020). Still, Baman struggles with selecting and maintaining functional connections with upstream and downstream collaborators due to setting almost impractical strategies highly affected by market changes. The business must move with moderation and only make a step ahead after ascertaining the previous ones are sustainable and fully functional to realize supply chain stability.

Tables for Retail and Restaurant Lines

Baman’s retail and restaurant lines exhibit significantly varied supply chain strategies. The eateries offer innovative products with responsive strategy, whereas retails are functional and have an efficient plan. The following tables show their various but corresponding supply chain elements:

Table 1: Demand Characteristics

RetailRestaurant
Low demand uncertaintiesHigh demand uncertainties
Significantly predictable demandModerately difficult to forecast
Reduced inventory costHigh inventory cost
Stumpy profit marginsHigh-profit margins
Low stock-out costHigh stock-out cost
Low obsolescenceModerate obsolescence

Table 2: Supply Characteristics

RetailRestaurant
Fewer breakdownsVulnerable to breakdowns
Stable and moderately high yieldsVariable and lower yields
Less quality glitchesPotential quality problems
More supply basesLimited supply sources
Less process alterationsMore process changes
Laid-back to changeoverDifficult to changeover
Steadfast lead timeVariable lead time

Table 3: Uncertainty Framework

RestaurantRetail
Innovative products: High demand uncertaintyFunctional products: Low demand uncertainty
Evolving processes: High supply uncertaintyStable processes: Low supply uncertainty

Table 4: Uncertainty Reduction Strategies

RetailRestaurants
Maintain information sharingImprove information sharing
Preserve stakeholder coordinationAdopt tight stakeholder coordination
Preserve synchronized planning across the supply chainAdopt synchronized planning across the supply chain

Table 5: Matched Strategies

RetailRestaurants
Efficient Supply ChainResponsive Supply Chain
Scale economies realizationInternet reliability for faster information sharing
Optimized techniquesBuild-to-order and
mass customization processes
Established information linkagesOrder accuracy

Table 6: Matching Supply Chains with Products

RetailRestaurants
Innovative ProductsInnovative Products
Efficient
Supply Chain
MatchMismatch
Responsive
Supply Chain
MismatchMatch

References

Arenas-Jal, M., Suñé-Negre, J. M., & García-Montoya, E. (2020). European Food Research and Technology, 246(7), 1371-1382. Web.

Fisher, M. L. (1997). What is the right supply chain for your product? Harvard business review, 75, 105-117. Web.

Guiné, R. P., Florença, S. G., Barroca, M. J., & Anjos, O. (2020). Foods, 9(9), 1317. Web.

Katsikouli, P., Wilde, A. S., Dragoni, N., & Høgh‐Jensen, H. (2021). Journal of the Science of Food and Agriculture, 101(6), 2175-2181. Web.

Lee, H. L. (2002). California Management Review, 44(3), 105-119. Web.

Zhao, X., Ruan, L., & Wang, L. (2020). ” Web.

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