House Foods China Inc.
a national food. Implement an SCM infrastructure BPR project
for business process standardization and visibility.
Expand business operations in China to make curry rice a national food.
Implement an SCM infrastructure BPR project for business process standardization and visibility.
House Foods China Inc., the affiliate in China of House Foods Group, handles food product manufacturing and sales, as well as restaurant operations. As a result of concentrated efforts to popularize curry roux and retort package products, Japanese-style curry is steadily establishing a widespread presence in Chinese households on its way to becoming a national food. Sales have grown continually at an annual rate of over 20%.
Due to the sudden drastic expansion of sales and distribution operations, however, building up system infrastructure that achieves standardization and visibility has become an urgent task. ABeam Consulting used its Supply/Demand Template and ABeam Cloud to support the SCM infrastructure BPR project initiated under these circumstances.
Business processes lacking essential data—the urgent issue that triggered the establishment of SCM infrastructure
Nakano : We are extremely grateful to House Foods for choosing ABeam Cloud for their SCM Mission-Critical Business Reform Project at their Chinese base. It was an incredibly challenging project—we established systems for both results-based and planning-based SCM mission-critical business processes at the same time, in a period of just four months between November 2015 and March 2016. At ABeam Consulting, we are very relieved that the business processes started operating as scheduled under these new structures.
Nakashima : House Foods is also extremely grateful. Thank you.
Katsurayama :Half a year has now passed since the new SCM infrastructure commenced operations, and today we would like to take a look back over the entire project. To begin with, can you explain why you needed a new SCM infrastructure? What issues were you facing?
Nakashima : Having established a business goal of making curry a Chinese national dish, House Foods began producing curry roux in China in 2005. We took great care to create a flavor suited to local tastes—we used star anise, for example, which is used by our Chinese customers as a spice and as an ingredient in traditional Chinese medicine. As a result, although we were by no means completely satisfied, curry steadily began to penetrate into the Chinese market.
At that time, we only had one plant in Shanghai. However, almost exactly at the same time as I was posted to China, in October 2013, a new plant was established in Dalian, and our production base expanded.
Nakano : It sounds like global business expansion was going well.
Nakashima : Yes, it seems that way. However, when I was first posted here, it was a catalog of nightmares. The reason was that the data that should have been essential to business processes such as production, sales, inventory, and distribution was almost completely lacking. Even though we had gone to the trouble of establishing a second plant at our Dalian base, we were faced with the problem of not being able to deliver products to our customers efficiently.
Nakano : Can you explain the problems you encountered in concrete terms?
Nakashima : China is a vast country, so it goes without saying that, from the standpoint of both distribution and sales channels, it is more efficient to sell products made in the north (in Dalian) in the north, and products made in the south (in Shanghai) in the south. In reality, however, we did not have full control over sales and inventory data, so it frequently happened that products made in the north were sold in the south, and products made in the south were sold in the north—an incredibly inefficient operation.
There were also problems with our pricing strategy. At House Foods, we adjust our pricing according to the region and the business partners involved. However, it often happened that products were sold in certain regions at prices which they should never have been sold at under normal circumstances.
Nakano : That is a major issue. It could have threatened the market position that House Foods worked so hard to establish in China.
Nakashima : Yes, you’re quite right. In addition, we weren’t able to trace the sources of these irregular products or the routes they took.
Katsurayama : Having said that, you did actually have a system that oversaw mission-critical business processes such as sales and distribution, didn’t you?
Nakashima : Of course. After all, business processes cannot be put into effect through paper correspondence and verbal commands alone. But although we had a system of sorts, it was separate between each base. For example, we have sales bases in both Beijing and Shanghai, but a different system was implemented for each base, and there was no data sharing between them. The personnel in charge of sales used tools such as Excel and managed sales data in their own individual ways.
We wanted to escape this state of affairs, establish a system that used integrated master data, and manage and control this data using rules that were standardized throughout the company.
Katsurayama : And it was this pain which triggered the establishment of the new SCM infrastructure.
Nakashima : Yes.
Project Background and Objectives
With 20% annual sales growth as the goal, sales operations continue to expand, change and diversify drastically.
Operational standardization and visibility, as well as systems infrastructure establishment are urgent tasks.
Increased sales forecast accuracy is also needed in order to prevent loss of sales opportunities and control rising costs of excess inventory.
- Company name:
House Foods China Inc.
Tokyo office: 6-3 Kioi-cho, Chiyoda-ku, Tokyo 102-8560
Osaka office: 1-5-7 Mikuriyasakaemachi, Osaka-shi, Osaka-fu 577-8520
November 11 1913
- Business activities:
Business operations comprise the manufacturing and processing of food products including aromatic and spiced foods (curry roux, spices & seasonings), processed foods (stew, hash, grattan, ramen & other noodle products), precooked foods (retort-packaged and snack foods) and home desserts (snacks & confections).
- Total investment:
2 billion yen (as of March 31, 2016)
The project includes the construction of SCM infrastructure using the ABeam Cloud and Supply/Demand Template for House Foods China Inc., the affiliate in China of House Foods Group Corp. This will make sales operations highly accurate and easy to understand.