• Hong Yuan – An Innovative Food Product Supply Chain

Abstract

The baking industry, which can be seen at every street corner, belongs to a non-mainstream industry among traditional industries. As a result of the sky-rocketing prices of raw materials in 2007 and the financial crisis in 2008, a great number of bakeries went bankrupt and Hong Yuan's business was mired in difficulties as well. Mr. Mao, the general manager of Hong Yuan, thus examined supply chain for his bakery business and adjusted its operational model. In addition to acting as an agent for the original raw materials and semi-finished products, as well as offering a baking technology service, Hong Yuan also served as the agent for small cakes depicting the Japanese cartoon character “Doraemon” and promoted the sales business of various finished baking products, thereby developing a new operational model for Hong Yuan; selling both raw materials and finished products.

On the one hand, the whole supply chain adopted a rapid-freezing method in cooked food in order to solve the inventory problems of fresh food. On the other hand, Hong Yuan also made use of the value-added heating method “of the latest mile” in the bakeries so as to provide delicious, tasty hot food in order to satisfy the needs of customers and the market.

With the innovation of products, Hong Yuan discovered a distinctive segmentation between “room temperature” and “pre-roast”, “convenience” and “deliciousness”, and, therefore, instigated new channels to solve the existing supply chain problems of channel conflict. In short, Hong Yuan cooperated with its partner, the Hwa-Sin Food Company, to achieve a win-win situation by using a differentiated marketing mode.

Keywords: Baking Industry, Reformed Innovative Products, Supply Chain, Postponement Strategy