Revisiting Standardization and Automation

At the morning meeting of all management cadres on July 29, 2022, Mr. Wang asked Qi Fei and Li Lei, the vice presidents of production, to share the insights of visiting the digital factory of Baizhentang Food Co., Ltd., and took this as the introduction to expound the flywheel effect of realizing large-scale and cost-effective through standardized and automated construction.

On Thursday, the company's senior management team visited Baizhentang Food Co., Ltd., which made us feel the scale, high cost performance and economic effect brought by the standardization and automation of Baizhentang Food Co., Ltd., thus broadening the thinking of management cadres and letting them lead their subordinate teams to do standardization, automation and digitalization within the enterprise.

Standardization

China's catering industry is different from the western catering industry represented by McDonald's and KFC. Westerners pay attention to diet science and nutrition, and the entire cooking process follows recipe standards. Just like doing experiments, the measurement of every ingredient and condiment during the cooking process will be accurate to the gram, and the cooking time will also be accurate to the second. Steaks, hamburgers, fried chickens and other foods cooked in Western food are surprisingly similar in every country or region from Europe and the United States to the world. Chinese cuisine is very different from the West. In terms of its characteristics, due to regional differences, China has formed four major cuisines: Shandong cuisine, Suzhou cuisine, Sichuan cuisine and Cantonese cuisine. Not only do different cuisines have different tastes and characteristics, even if it is the same dish, different chefs will cook different tastes, and the chef's cooking skills determine the color, aroma and taste of the dish. In other words, except for hot pot, it is difficult for China's catering industry to achieve standardization. During the communication with Mr. Dai from Baizhentang Food Co., Ltd., we learned that: due to the influence of the market environment in 2012, the entire domestic catering industry was in recession. Changes in the market environment have forced Baizhentang to embark on a transformation path. Baizhentang invited Cantonese soup masters from Hong Kong, sent people to follow the masters to learn and record the ingredients, seasonings, heating time, etc. of the soup, and arranged personnel to verify the feasibility and authenticity of the soup recipe. After a long period of accumulation, Baizhentang realizes the standardization of recipes for soups, sauces, and juices. Ouhai is a manufacturing enterprise. From a certain point of view, the industry has more advantages than the catering industry in promoting standardization. As early as 2008, the company proposed the "four modernizations", namely rigidity, curing, standardization and automation, focusing on the standardization of labor-intensive workshops or processes such as polishing and painting. Ouhai advocates not relying on star employees, but we can pass on the spirit, experience, knowledge and skills of excellent employees to make other employees better. Through listening to them, close observation and on-site testing, the experience and methods of outstanding talents are transformed into standards. Our standard is to be like a Lego manual, so that a person who has never done glasses can make a qualified product by operating on WI.

Automation

With standardization, automation can be implemented. After realizing the standardization of soup, sauce, juice and other recipes, Baizhentang invested a lot of money in 2018 to automate the production line. Using intelligent systems such as quick-freezing, robotic palletizing, pressing, central control, WMS smart warehouse, and CIP cleaning, they have established a broth extraction production line with independent intellectual property rights. In the exhibition hall of Baizhentang, we saw that they displayed a lot of patents, among which invention and utility patents are mostly the results of equipment research and development. Glasses manufacturing is a relatively small industry, unlike semiconductors, electronics, automobiles and other industries that are large-scale, with many equipment manufacturers and a high degree of automation. The annual output value of Wenzhou's glasses industry may be less than 20 billion yuan. The scale of its supporting equipment manufacturers is also relatively small, and its R&D and manufacturing capabilities are relatively weak. Most of the machines seem to be numerical control equipment, but the glasses equipment manufacturers are actually only play the role of assembly. When the company really implemented the Internet of Machines, we found that some important data in the CNC equipment could not be collected. Therefore, the research and development of intelligent processing equipment for glasses is crucial to the implementation of automation and the future development of enterprises. In recent years, the company's investment in equipment research and development has also increased, and some equipment research and development projects have achieved certain results, but this is just the beginning. I hope that the equipment R&D team can improve equipment R&D and manufacturing capabilities, create more project results with independent intellectual property rights, and contribute to the construction of the company's digital factory.

Large-scale

Only with standardization and automation can the scale of the industry be realized. Mr. Dai of Baizhentang Food Co., Ltd. introduced that before the implementation of standardization, the company opened a maximum of 58 branches. When the number of branches reached about 50, many customers reported that the taste and service of "Dawn Stew" from different branches were different. This phenomenon can be said to be a common problem in the catering industry - it is difficult to achieve scale. Since the implementation of standardization and automation in 2018, Baizhentang has planned the "Thousand Stores Plan" and currently has about 750 stores across the country, with daily sales of more than 30,000 copies. It can be seen from this case that standardization and automation are the basis for enterprises to achieve scale and become bigger and stronger.

Cost-effective

Only when the industry is large-scale can we provide customers with cost-effective products. Baizhentang Food Co., Ltd. is a local catering company in Wenzhou. It started with "Dawn Stew", and the early "Dawn Stew" belonged to high-end consumption in Wenzhou. During the exchange, Mr. Dai from Baizhentang Food Co., Ltd. shared a set of data: before standardization and automation were implemented, the labor cost per pound of soup was 1.8 yuan. After the implementation of standardization and automation, the labor cost per pound of soup is 0.16 yuan; the dawn abalone rice has also dropped from more than 100 yuan per serving to about 40 yuan. From these data, it can be seen that after standardization, automation and scale are realized , it can save costs and provide customers with cost-effective products, so that "the old Wang Xietang Qianyan flew into the homes of ordinary people".

Flywheel effect

Extreme cost performance is the eternal pursuit of customers and the market. When customers buy cost-effective products, they will place more orders. The increase in orders can increase the company's income, and the increase in operating income can promote the expansion and reproduction of the company. When the industry achieves economies of scale and increases in efficiency and income, enterprises will have more capital and energy to invest in standardization and automation. In this way, a flywheel effect of standardization, automation, scale and high cost performance can be formed, and the operation of the enterprise can enter a virtuous circle of becoming bigger and stronger.

Ouhai advocates not relying on star employees, but we can pass on the spirit, experience, knowledge and skills of excellent employees to make other employees better. We need to translate the experience and methods of outstanding talents into standards. Make the standard like a Lego manual, and let a person who has never done glasses operate on WI to create a qualified product. On the basis of standardization, we must continuously improve the R&D and manufacturing capabilities of equipment, and contribute to the construction of enterprise intelligence and digitalization. By promoting standardization and automation, we will achieve industrial scale and provide customers with cost-effective products, so that standardization, automation, scale and high cost performance will have a flywheel effect that promotes each other.