RAMLY FOOD PROCESSING SDN BHD Ahmad Afif Muhamad Atiff 1, Abdullah Izzuddin Abdul Hamid2, Amir Abdul Rahim3, Abdul Rahman Ahmad Dahlan4 1,2,3,4 Kulliyyah of Information and Communication Technology, International Islamic University Malaysia
Abst Abstract ract: The purpose of this paper is to analyze Malaysia’s local huge frozen food company current
performance and propose a digital transformation transformation business model for the company. Literature Reviews, benchmarking, Business Model Canvas (BMC), 4 Lenses of Innovation, and Value Proposition Design (VPD) have been used as the methodologies for this paper. I nde ndex T er ms: queue, QMS, 4 Lenses of Innovation, BMC, VPD, EM
I.
INTRODUCTION
Fast food continued to grow in 2016 despite consumers showing cautious spending behavior. Existing players continuously introduce new products and value set meals to attract priceconscious consumers through various marketing campaigns to create brand awareness. Side menus like desserts were launched to attract consumers [1]. For exam ple, exam ple, McDonald’s introduced Cheesecake Delights and Hot Cakes Groovy Lime in November 2016 much to consumer fanfare. QSR Stores, which operates KFC, is the leader in fast food and recorded a 42% value share in 2016. The company introduces ongoing new products and value set meals supported by ongoing media advertisements through newspaper and television. However, our local giant Malaysian based company who who provide high quality fast food had not emerge as one of great competitor to these foreign companies despite having operated in Malaysia for almost 35 years. II. BACKGROUND Ramly Food Processing Sdn Bhd (doing business as Ramly) is a Malaysian frozen and fast food company founded by Haji Ramly Mokni through Pemasaran Ramly Mokni Sdn Bhd. The company produces burger patties, frankfurter, nuggets, meat ball, fried chicken, buns and sauces like chilli and mayonnaise as well as operates burger stalls widely in Malaysia. The company was founded by Haji Ramly Mokni in 1984, with the aim of developing a clean cle an and good-quality halal Western fast-food chain in Malaysia. Ramly started a business selling burgers with his wife from street food stalls in 1979. While working as a butcher in a market, he discovered that it is unknown whether most fresh-meat sources were halal or not, leading to Ramly's decision to produce a halal-certified meat source for all Muslim consumers in Malaysia.
III. PROBLEM STATEMENT While other fast food companies are making great progress and venture into the new rapid economic growth, Ramly Burger however seems to be stagnant and are not making any significant profit. The company still rely on their traditional business model which to open tender for small stall franchise across Malaysia. If Ramly fail to recognize its current position in the market and made significant changes to harness the current business trend, they might as well lose up in the run and worst, prone towards bankruptcy. Thus, it is believe that making digital transformation and improvement to the current business model would empower the company and even make it a huge multinational company in Asia.
IV. LITERATURE REVIEW There are many other similar food franchises that are worth to be comparing about with Ramly. The examples are Mcdonald's Corporation, Burger King and FoodPanda. Although all the companies have about similar premises, but their business model are quite different from each other. The first things to look upon is the products of all the food franchises stated before. Mcdonald's produce fast food products such as burgers (chicken, beef and fish), chicken products, french fries, soft drinks, wraps, desserts and so on. The foods are all pre-made to be served quickly for customers. In contrast with Mcdonald's, Ramly produces frozen foods such as burger patties (chicken and beef), frankfurters, nuggets, meatballs (chicken and beef), fried chicken and complimentary products like buns, sauces (chilli and tomato) and mayonnaise. All items are available in majority of groceries, hypermarket and cold storage chains in Malaysia. On the other hand, Foodpanda does not produce any food products at all. The firm focused on its food delivering service, which give its customers many choices of foods from local restaurants near them. Customers only have to place the order through the Foodpanda mobile application and website, and Foodpanda will deliver it in front of their door house. The revenue generated by these companies are also different. McDonald Corporation and Burger King are focusing its business on their fast food restaurants, which their revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in companyoperated restaurants. While Ramly Group is focusing on its frozen foods products as well as other complimentary food products as the primary business. Ramly also gain revenue from the vendors which purchasing their license to operate a Ramly Burger stall. While the Ramly Burger Restaurants are the newest venture which started in 2014, and has opened 8 restaurants since. The business model of Foodpanda is not similar to the formal two businesses as the firm focused on its on-demand delivering service and does not own any restaurants or food products at all. According to questionnaire asked in Quora, Foodpanda’s revenue come from the delivery fees that they charge their customers. They also generate their profit by earning commissions from the restaurants that they get their foods from, for
every online order. Other than that, they also make use of the ads in their ads as part of their revenue model [2]. Talking about globalization, Mcdonald's franchise has reached many countries in the world, starting in 1967 when the American company opened their first franchise in Canada. By the late 1970s, Mcdonald's can be found in five out of seven continents in the world. [3] Mcdonald is also noted for their effort to cater with the local taste in different countries, for example only Mcdonald's’s spicy products can be found in Asian countries, while in European and American there are hardly produce new menus with such spi ciness. Mcdonald's is very successful that their market share in 2009 outpacing other fast food franchises such as KFC and Burger King by a large margin. [6] The comparison chart can be referred in Figure3. Ramly Group has also gone global recently where they have been exporting the frozen food products to Singapore, Thailand, Indonesia, Myanmar, Cambodia and Bangladesh. Ramly also plan to expand the market to other Southeast Asian countries such as Vietnam and Philippines while also eyeing the market in Middle East and East Asian countries. [4] Foodpanda also has experienced globalization. As a food delivering service originated from SIngapore which launched in 2012, they have expanded their coverage to 23 countries all around the globe. [5] As in Malaysia itself, Foodpanda has only covered their networks of restaurants and delivery services in six regions, which are currently only available in Kuala Lumpur, Penang, Petaling Jaya, Subang, Shah Alam and Cyberjaya. Next, to compare the initiative taken by these businesses using Industry 4.0 technology platform in order to transform, Mcdonald's might be the most progressive business to do so. One of the aspect in Industry 4.0 is the automation of everything. CNBC reported that Mcdonald's will upgrade it’s 2,500 restaurants to a new technology, which is the humanless cashier but instead with a fully digital and automated ordering and self-serving kiosk. [7] With the new technology which will be realised by Mcdonald's in the end of the year 2017, customers won’t have to queue anymore. They will only o nly need to order online beforehand or to order at the designated machine and the orders will be finished and delivered much faster. This way, it will give more values to the customers. Other business which has been affected by the Fourth Industrial Revolution as well is FoodPanda. The idea of connecting all the restaurants and customers over the Internet is revolutional. By doing this, FoodPanda is able to fulfill the demand, satisfying the changes in customers tastes and at the same time following the correct food handling procedure for safety measures. Ramly Burger has yet to implement the Industry 4.0 in their business. The company might still be in the Industry 3.0 where all the food processing is using the computer and automation system with human resources as well.
Figure 1 McDonalds’ Business Model Canvas
Figure 2 Foodpanda’s Business Model Canvas
Figure 3 Burger King’s Business Model Canvas
Figure 4 Comparison chart between Mcdonald's, Burger King and KFC in 2009
V. STRATEGY CANVAS For Ramly Group to be able to compete with a larger food franchise, the company needs to rethink and apply a new and improved methodology and approach for the transformation. It has to happen now, because every other businesses are keep changing from day to days. Digital trends and Industy 4.0 technology platform specifically has changed the world itself for the past years. Ramly has to realise the Opportunity that they have which would not be replaced by whatever coming to their burger products which has been a staple to the Malaysians since long ago. Malaysians preferred the local stall burger rather than the western burger at the restaurant. Many believed that the taste of the classic street burgers has its unique taste which are not the same as the premium burger at the restaurants, which are proven true by some of the tourists that had tried the street burgers in Malaysia. To tackle this opportunity, Ramly may need to start a delivery services of foods for customers. This can be done via the online channel where customers will place their orders and the nearest Ramly Burger stall will processes the order and deliver it in front of their door house. It can be done easily since the Ramly Burger stall has opened nearly everywhere in every states in Malaysia. The next step after Ramly has gone online, the things that needs to be revamp is the Digital marketing which is very important to reach the customers. Ramly needs to reevaluate their outdated website which has last been updated in 2009. The website will be used to promote food menu, spread promotions and events to reach the customers. Ramly also may need to invest in the development of their mobile application in order to reach a wider range of customers since people in the modern days are always fast and they want things fast. The mobile application will makes things faster and more convenient for the customers. In order to make it easier for customers to reach the products anytime and anywhere, Ramly Burger also has to offer Omni-channel in their business model. There are many platforms that Ramly can cover, one of them is the brick-and-mortar which is the old food stalls as well as the newly introduced Ramly Restaurants. For this platform, customers can simply walk-in to order and get foods in one go. Another platform is the website. It would act as a guide for customers to get more information about menu, prices, promotion and events. To order foods, customers may place their order in the website itself. Some customers may prefer the good old platform, which is through telephone call. This platform not only provide the ordering food and delivering services, but it also provide customers services. Talking about customer services, Ramly Burger also need to focus on their Customer Insight. This is very important for Ramly to understand the customers in order to improve their services. Ramly also need to create a new menu based on customers’ preferences and current trends, just like McDonalds do in order to keep the menu fresh and prevent the customers from tired with the old same menu. With this method, Ramly would also reaching new customers as well as keeping the current customers loyal.
VI. INITIAL BUSINESS MODEL CANVAS
Figure 5 Initial Ramly Burger Business Model Canvas Canva s
Figure 6 Initial value proposition canvas for individual
Figure 7 Initial value proposition canvas for franchise
Figure 8 Initial value proposition canvas for event
Figure 9 Initial value proposition canvas for poor people
VII. ALTERNATIVES BUSINESS MODEL CANVAS
Key Partners
Key Activities
Local and foreign farmers (suppliers)
Manufacture & selling food product
Government agencies Private Agroindustries
Warehousing & logistics Quality checking
Local food vendors
Value Proposition
Customer Relationships
Customer Segments Food stalls vendors
Increase job opportunities for food stalls vendors
Customer care hotline services
Frozen food retailers Low-middle income families
High nutritional foods
Young people Housewives
Frozen store retailers Key Resources? Resources?
Channels
Suppliers
Frozen food stores
Physical warehouse
Fast food stalls
Machines Human resources Brand
Website (outdated)
Cost Structure Manufacturing cost Shipping Annual maintenance
Revenue Streams Marketing
Government subsidies Direct sales Reseller sales
Figure 10 Alternative BMC for frozen food manufacturing
Figure 11 Food mart
VIII. VALIDATION OF INITIAL BUSINESS MODEL QUESTIONNAIRE RESULT As part of the information gathering for this research, the questionnaire is important to be conducted, as to know the real problems from the real people concerning their difficulties experienced about food services. The questionnaire prepared beforehand is mostly about the preference of fast f ast foods, availabilit y of food in market, the on-demand food delivery services and also about the affordability of the foods. The type of people that participated in this questionnaire is students with minimal budget to spent on foods in their daily life. Over the 50 respondents, the results are as follows. About the preferences of fast foods, most of the students choose Ramly Burger over Mcdonald's, KFC, Burger King and A&W. The reason for which the outcomes are like so is because burgers from Ramly stalls are much cheaper and the stalls are also abundant and reachable everywhere, even in campus itself. For the occasional reason, such as outing in the weekend, the students preferred to try other fast foods such as Mcdonald's and KFC since the restaurants are often introduced many new menu and varieties compared to Ramly burger stalls. But in the end the Ramly burger still stapled in the heart of students.
Figure 12 Preferred fast food choices
About the on-demand food delivery services, many of the respondents choose Domino Pizza’s and Pizza Hut over the likes li kes of KFC, Mcdonald's and FoodPanda. The reason why the pizza’s delivery is popular is because the affordability and coupon reward offered by the restaurants, as well as the time it being delivered as well without have to wait long. While the reason the FoodPanda only got a few responses is because the brand is still new for most of the students. The prices of foods are also high considering that FoodPanda only delivering premium foods from top restaurants.
Figure 13 Preferred food delivery services comparison
Another finding also found out that in suggestion segment, many of the respondents hope that Ramly burger will do the delivery service in the future as in-demands like many other similar businesses. It is i s because it will be a lot easier to get burgers from Ramly stalls without going out of the room at the night so that the students will be able to focus on studying. X. CONCEPTUAL SOLUTION ENHANCEMENT BUSINESS MODEL CANVAS Key Partners
Key Activities
Value Proposition
Local and foreign farmers (suppliers)
Manufacture & selling food product
Government agencies
Warehousing & logistics
Private Agroindustries Local food vendors
Quality checking
Customer Relationships
Customer Segments Food stalls vendors
Increase job opportunities for food stalls vendors
Customer care hotline services Automated
Burger ondemand
Platform development
Frozen food retailers Low-middle income families Young people
Cash free order Stall owner onboarding
Housewives
Easy to order
Frozen store retailers Delivery man
Key Resources? Resources? Suppliers Physical warehouse Machines Human resources Brand
Short waiting time No queue High nutritional foods
On-the-go people Channels Frozen food stores Fast food stalls Banner Mobile apps Social media marketing
Ramly application platform
Website
Cost Structure Manufacturing cost Shipping Platform development Annual maintenance
Revenue Streams Sales & Marketing Commission payment Delivery cost Platform maintenance
Government subsidies Food stalls licensing fees Direct sales Reseller sales
Figure 13 Enhanced BMC
XI ENHANCEMENT VPD
Figure 14 Frozen food manufacturing VPC
Figure shows the value proposition canvas for the frozen food manufacturing segment. In this segment, customers always experienced pains because of the popular products/stocks always run out in the store. Example of products that are fast selling are the chicken/beef burger patties, chicken sausages and chicken/beef mashed meats. Another reason for the frequent out of stocks of these products is because the fast food vendors always buy these products in bulk, which resulted the normal customers to not able to buy. To overcome this problem, Ramly Food Manufacturers must surveys the market, identify the critical products and increase the manufacturing of the products. Second pain is that there are very few frozen food outlets in rural town, so customers from there need to go to the urban city’s mall and market to get the products. In order to overcome this problem, Ramly need to expand their market in rural town and in local hawker stalls as well.
CONCLUSIONS In order to transform the business of Ramly Burger, the company has to embrace the fast changes in the current trend in order to compete with other similar businesses such as Mcdonald's, Burger King and FoodPanda. The current trend also demanded that all the businesses to enter the Industry 4.0 technology platform in order to provide high quality service with the least cost while achieving as much performance as possible to increase the profits. Ramly Burger is an established business of serving people’s favourite burgers and frozen foods in Malaysia for years, but the company has much greater opportunities to transform further which of course will satisfy the customers better.
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AUTHORS First Author – Author – Ahmad Afif Muhamad Atiff, Bachelor of Information Technology, Kulliyyah of Information and Communication Technology, International Islamic University Malaysia,
[email protected] Second Author - Abdullah Izzuddin Abdul Hamid, Bachelor of Information Technology, Kulliyyah of Information and Communication Technology, International Islamic University Malaysia,
[email protected] Third Author – Author – Amir Abdul Rahim, Bachelor of Information Technology, Kulliyyah of Information and Communication Technology, International Islamic University Malaysia,
[email protected] Correspondence Author – Author – Abdul Rahman Ahmad Dahlan,
[email protected] [email protected],, 019-2202032
