In an era that food safety accidents come one after another and public food safety are continuously questioned by the public, DaChan Food (Asia) Limited (DaChan Food), the leading chicken meat supplier in mainland China, has started with food safety and therefore forged its competitive advantage. Its food safety supply chain featuring traceable sources has assured consumers of its product safety and gained the price advantage of 10% to 15% percent higher than those of its competitors’ products.
Under our feet, there stands a modern chicken farm, a contract chicken farm of DaChan Food (Dalian) Co., Ltd. The contract farm is located in Wangtun Village, Shuangta Town, the country-level city of Wafangdian of Dalian, where it is the chicken meat supply base of famous fast food chain enterprises, for example, KFC. DaChan Food has 4,000 medium- and small-sized contract farms of its kind in mainland China.
In the Internet, the similar stories of food material supplied to fast food industry have been spread beyond imagination, such as the chickens fed here have four wings, the chicks can grow up with astonishing speed within days after they are hatched, etc. The rumors make farmers burst into laughter, but it does no help to relieve the public’s worries about food safety. The frequent occurrence of food safety crises made the food material supplier convinced that they must let the public believe that their chicken meat is safe, which is harder but of much more significance than to persuade the public to believe that DaChan Food’s chicken meat is very delicious.
As the largest domestic chicken meat supplier, DaChan Food offers 1/3 chicken meat to KFC and is the largest chicken meat supplier to McDonald’s and Dicos, and has its products exported to Japan and South Korea all year round. In 2008, DaChan Food was appointed as the licensed chicken meat supplier to Beijing Olympic Games. Even so, DaChan Food remains unknown to consumers even if many of them may have eaten DaChan Food’s products.
The food safety supply chain of DaChan Food has really turned into competitive advantage. With the establishment of “food safety traceability system”, DaChan Food wins orders with the purchase order price 10% to 15% higher than that of the suppliers of the same kind of products. Furthermore, DaChan Food starts to promote its terminal brand of “Sisters’ Kitchen” with great confidence.
Where does the chicken wings you are biting come from?
Within 15 days after visiting the chicken farms in Dalian, I bought several packages of chicken meat food from “Sisters’ Kitchen” located at Beijing East Three Ring. After satisfying my appetite, I copied down the 10-digit reassurance code on the food package and started my journey of tracing sources in the Internet. How fantastic it is if the chicken I have eaten comes from the place that I have visited or is among the lot of chicks that were fed two weeks ago!
The inquiry result from the website of “Sisters’ Kitchen” indicated that the chicken I had eaten came from a household chicken farm in Shihuiyao Village, Lidian Town, Wafangdian City, Liaoning Province. With the help of Google Map, I found the village that was dozens of miles away from the chicken farm that I visited previously.
On the Website, there was a patiently smiling face of Mr. ZHANG Houbin, the owner of the chicken farm. The information said that Mr. ZHANG had fed chickens for 8 years, and his chicken farm fed 11,500 chickens, a little smaller than the one that I have visited.
The chicks that Mr. ZHANG feeds come from DaChan Chick Factory, the feeds come from DaChan Feeds Factory, the slaughtering is performed in a local electric slaughtering factory, and the deep process is fulfilled in Miyasun-Great Wall Foods (Dalian) Co., Ltd. Meanwhile, I also looked up the standard for feeds additives and test results of chloromycetin, furan and sulfonamides that were used for immunity and special test result of melamine that is to blame for the Sanlu tainted milk scandal. There are names of heads of enterprises and quality inspections as well as photos of these persons-in-charge or photos of the enterprises.
Then I inquired the information about a “Salt and Pepper Chicken”: the chicken is from a farmer called XU Shankang; the chicken farm is located in Dogou Village, Shihu Town, Guzhen County, Anhui Province; the chicken is slaughtered and processed in DaChan Food (Shanghai) Co., Ltd. The standards adopted in the entire procedures are the same as what the previous inquiring results have indicated.
Mr. QIAN Zhongshu has ever said that it is enough to have nice eggs, and it is unnecessary to be acquainted with the chicken that laid these eggs. However, it is an interesting process to trace the food sources. The industrial chain and the network technology link me with these strangers: a consumer in Beijing, chicken farm owners in Dalian and Anhui, manager of feeds factories, quality inspectors, person-in-charge of electric slaughtering factories and the cooked food factories and their inspectors. To some extent, this looks like the “food chain” in a textbook.
But for DaChan Food, this is a chain filled with strict responsibility. If I suffer from diarrhea next day, then the responsibility of every person linked to the chain will be very clear. If there is a public food safety problem, the government and the judicial authority will find out who is to blame for very soon.
In the office in Beijing, Mr. Mark Han Jia-Hwan, the Chairman of the Board of DaChan Food, honestly says that the entire goal of DaChan Food is to build this chain into a mutually trustable industrial and consumptive chain, a chain full of business opportunities. So far, the chain has shown its initial values.
Record of a chicken’s life
The slogan of “Sisters’ Kitchen” is “Foods with transparent sources content your appetite with reassurance”. However, we and they, the two sides at two ends of the food chain, can trust each other?
70% of chicks that DaChan Food offers come from the contract farmers, while the other 30% of chicks come from DaChan Food’s own chicken farms. Since household feeding possesses such advantages as flexibility in the labor services and land usage, low costs and high efficiency, the mode of “company + farmers” is very popular and widely accepted. Will DaChan Food have the same doubt about the contract farmers as we did to the food safety?
The chicken farm located in Wangtun, Shuangta Town of Wafangdian City is jointly run by DaChan Great Wall Group and Wangtun Village Committee. Mr. CAI Guowei, 37 years old, is the manager of the farm. Like other contract chicken farms in Dalian even in China, this farm feeds chickens for the Group, and the Group offers breeders, feeds, immunity and other services and training to the farm, and purchase the pulled chicken at the price set in the contract.
The transparency of chicken farms is the very first important process in the chicken food safety system featuring “transparent source”. DaChan adopts three detail-controlling key points for this most important management process and has held three important links of brooding, feeds and immunity and usage of drugs.
In the “Melamine Accident” that affected the entire milk industry of China in 2008, there were such serious vulnerabilities in the management of farmers feeding cows in Sanlu and other milk enterprises that these enterprises neglected and ignored the supervision and control of adding melamine to the feeds by the farmers themselves, which led to the safety problem of milk sources and brought about the safety quality accident that severely affected the entire industry.
Besides the contract number and registration data of the chicken farm, other information is also available. There are 7 to 8 lots of chicks for sale in the farm each year, with a feeding scale of 30,000 chicks in a single lot. Since there is cleaning and sterilization after the sales of pulled chicken, the chicks here are fed in lot, and a lot of chicks has its codes.
The name and photo of Mr. CAI Guowei and relevant information and data about the chicken farm are not merely used during the chicken feeding by farmers, but also extended to the post production and sales, so that the terminal consumers can trace back to the very original source. Mr. Mark Han Jia-Hwan, the Chairman of the Board of DaChan Food, also thinks about printing the photos of Mr. CAI Guowei and his counterparts on the food packages.
The immunity and usage of drugs for live chickens are also concertedly supplied by DaChan Food upon the request of the contract farmers, so there is a set of electronic record of immunity and drug data. The veterinarians of DaChan Food pay regular visit to the chicken farms to give directions and take inspections. On one side, they will direct the farmers to feed chickens with scientific methods and to correctly use drugs. On the other side, they will supervise and inspect the wrong usage of drugs so as to avoid excessive usage. The detailed information is not only convenient for the control of drug residue of chicken meat products but also offers traceable data source for the possible dissent from drug inspection result.
When the live chickens on the chicken farms of Mr. CAI Guowei and his counterparts enter maturity period, DaChan Food will take appraisal and make arrangement according to the time and status of chicken feeding, and bring the farmers whose chickens are fed in good conditions into the chicken delivery plans, and the Breeding Department will fill in the notice of delivery of feather chickens and intended slaughtering schedule.
Within 3 to 5 days before the arrival of feather chickens, DaChan Food will take the drug residue inspection and fill in the drug residue inspection record form. The persons-in-charge will examine the health conditions of chicks and feeding diaries before the feather chickens are sent to the factories. Besides, the person-in-charge will fill in CCP1 Examination Form (inspection record form). The unqualified chicks will be rejected.
The qualified chicks from nearby contract farmers and chicken farms will be slaughtered and processed in the production workshops. During this period, the Production Department will fill in the daily slaughtering record form, which forms another series of slaughtering record.
When the qualified products of the same lot are approved to be warehoused and sold in markets, the person-in-charge will fill in chicken meat product warehousing form, and the fresh chicken meat is transported quickly by the refrigerator vehicles. After an order is placed for the frozen products, the person-in-charge will fill in loading record and daily report of quality inspection at the time of sales.
The chicken feeding process in Wangtun Chicken Farm thus has formed a complete set of database, and then is programmed into a 10-digit reassurance code. Since one contract farmer corresponds to one contract, the reassurance code of each item of the same lot of products is all unique. Now therefore, I can inquire the information about food production and quality inspection via the Internet in Beijing, which will then direct me to the information in the meat product database so as to trace sources.
Integration of industrial chain
In 1957, Mr. HAN Haoran established DaChan Food in Taiwan, which grows into the largest agricultural and animal husbandry enterprise and the supplier of major meat protein in Taiwan. Since 1989, with Dalian as its center, DaChan Food gradually extended its businesses to Indonesia and other parts of mainland China. At present, DaChan Food embraces more than 20,000 employees, over 40 branches and a turnover of above 20 billion Yuan.
Since 1990, DaChan Food has successively invested in 12 provinces and cities including Liaoning Province, Tianjin Municipality and Shandong Province, with its business covering the entire industrial chain including feeds production, integrated businesses combining chicken hatching and slaughtering in one single operational platform and food processing. This means that DaChan has had the initial potential to integrate the entire industrial chain.
In 2009, DaChan Food introduced its independent catering chain brand “Sisters’ Kitchen”, which has got through the entire industrial chain afterwards. Mark Han thinks when the Company directly faces its terminal consumers, besides the competition that is different from western fast foods in terms of products, DaChan Food should promote its products to consumers from the perspective of food safety, namely “Foods with transparent sources content your appetite with reassurance”.
“Otherwise, why do you sell your products at a price higher than other roast chicken wing stores”, this is the question Mark Han proposes. In his opinion, food safety crisis motivates the consumers in mainland China to be willing to pay for food safety. Furthermore, plus the taste that is popular with easterners created by and the management experiences of Taiwan catering chain industry, DaChan Food will achieve the business success.
The solid foundation for DaChan Food to implement the food safety management system with the feature that the entire process from table to farm is traceable is that previously, DaChan Food has possessed a highly vertical integral business mode to integrate chicken hatching, feeds production, chicken feeding, chicken slaughtering and deep process of chicken meat into a concerted business platform
DaChan Food’s advantage is that, thanks to the hard work in the export of its products to Japan and South Korea that always impose on high standard and stringent requirements on the exporters within years and to its being the supplier to KFC and the licensed food supplier to 2008 Beijing Olympic Games, it has ran and accumulated abundant and mature experiences from its product quality and safety monitoring system over a long period of time.
Hence, DaChan Food’s current food safety traceability system is not a major adjustment or repair of internal structure and process, but integration and upgrade based on the existing platform. This business mode enables the Company to effectively trace sources and assure product quality so as to carry out rigorous quality and hygiene control measures to assure the quality and safety of all products.
Mark Han says “previously, we manufactured products according to the stringent standards of Japan, South Korea and mainland China and passed a series of certifications by the international authoritative certification organization Swiss SGS, and therefore we gained orders from top international fast food chain enterprises. At that time, there was complicated data inside the Company relating to each lot of chicks. Now, the food safety traceability system is merely to program the previous data into the “reassurance code” so that customers can enjoy the vivid description and footnotes of such data. More complicated and professional data are on our servers”.
Before and after 2006, the State started to advocate the establishment of food safety traceability mechanism, but limited it to retail industry, for example, the supermarkets. However, DaChan Food has extended the trust mechanism to its consumers. Nowadays, some domestic IT enterprises start to import advanced technology from foreign countries to offer their consumers and users the entire scheme that our food safety traceability system has provided.
Mark Han admits that the implementation of such a mechanism needs a considerable amount of one-time investment and increases many data collection links, yet with the expansion of production scale and as time goes on, the cost will be tremendously allocated. The purchase price offered by large-sized purchasers is 10% to 15% higher than the prevailing market price. The implementation of such a mechanism is mainly to safeguard the safe and stable supply chain. The contribution made to an enterprise by consumers’ trust in and dependence on the food safety is far more than the cost.
Being a “transparent & silly” company
Can we trust DaChan Food?
Before Sanlu melamine-tainted milk came to light, CCTV ever reported that Sanlu Milk had undergone 1,100 tests. After the exposure, the food safety problem brought the trust of consumers and businessmen down to zero.
Mark Han says that compared with others, food companies concern themselves most with food safety problems. Under the condition of industrialized scale production, once there is a food safety accident, the accident itself is a collective one. Even though companies may have accumulated enormous wealth over years, they will have nothing left after paying compensations and punitive damages.
Purchasers like KFC will take regular inspections of food sources so as to assure the safety of their food materials. Accordingly, large-sized purchasers often offer favorable prices to their trusted suppliers. Such orders can assure the Company of stable profits. “It’s impossible that DaChan Food loses its orders for petty profits. Orders are second to nothing”, says Mark Han.
“In Japanese enterprises, the safety factor is the same important as the balance of products and the control of processes, so it is only one of key points in the processes of product development, cost control and manufacture”, says Mark Han, “while in western world, especially in western European countries, the safety factor is the only core”.
While Japanese enterprises achieve balances and successes in the aspects of techniques, costs, profits and safety, it means that the safety issue has been actually placed into a general mode without serving as a core. However, in western world, the safety factor is always given the top priority and taken seriously throughout the whole processes of development, design and manufacture, and all work will be done around the center of “how to guarantee the safety”. Mark Han hopes that after learning about and mastery of the optimized management of Japanese enterprises, DaChan Food will place safety factor at the core place.
For example, COFCO, a central enterprise, based on its comprehensive strength and complete industrial chain, have made significant achievements in its industrial chain analysis. www.womai.com, a website under COFCO, directly crosses over the traditional field sales mode and enters the B2C website sales market and achieved big success.
Based on the trust and confidence in its own products, DaChan Food hopes that it can extend to the terminal end of its industrial chain and has set up catering stores in Beijing, Shanghai and other cities under its own brand of “Sisters’ Kitchen”
in the opinion of Mark Han, product quality should come before the operating profits and become the prime goal of the Company’s operation, though the implementation of traceable food safety system throughout the entire process will increase internal monitoring costs and reduce profits space or price advantages of DaChan Food. In Mark Han’s opinion, a shrewd company in excessive pursuit of business profits may have the impulse to reduce the monitoring of product safety, quality and process or jeopardize the interests of its business partners. DaChan Food will possess more vitality and competitive advantage by the only way of paying attention to safety, sharing interests with its business partners linked to the industrial chain, supplying quality products to consumers and even giving up some potential profits to upgrade product quality with great effort.
