Written by Yang Yuexin
In today's rapidly changing business environment, digital transformation has become a key way for enterprises to gain competitive advantages and achieve sustained growth. Especially for large enterprises in traditional industries, digital transformation is not only a technological revolution, but also a change in the way of thinking.
Mengniu Dairy , since its establishment in 1999, has always occupied an important position in the dairy market with its advantages of high brand awareness, rich product lines and high repurchase rate. The financial report shows that Mengniu will achieve full-year revenue of 98.62 billion yuan in 2023, a year-on-year increase of 6.5%, operating profit of 6.17 billion yuan, a year-on-year increase of 13.8%, and operating profit margins continued to increase by 40 basis points year-on-year to 6.3%. However, faced with challenges such as short product shelf life, high logistics costs, and difficulty in reaching consumers directly through traditional channels, Mengniu realized that digital transformation was an inevitable choice to break through development bottlenecks, improve operational efficiency, and enhance market competitiveness. Therefore, Mengniu actively embraces digitalization and achieves sustained business growth and industry leadership by building a full-link digital system.
Recently, "Yicai Business School" invited Ms. Li Chengjie, Vice President and Chief Digital Intelligence Officer of Mengniu Group, to share what key nodes Mengniu has experienced in the process of digital transformation and how to give full play to offline channels by solving the pain points of offline channel digitization. With the advantages of different channels online, in the public domain and in the private domain, we can transform the digital capabilities empowered by the latest AI technology into new productivity.
Digital Transformation "Three Steps"
Common industry issues: Large traditional consumer goods companies have long supply chains, numerous product lines and sales channels, where can digital transformation start and what path should be followed?
"Both the logic of goods and the logic of people must be coupled with new engines today. Now the focus of Mengniu's digital transformation is AI-driven digital improvement."
"Data cannot be separated from the ecosystem, because data can only be used if it is used. "
Phase 1: Product-centered full-link digitalization (2015-2021)
Mengniu's digitalization covers the entire life cycle of goods, building a "digital intelligence journey for a drop of milk": By establishing and improving digital tools, digital monitoring and management of the entire process has been achieved, from grass cultivation, dairy farming, to milk processing, storage and transportation. This not only improves product quality and safety, but also improves the efficiency and response speed of the supply chain through data analysis and optimization. A large amount of data assets were also accumulated during this stage, laying a solid foundation for subsequent digital transformation.
Phase 2: Consumer-centered global digital intelligence (2021-2023)
Mengniu has an extensive distribution system, with more than 4 million stores supporting the best-selling of many products across the country. However, the deep distribution model will also distance the brand from consumers, which is not conducive to the launch of new products that meet consumer needs and the rapid formulation and adjustment of market strategies. Therefore, Mengniu has turned the focus of its digital transformation to consumers. It has achieved direct connection with consumers through the implementation of "one item, one code", strengthened consumer operations through social tools such as scrm, and strengthened offline sales outlets and online sales. The data integration of domain, private domain and other channel terminals, with Tmall, , JD.com, and other platforms, enables the identification of 220 million consumers through privacy computing capabilities, at the right time, from the right channel, and in the right way. , providing consumers with the right products. This stage of transformation has enabled Mengniu Dairy to gain a deeper understanding of consumer needs and provide data support for market strategies and product innovation.
Phase 3: Comprehensive digital intelligence with AI capabilities as the core (2023 to present)
Entering the third phase, Mengniu Dairy has begun to make full use of AI technology to further deepen digital transformation. The company has established an AI middle platform to comprehensively dispatch the digital intelligence capabilities accumulated in the first and second phases and the AI capabilities of large and small models, and fully apply the enterprise-level knowledge accumulated over the years through the knowledge bank. Based on this, in the supply chain domain and channel domain , consumer domain, and management domain promote intelligence.
It is reported that in June 2024, the "Mengniu Health and Nutrition Intelligent Question and Answer Text Generation Algorithm" passed the algorithm registration of the State Cyberspace Administration of China. This is also the first algorithm in the domestic nutrition and health field to pass the registration. Based on this, Mengniu has launched the AI nutritionist "Mengmeng" based on mengniugpt to provide consumers with personalized nutrition and health services, using digital intelligence capabilities to improve the operational efficiency of Mengniu Dairy and enhance consumer experience and loyalty.
Channel selection returns to the essence of business
Common industry issues: Online channels tend to have richer and more accurate data. Should FMCG companies focus on online channels? Online channels are diversified. How can companies differentiate their layout of shelf e-commerce and content platforms?
"The choice of channel depends on many factors. As far as dairy products are concerned, offline channels will still be the mainstream for a long time."
Although data plays an important role in business decisions, profit is the essence of business. Online channels provide a convenient and accurate way to obtain data. However, fierce market competition and high fulfillment costs (especially for liquid milk products) often compress profit margins.
Therefore, Mengniu has adopted differentiated channel strategies for different categories. For example, categories such as milk powder and sports nutrition require more consumer education processes, and a closed loop of "planting and transformation" can be done on content platforms such as Douyin and Xiaohongshu; while liquid milk products have fast consumption decisions and high contract fulfillment costs. , so offline is still the main sales channel - through digital empowerment of offline channels, the sources and dimensions of data can be enriched.
private domain capabilities are centralized and operations are business-oriented.
Industry common issues: all say that private domains are very important. How to understand the value of private domains and make users willing to enter brand private domains? In terms of organizational structure, how to sort out the relationship between private domain operations and different product lines and sales channels?
"The core principle of Mengniu's private domain operation method and e-commerce operation method is to diversify its capabilities into a central platform and bu (business unit) its operations."
The value of private domain operation is not only the long-term value of the members themselves, but also the radiating members. More family members. Products such as milk powder not only meet the needs of young children, but may also drive their parents to purchase other products such as milk and yogurt.
To achieve higher repurchase through the private domain, brands need to provide value that is different from the public domain. Mengniu's approach is to launch the nutrition and health service platform "Wow Health+" and the AI nutritionist "Mengmeng" to provide long-term companionship and real-time online personalized nutrition services to private members and their family members, including health assessment, nutrition Plan formulation, exercise plan formulation, etc.
Li Chengjie told Yicai Business School that Mengniu’s current digital capabilities are integrated with actual business and follow the basic principle of “centralized capabilities and centralized operations”, that is, data precipitation, analysis and management are unified by the data center, and different business units Based on its own business goals and product characteristics, it proposes data usage requirements to the data center. The advantage of this is that users will not be repeatedly disturbed by multiple product lines, bu will have richer data dimensions and application capabilities, and the group will realize the integration of data management.
Digitally empower offline channels
Common industry issues: FMCG companies focus on offline channels such as multi-level dealers, traditional supermarkets and mom-and-pop stores. How to effectively collect data from these channels and form accurate consumer portrait? Sales channels are becoming increasingly complex. How can companies make effective sales forecasts? The o2o model is growing rapidly offline. What are the opportunities for traditional retail companies to combine it?
"When the brand's coverage is wide enough, its products are diverse enough, and its relationship with channel providers is close enough, more ways to obtain data will be generated, and the channel providers' willingness to share data will also increase."
and channels Establishing close cooperative relationships with business partners is the key for Mengniu to obtain data insights. First of all, by providing a series of digital tools to points of sale, it not only improves the operational capabilities of channel dealers, but also helps Mengniu master sales data, inventory status, etc.Secondly, Mengniu Dairy further stimulates the enthusiasm of channel dealers by linking outlet subsidies with performance. In addition, Mengniu Dairy is also actively expanding its o2o model, cooperating with dealers to set up unmanned milk stations in communities to provide "last mile" upgraded services. This new retail scenario not only improves sales through terminal channels, but also provides insights into consumer habits and preferences from these digital channels.
Through this series of measures, Mengniu has not only improved the accuracy of sales forecasts, but also enhanced the accuracy of consumer portraits. After obtaining a wealth of sell-in (sold from enterprises to various nodes in the distribution system) and sell-out (sold from dealers to consumers) data from many offline channels, Mengniu continues to accumulate and simulate the data to improve the system's algorithms. capabilities, thereby improving the average weekly and monthly sales forecast by 7 percentage points.
New and old brands have different development paths, but in fact they lead to the same goal.
Common industry issues: How does view the new model in which new consumer brands often start online and focus on online channels? How can companies rely on digital transformation to improve new product research and development capabilities?
"New brands are "from people to goods", mature enterprises are "from goods to people", and the connection between people and goods is a two-way process."
"The data will prove that in the eyes of the brand, what is he? Is it the one who is willing to accept the product? "
Every company hopes to maximize profits and expand market share through innovation and market strategies on the basis of ensuring product or service quality. The purpose of launching new products is to meet market demand, enhance competitiveness, and improve customer satisfaction. Therefore, companies need to comprehensively consider multiple aspects such as product research and development, market positioning, and marketing strategies to achieve long-term profitable growth and market leadership.
New brands that start online often have native digital capabilities, are good at communicating with consumers, and find business opportunities from insights into market demand. However, self-built supply chain capabilities are not built in a day, so their products often do not have cost advantages. . In contrast, most mature brands can leverage their supply chain advantages to leverage economies of scale and provide lower-cost products. However, they are far away from consumers and often find it difficult to capture market changes in a timely manner.
Therefore, what the new brand needs to do is to "from people to goods", quickly strengthen the back-end OEM production capacity, or build its own supply chain system, and put the brand value brought by insights and marketing into real goods. , in order to truly achieve profitability. Mature brands need to "from goods to people" and continuously carry out digital transformation to improve their reach and awareness of consumers, so as to develop good new products and maintain market competitiveness.
The "omni-channel, no-channel" trend will reshape the business landscape in the future, and AI is the key to enterprise innovation and growth. Leveraging the revolutionary capabilities of AI technology to achieve seamless online and offline connections, provide personalized shopping experiences, break traditional channel barriers, and cover a wider range of consumer groups is a must-have path for innovation and exploration for all retail brands.
(This article comes from China Business News)
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