---
title: "Digital Transformation for Traditional Enterprises: Where to Take the First Bite - A Study of COFCO Oils & Fats Marketing's Digital Practice"
description: "In the digital economy era, digital transformation has shifted from an option to a necessity for enterprises, especially under the pressure of the COVID-19 pandemic and with the aid of digital technologies. COFCO Oils & Fats Marketing, a leader in the domestic oils and fats industry, has been building its digital capabilities for over a decade, and its journey offers valuable lessons for traditional enterprises."
author: "首席数字官"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-01-02"
language: "en"
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# Digital Transformation for Traditional Enterprises: Where to Take the First Bite - A Study of COFCO Oils & Fats Marketing's Digital Practice

> In the digital economy era, digital transformation has shifted from an option to a necessity for enterprises, especially under the pressure of the COVID-19 pandemic and with the aid of digital technologies. COFCO Oils & Fats Marketing, a leader in the domestic oils and fats industry, has been building its digital capabilities for over a decade, and its journey offers valuable lessons for traditional enterprises.

Source: Chief Digital Officer (ID: ChiefDigitalOfficer)

In the digital economy era, digital transformation has shifted from an "option" to a "must" in the process of enterprise development. Especially under the pressure of the COVID-19 pandemic and with the aid of digital technologies, traditional enterprises have begun to awaken to digitalization, and the digital wave is sweeping and disrupting all industries.

COFCO Oils & Fats Marketing Company (hereinafter referred to as COFCO Oils & Fats Marketing) is one of the leaders in the domestic oils and fats industry, with 30 production enterprises across 13 provinces and cities nationwide.

As a traditional grain and oil enterprise, its digital construction can be traced back to 2008, when it was still part of the China Foods segment. It has been over ten years since then, much earlier than many emerging enterprises.

Of course, from the various systems in different factories to the unified planning led by the group, it is evident that COFCO Oils & Fats Marketing's understanding of digitalization has deepened through step-by-step exploration.

**Why Does the Elephant Turn Around?**

The industry likes to call traditional leading enterprises "elephants" because they share a common characteristic: large scale and large organization. This characteristic often means "it's hard for a big ship to turn around" in digital transformation, and it can also become a constraint.

This requires enterprises to be sufficiently clear-headed. They need to know why digital transformation is necessary, what the goals are, how to proceed, anticipate difficulties, and be prepared for the costs.

To outsiders who don't understand, it may seem that grain and oil enterprises have stable raw materials, stable channels, stable consumption, and a relatively stable competitive environment, especially for giants, so pressure may not be high. But in reality, this is not the case.

On one hand, there is the ceiling effect. In recent years, the growth rate of the entire grain and oil industry has slowed across short, medium, and long cycles, which also affects the growth rates of leading companies.

On the other hand, the industry threshold is relatively low, with many emerging brands entering the market. At the same time, there are high product homogeneity, low consumer stickiness, low repurchase rates, slow market expansion, and other lurking crises.

Therefore, even the giants that have long been at the top of the industry dare not claim to be fully confident in competition, let alone new brands.

So, giants are not as comfortable as imagined; they are more often already thinking about potential dangers while living in peace.

This is why COFCO Group, as the largest agricultural and grain central enterprise in China, still attaches great importance to digital transformation. Although it is not easy for an elephant to turn around, it must plan ahead to move in the right direction and follow the right path.

**Drawing a Clear "Map"**

**Only Then Will You Know Where to Take the First Bite**

"Planning ahead" is also why, when we ask about a company's digitalization, we like to start with planning. Digitalization without clear planning and goals cannot succeed. Clearly, COFCO Oils & Fats Marketing is also aware of and follows this rule.

Mr. Song Shiwu, CIO of COFCO Oils & Fats Marketing, who has been in the grain and oil industry for 26 years, told us that COFCO Oils & Fats Marketing has formulated digital strategies and plans according to industry standards and rules, mainly including the construction of front, middle, and back office systems, and **according to the plan, they have already completed more than half.**

Are you surprised that an enterprise of such scale can assess its construction progress so accurately?

As one of the core main businesses of COFCO Group, COFCO Oils & Fats Marketing's business focus is on omni-channel marketing. For them, marketing is the business theme and an important source of business. Corresponding to the business layout, it can be seen that COFCO Oils & Fats Marketing's information planning focus is also concentrated here.

COFCO Oils & Fats Marketing's core marketing systems currently include SAP and BPM systems built by the group; two major business system sources: GT and CASS systems; two core marketing systems: SFA and TPM systems; in addition, there are OTMS systems, one-card systems, financial shared systems, etc.

Starting from each key node in the marketing process, digital empowerment is carried out point-to-point, ultimately achieving closed-loop management of marketing business.

According to the plan, the middle platform will be an extremely important part, aiming at comprehensive budget management systems, full marketing management systems, full supply chain management systems, and consumer behavior analysis systems, building towards a digital middle platform.

This is the first step of construction: drawing a clear map, with clear thinking, clear direction, and naturally clear rhythm.

But with the same map and the same destination, different people take different routes. This is also true for digital construction, which is the role of project implementation path design.

How should the path be chosen? According to research results with most digital service providers, **the path cannot exist apart from business reality; as the business chooses, the road naturally goes there.**

In the oils and fats industry, on one hand, fees and prices are deeply affected by market conditions and change very quickly, with daily quotes. Especially for bulk trading commodities, a small price change can have a big impact, so the importance of channel marketing expense management cannot be underestimated.

On the other hand, unlike other sub-sectors, in the channel composition of grain and oil brand owners, most only involve the distributor level, and the main battlefield is concentrated in the supermarket KA channel.

Other industries, due to the need for deep distribution, require a large number of frontline sales personnel and must ensure the standardization of personnel in all aspects. Only on the basis of people can they further promote the management of expenses, activities, and other links.

This determines that most grain and oil brand owners do not need to use a human wave tactic at the terminal like other industries, but rather need to focus more on expense management. This is why grain and oil giants like COFCO Oils & Fats Marketing and China Resources Ng Fung **prioritize starting with TPM marketing expense system construction,** unlike other industries that mostly choose to start with SFA.

Whether starting with people and then extending to other areas, or focusing on expenses with others as auxiliary, although the paths are different, the thinking is the same: **based on the enterprise's business characteristics, choose the point with higher weight and broader impact to decide where to take the first bite of digitalization.**

**COFCO Oils & Fats Marketing**

**The "First Bite" of the Full Marketing Digital System: TPM**

The history of COFCO Oils & Fats Marketing's TPM system construction can be traced back to 2008, but at that time it was only a module of SAP to manage expenses. So strictly speaking, before 2019, COFCO Oils & Fats Marketing did not use an independent system for online management of marketing expenses.

After investing hundreds of millions in market expenses each year, promotional activity needs were collectively packaged via email to the "Ai Ling Gong" platform, which published tasks to members, and after execution, rewards were given. Execution result feedback relied entirely on offline methods.

The construction of the TPM system was an effective innovation in business execution mode. Through the TPM system, it changed the previous situation where expense execution and feedback relied entirely on offline methods. With digital means, it effectively achieved a perfect connection between online and offline links in expense execution management.

Therefore, the TPM system plays a pivotal role in the marketing management system. As Song Shiwu said, the TPM system construction can be considered the first step of the full marketing digital system for COFCO Oils & Fats Marketing, and it opened the prelude to building a marketing platform through TPM.

**1. Core Pain Points Determine Core Functions; Core Functions Determine Core Value**

Looking back, for COFCO Oils & Fats Marketing at that time, the core pain point of building TPM was to solve budget issues. How much budget is needed? How much to spend in each store? How much per distributor? How much per category? How much for headquarters special expenses? How much for each region?

Through TPM system budget management, the system calculates available expenses as the budget source. The budget is divided into four dimensions: first, headquarters special items, such as special expenses for the Chinese Women's Volleyball Team and aerospace; second, regional expenses; third, customer expenses; fourth, pre-invested expenses.

Budgets in each dimension can be transferred and supplemented mutually. This has become one of the core functions of COFCO Oils & Fats Marketing's TPM system.

The second core function is promotion planning, which manages promotional activities. Activities are first established in the system, such as monthly promotion plans and promotion plans for hundreds of thousands of outlets. After the promotion plan is formulated, it initiates review (pushed to BPM).

In the promotion plan approval stage, real-time decision information such as budget balance, verified amount, actual sales, and cost-effectiveness ratio is provided.

**2. Highlight Designs Determine System Adaptability; System Adaptability Determines Long-term System Value**

In fact, the two core functions interact because once a promotional activity is established, it occupies budget. This linkage is reflected throughout COFCO Oils & Fats Marketing's TPM expense management chain.

For example, as Song Shiwu introduced, one of the **highlights of this TPM system compared to other vendors' systems is the audit platform.** This audit platform is inseparable from budget, planning, and other links.

Because promotional activities are mostly concentrated in stores, each activity is linked to a store, with master data such as address and distribution status. Through system-linked management, once an activity is approved, the corresponding data information can be displayed on the audit workbench.

Connected to BPM process approval, after the audit plan is created, it is automatically published to the third-party Ai Ling Gong platform via interface for audit execution. Once a store is selected for audit, it cannot be verified until the audit result is transmitted back to the TPM platform, and the audit task is considered complete.

Another special point here is that the selection of audit objects is automatically selected based on algorithms.

In addition to the audit platform, Song Shiwu also introduced another feature closely related to the audit platform and **different from general TPM, which is the humanized appeal function.**

This stems from the particularity of third-party audits. Considering frontline business feedback on audit results, an appeal link was specially added, allowing appeals by providing evidence.

Seeing this, I believe you also feel like us: this system has a sense of "all roads lead to Rome." Song Shiwu described it as, **"This may be one of the biggest highlights of this system; it is not an information island."**

The TPM system is not only connected with the SFA system but also integrated with SAP, approval system BPM, fund system, etc.

Based on the two core functions and three highlight designs, the core process of COFCO Oils & Fats Marketing's TPM system becomes clear.

Through a comprehensive budget management system, manage expenses from the source, further build two expense management workbenches for the sales department and expense audit personnel, integrate existing business systems to achieve master data integration, and build a PDCA closed-loop expense management system, thereby achieving integrated management of market expenses that can be tracked and traced.

The flywheel effect refers to the organic mutual promotion between various business modules of a company, like meshing gears driving each other.

Initially, it takes a lot of effort to start from rest, but every turn of effort is not wasted. Once it starts turning, the gears will spin faster and faster. This idea is reflected in many aspects of COFCO Oils & Fats Marketing's TPM system construction project.

Objectively speaking, when taking stock of COFCO Oils & Fats Marketing's existing TPM system, the logical design is not complex, but compared with other enterprises' systems, there are indeed many outstanding points in detail settings, system integration, and linkage.

During the TPM system launch process, terminal data was cleaned to form a unified data system. In the integration of TPM with other systems like SFA, multiple batches of data were sorted out in gradients again.

The entire system launch process is actually a process of internally sorting out business data. Based on systematic data, the TPM system drove expense management and also promoted data interoperability and collaboration among other systems.

**As Song Shiwu said, the TPM system has played a pivotal role in the process from digital analysis to digital intelligence in omni-channel marketing.**

**Digital Construction in Traditional Industries: Adapt to Industry Characteristics and Business Features**

Compared with other FMCG industries, the overall digitalization level of the grain and oil industry is indeed not as high as that of large consumer goods sectors like food and beverages that are active on the consumer front line. However, COFCO Oils & Fats Marketing's digital construction projects also have many aspects worth learning from for traditional enterprises.

**First, understand the essence of digital transformation, deeply understand business models, and build systems that meet business needs.**

During the exchange, Song Shiwu said, "I joined COFCO in 1995. I have been working in the grain and oil industry for many years, so I know this industry quite well, covering production, marketing, brand building, and channel construction. Based on my understanding of the industry and systems, it is our unshirkable responsibility to inject the business management model of the grain and oil industry into the system, into TPM."

Understanding the business model of traditional industries makes system construction more aligned with actual business needs, determining that system value can be realized faster and more effectively. And value can enhance recognition from all levels of the enterprise, fundamentally solving the problem of system promotion.

**Second, strengthen investment in digital resources and attach great importance to digital culture construction.**

Although it is a traditional enterprise, COFCO Oils & Fats Marketing's overall style and thinking are relatively market-oriented, which is different from monopolistic enterprises. **It is this market-oriented characteristic that makes the enterprise's acceptance of digital culture construction relatively high.**

Not only does the decision-making layer attach great importance to digital investment, but key users at all levels of the enterprise are also more inclusive of system applications, able to understand the system, recognize the significance of digitalization, and truly use system tools to empower business management.

For example, at the group level, a dedicated technology company was established - COFCO Information Technology Co., Ltd., with an IT team of about 200 people responsible for the operation and construction of group-level unified systems. The group's 18 professional companies also attach great importance to digital construction, with professional IT teams building business systems other than core systems.

Therefore, for traditional enterprises, digital construction cannot be blind. They must understand their own enterprise characteristics and make full use of them to make designs and choices that fit their characteristics, thereby reducing resistance and making construction twice as effective with half the effort.

Under the catalysis of the epidemic, enterprises that previously had doubts and adopted a wait-and-see attitude towards digitalization have generally changed their minds. However, for traditional enterprises, especially large ones, it is not easy to change long-standing business models and logic.

Digital transformation is not a one-day effort. Where to start, what to do at each step, and what to ultimately achieve... all need exploration and verification.

COFCO Oils & Fats Marketing's digital construction shows us how a mature traditional leading enterprise, without being rigid or blindly following, uses a long-term perspective to think about enterprise development, uses innovative thinking and perspectives to view the market environment, lays out long-term construction, and builds digitalization in a way that adapts to its own business characteristics.

Of course, long-term digital construction needs priorities and direction. COFCO Oils & Fats Marketing chose TPM construction as the first step of the full marketing digital system, based on considerations of the grain and oil industry's business model and characteristics. It is believed that for other enterprises with similar backgrounds, this can serve as a reference direction.

Especially when SFA has become a relatively mature and basic application in most industries and enterprises, how enterprises adapt to market changes, further explore and deepen system value, the marketing company's path provides a good demonstration.

**Conclusion:**

Digital transformation is never just about technology; it cannot be separated from business, from all levels of the enterprise, and especially from the top leader. The necessity and difficulty of digital transformation coexist. With the drive of the digital economy, to do digitalization, one must be prepared for long-term persistence and struggle, which is gradually becoming a consensus.

As more and more enterprises find suitable paths for themselves, we will surely see more explorations that break through inherent thinking, and discussions on digitalization will become more practically meaningful.

**Are you "watching" me?**


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