The 6th China FMCG Channel Innovation Conference, hosted by New Distribution, a professional FMCG new media platform, was grandly held from April 1 to April 3 at the Chengdu Agile Howard Johnson Hotel. The event attracted 3,000 industry professionals, including distributors, community e-commerce platforms, brand owners, and internet companies from across the country, with a full house and unprecedented scale.

On the afternoon of April 1, at the China FMCG Digital Growth Summit, Mr. Guan Xiangyu, Sales Director of Field 365, delivered a keynote speech titled "Giving FMCG Enterprise Management an External Brain." Field 365 has been committed to providing professional digital services to the industry for many years, serving over a thousand brand owners and tens of thousands of distributors in digital channel innovation. The company has received three rounds of funding from international investment institutions including GSR Ventures, China Broadband Capital, Weiguang Venture Capital, and Fengqiao Capital.

New Distribution has carefully organized and excerpted the essence of Mr. Guan's speech for publication to our readers.

-01-

All attempts to adapt to trend changes are for competition

At the main forum, Mr. Chen Siting of New Distribution mentioned that due to the pandemic, it had been 741 days since our last gathering at the New Distribution Chengdu Spring Sugar Conference. However, in the consumer goods sector, overall industry performance has still grown, as confirmed by New Distribution's small store survey report.

Because we have long served the consumer goods sector, we pay close attention to such data, and we can see this trend in China's FMCG industry. From 2005 to 2014 was the golden decade for FMCG, when many billion-yuan products were born, such as Wanglaoji and Ambrosial. Those who seized the opportunity at that stage could gradually grow into huge brands, and the management model then was mainly channel sinking.

In 2017, we called it the first year of new retail, and a new trend emerged called consumption upgrade. The most intuitive feeling is that the mineral water on our tables has gone from 1 yuan initially to the mainstream 2 or 3 yuan now, and even in some places in Shanghai, 4 or 5 yuan has become the main price range.

By 2020, due to the pandemic, the industry considered it the year of value, and a trend called value trend emerged. Currently, many companies are trying BC integrated operations.

In fact, no matter what kind of year or era, the problem we can never escape is competition. All efforts and attempts to respond to trend changes are to cope with competition.

In the FMCG industry, although it may not be a life-and-death struggle, at least the shift in market share is the norm of competition. For example, the mineral water on the table—I see some friends have placed Genki Forest. Ask yourself, after drinking this bottle of Genki Forest, will you drink other mineral water? After eating a bowl of Lamian Shuo, will you still eat a pack of Haoliyou?

Old players are constantly launching new products, such as the famous liquor brand Luzhou Laojiao launching ice cream called "Duanpian," and Nongfu Spring launching coffee. New players are also joining continuously. There were too many internet-famous brands last year, such as Wangbaobao, Lamian Shuo, and Li Ziqi also competing in this industry. So the biggest pressure comes from competition.

I studied management and have heard many management cases. The most famous decision-making mistake is Kodak cameras. They discovered digital film but chose to suppress it, and were eventually eliminated by the new category they had discovered. Another example is Huawei, which 20 years ago spent $560 million to hire IBM for consulting, essentially asking IBM to be an external brain to help diagnose, ultimately creating today's Huawei.

In the final analysis, every choice in corporate competition is a decision. So-called decision-making is the collection, processing, and final judgment of information. That is to say, the success or failure of an enterprise often depends on whether you can make the right decision first or before your competitors.

How to achieve this? That is why many companies leverage the power of an "external brain."

-02-

The role of a digital external brain: making decisions more precise

Why do companies hire external brains? Because those involved are confused, while bystanders are clear. Because our ability to collect and analyze information is limited, our decision-making precision is limited, and we need external consulting agencies or professional data consulting companies to help us uncover existing problems.

The precision of decisions depends on the efficiency of information transmission.

In the Tang Dynasty, the An Lushan Rebellion began in Fanyang, 3,000 li from Emperor Xuanzong's Huaqing Palace. Historical records clearly state that with eight-hundred-li express, the emperor's gold medal, and the order that anyone obstructing would die, horses rested but people did not, running continuously on the road. This was the peak transmission speed in ancient times: 3,000 li took six days, and along the way, three people and ten horses died from exhaustion. Today, with digitalization, we can grasp frontline dynamics anytime, anywhere.

Huawei's Mr. Ren has said, "Those who hear the sound of gunfire make decisions." What is the sound of gunfire? It is the information collected by frontline personnel during operations. We use digitalization to increase transmission speed. In this year's national "14th Five-Year Plan," four chapters and 13 sections emphasize national digitalization. Promoting data circulation and improving data usage efficiency will be an important theme of current digitalization.

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Core of enterprise channel digitalization: 5 online integrations

So for enterprises, how to achieve digitalization? Five points:

Personnel online: Build a standardized operation platform for the marketing team, ensuring instant command delivery and real-time dynamic feedback.

Customer online: Establish an online customer operation and interaction mechanism, eliminate fake stores, and accumulate enterprise customer data assets.

Expense online: Shape a closed-loop management process for channel expenses, enhancing the authenticity, rationality, and effectiveness of expense investment; improve expense reimbursement efficiency.

Order online: Build an omni-channel order flow system, increase the transparency of product flow, and expand new ideas for marketing decisions.

Inventory online: Establish a real-time channel inventory observation system, improve inventory risk identification capability, accelerate inventory turnover, and promote production-sales coordination.

When data flows online and reaches decision-makers in real time, it can realize its value.

Why do we need so much information online? Because we need to establish core indicators to understand market changes.

Based on Field 365's services to a large number of brand owners and distributors, as well as our understanding and insights into the industry, we have extracted some valuable indicators for enterprises. Personnel assessment, customer analysis, market insight, and risk warning are mainly around these four aspects.

Perhaps there are differences across industries and categories, but across consumer goods, these indicators in the personnel dimension, distributor dimension, and terminal dimension may be the levers for enterprise performance growth. Let's look at these three dimensions in detail:

Personnel dimension: Mainly focus on visit execution rate, number of customer visits, average time in store, effective working hours, work saturation, sales achievement rate, number of new outlets opened, etc.

For example, one of our clients, a well-known domestic food company, has very deep and excellent distribution. In the past, their salesperson visited 23 TT terminal stores per day. After using our software, they gradually formed more standardized operations, making their actions more precise and efficient, and with automated tools, the number of daily visits increased to 38.

For the FMCG industry, especially those with large frontline sales teams, the visit plan completion rate is an important indicator of the company's management level. Another client, BESUN, which makes health and weight-loss food, has a department dedicated to data observation, and one of its core observation indicators is the salesperson's time in store.

They regularly calculate the work content and efficiency of salespeople in stores, then compare the data of high performers with low performers to identify gaps, and use this to set the average in-store time indicator for the next assessment cycle.

Terminal dimension: What to look at in the terminal store dimension? Shelf visibility. Although we are a software company, all our teams run routes with clients.

One time left a deep impression on me: at a RT-Mart in Shanghai, I saw a socket shelf with brands like Bull, Delixi, and People Electric. Unfortunately, all three are our clients. We saw that Bull had placed their sockets in front of Delixi's hooks, expanding Bull's display by an entire column, while Delixi's products behind were basically invisible.

A full shelf share directly captures consumers' attention. Humans are visual animals; 67% of a person's senses come from vision, and most consumption impulses come from visual impulses.

Distributor dimension: In the distributor dimension, we need to look at sales analysis. We provided FrieslandCampina with a TBM platform plus a distributor portal, with the core task of helping Friso distributors see data in real time and what the next policy is. These are some core indicators we have developed for the distributor dimension. There are also similar indicators like growth rate and turnover rate, which we won't expand on here.

Having served so many clients and with years of experience, we can proudly say that none of Field 365's clients have failed to go live; all projects have been perfectly implemented.

-04-

Summary

To summarize, the digitalization of consumer goods enterprises should take three steps.

1. Fill basic loopholes to reduce enterprise operational problems Channel digitalization construction usually starts with SFA system construction. Through SFA, "personnel online" and "customer online" are achieved, better managing attendance, visits, execution, etc., while collecting real store customer data and accumulating enterprise customer assets.

2. Assess key indicators to enhance enterprise marketing capabilities In the second stage of channel digitalization, many enterprises will conduct digital management and assessment of key indicators, such as "market activity cost-effectiveness ratio," "perfect store indicator," "order delivery timeliness rate," "channel distribution growth rate," "distributor inventory days," etc. At this time, enterprises will launch projects like Trade Promotion Management (TPM), Perfect Store (PS), Distributor Portal (DP), and Distribution Management System (DMS).

3. Observe overall indicators to understand market business changes In the third stage of channel digitalization, many enterprises will set comprehensive KPIs for different subjects in channel business, such as sales teams, terminal stores, distributors, market activities, and items/brands/core SKUs. By observing changes in various KPIs, they can understand market channel changes. At this time, enterprises enter the KPI fine management stage.

The core data for digital transformation is actually these five words: authentic, comprehensive, timely, accurate, and real-time.

Final words: Finally, let me briefly introduce Field 365. Field 365 can provide a full-chain marketing line management system. With SFA, we can build a complete, standardized operation platform for enterprises; with DMS, we can establish a portal and linkage between brand owners and distributors, helping brand owners manage or control channel inventory and helping distributors improve sell-through capability. With TPM, we can fully control offline channel expenses, from budget verification to reimbursement and payment, all fully online.

The above is basically what Field 365 can provide. Our core competitive advantages are:

First, we have a very complete product line, allowing clients at different stages to choose the corresponding products without rushing to implement everything at once.

Second, we have a vast number of client cases.

Third, we have been focused on this industry, so we have accumulated ample experience.

Fourth, professional service capability. Our industry clients are focused on FMCG and durable consumer goods. Whether it's food and beverages, alcohol, or others, we have top-tier cases.

Therefore, we are very confident in serving every enterprise well.

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