Introduction: Only by understanding the industry and the enterprise can you provide customized processes and outcomes.
Author | Hai You Reviewer | Gou Gou Layout | He Wen
A few days ago, I received a call from a front-end sales director of a system supplier. He reported that despite the urgent need for digital transformation among brand owners, the FMCG business is becoming increasingly difficult. Several bids that they had invested significant effort in organizing all went unanswered. Where is the problem? I replied: Have you achieved the following three points? First, understand the client—not what services you can provide, but what services the client needs. If you don't understand, you become a "huckster." Second, the client and the supplier are not from the same platform; the client is in the FMCG industry, while the supplier is strictly speaking in the IT industry. It is the development of the times that brings resonance between the two, but you still need to find the point of integration (pain point)—you happen to need it, and I happen to satisfy it. Third, the height issue: view the enterprise from the industry's height, view operations from a business perspective. Enterprise digital transformation is strategy, execution is tactics. If you don't lead, you can't sign the contract.
In the past two or three years, I have cooperated with several system suppliers on consulting projects for enterprise digital transformation, involving listed companies and industry leaders with annual sales exceeding ten billion yuan. From the early bid competition to the final model building, I have many insights to share with you.
Understand: The Combination Logic of Product + Method + Tool
The essence of enterprise digital transformation is to empower the enterprise digitally, allowing it to leverage its competitive advantages. Deviating from this track makes digital transformation worthless. The value is reflected in: Product + Method + Tool combination logic.
1. Product
The ultimate result of digital transformation is to make the client's products "easier to sell" and "more profitable." Therefore, the product is the "basis point" for cooperation between the two parties, and this "basis point" is often overlooked by many system suppliers. I have participated in several bid presentations where many pre-sales directors didn't know what they were talking about; they never found a foothold, leaving brand executives confused. The core of a system supplier's bid should revolve around what actions to take regarding the client's "product." For example, you can use the product as the core, introduce the concept of product market, sort out the brand's business strategy with the market as the origin, and around one origin (market), expand four aspects (input, output, front-end, back-end), leading to eight tasks (promotion costs, operating costs, sales contribution, profit contribution, terminal performance, coverage performance, sales team, distribution network). This is a rough framework for thinking about regional market structure and processes. In this process, seek the brand's pain points and propose reasonable, actionable solutions based on past cooperation experience. This is the foundation for establishing cooperation.
2. Method
The principle for system suppliers is: supplement the brand's strategy and improve tactics. If you don't deeply understand the brand's development history and rashly propose strategic deployments, you are likely out of your mind. Moreover, when a brand reaches the stage of needing digital transformation, its tactical system is necessarily relatively mature, at least self-consistent. Try not to disrupt it; instead, empower it and improve efficiency. The core of the method is to empower the brand's business and operations, fully leveraging the system supplier's accumulated successful experience in the FMCG industry, organizing successful cases, depicting success images, and providing reminders, warnings, and suggestions to the brand. Deep cooperation should be based on consensus.
3. Tool
What is the definition of a tool? It seems simple but is hard to answer. I'll use two examples. First, armor: soldiers often wear armor to protect themselves. Armor has a dual nature: on one hand, it effectively blocks enemy attacks and provides protection; on the other hand, wearing armor itself adds weight and reduces flexibility. How to balance this requires joint discussion between the brand and the system supplier. The more demands the brand has, the heavier the armor, and whether the soldiers can bear it becomes a question. If it backfires, they may part ways. In fact, many brands in their initial digital transformation want SFA, DMS, TPM, etc., to go live simultaneously. If the system supplier doesn't provide reasonable implementation advice (step-by-step, gradual guidance), the grassroots cannot handle it, and the outcome is predictable. Second, a sword: swords vary in quality, but the sword manual is also important. Giving only a sword without the manual is "hooliganism." The manual is the method mentioned above. Methods need to be accumulated by going deep into the industry. FMCG is a large industry; beverage sellers differ from snack food sellers, and grain, oil, and condiment sellers differ from baijiu sellers. Without deep understanding of these sub-industries, you can't earn your keep. So, face the value of tools squarely. They are like a double-edged sword; if used improperly, you may kill a thousand enemies but lose eight hundred of your own. Both parties must have a clear understanding of this—not blind, not exaggerated.
Conduct Research: Go to the Frontline, Restore Work Scenarios
What is the core of enterprise digitalization? Mr. Liu Run described it this way: Digitalization is extracting data from the physical world, refining it into information, distilling it into knowledge, aggregating it into wisdom, and ultimately increasing productivity. For example, extraction: converting our perception of the physical world into text, a photo, an audio, or a video. The result of extraction is data. Who completes this process? It can be done by consumers (via one-code-one-item), by terminal outlets (via self-ordering and self-display), or by salespeople through "terminal devices." This requires system suppliers to go to the frontline for research, meticulously restoring the work scenarios of consumers, terminal owners, and salespeople. Otherwise, everything done later is hollow.
If you cannot accurately describe the market situation, you cannot efficiently solve problems.
So, what should be researched? In my opinion: Research should first restore the salesperson's work scenario, conducting a detailed analysis of the salesperson's execution loop. For example: work around outlets (development, maintenance, quantity, quality, etc.), work around displays (point-of-sale beautification, brand display, category display, etc.), work around visits (frequency and quality, content, success rate, etc.), and work around product sell-through (tasting experiences, new customer acquisition, repurchase, average transaction value, etc.).
Second, restore the distributor's business scenario, conducting a detailed analysis of the distributor's daily management and operations. For example, product strategy should study: product labeling; sell-through logic of each product; product channel chain grading system; product channel chain pricing system; last year's category achievement and opportunity forecast; whether the first engine product is complete and whether a second engine product needs to be launched; how to standardize channel product age management. For example, channel strategy should study: channel definition and mandatory SKUs; channel breakthrough priorities; channel outlet coverage requirements; channel execution standards; business area planning guidelines; scientific outlet visit planning; outlet management: rating system; clear regional battle maps; achievement and opportunity forecasts for each channel; distributor safety stock & product age management. Also, consumer strategy, organization strategy, expense strategy, distributor strategy, time advancement strategy, etc. Only by deep restoration can you further understand the business situation of the brand's distributors, laying the foundation for future manufacturer-distributor collaborative digital transformation.
Finally, provide reasonable business and operational suggestions. Based on field visits, give several actionable plans for business growth or organizational efficiency for the brand to study.
Diagnose, Find the "Cause"
When encountering market problems, my general advice is to solve them from the inside out. When a problem arises, first study whether the relevant systems and processes match. Generally, there are three situations:
1. Blank process system: There is no relevant process support behind the phenomenon. 2. Supplementary process system: There is relevant process support, but the process is incomplete and needs supplementation. 3. Corrective process system: There is relevant process support, but the process does not match the current situation.
If the process system is fine, the next step is to check execution.
Without execution, even the best processes and systems are useless. Execution = Knowledge * Attitude * Skill * Check.
1. Knowledge affects execution. If you don't understand, you can't do it. Product knowledge, logistics knowledge, channel knowledge, etc., are basic knowledge reserves for every marketing worker. To improve grassroots team execution, basic knowledge is essential.
2. Attitude affects execution. If attitude is not correct, things won't get done. Attitude is hard to quantify. What is a good attitude? What is a bad attitude? Can mood affect attitude? Can assessment affect attitude? What basis does a leader use to judge a person's attitude? This is not a pragmatic indicator; it needs soft guidance and training, and of course, necessary communication and incentives.
3. Skill affects execution. You must not only know but also be proficient. Skill training should not be limited to learning; the master leads you to the door, but practice is up to you. Skill improvement requires trainers to continuously guide grassroots workers to practice, ideally forming muscle memory.
4. Tracking affects execution. Checking is greater than trust. Truly self-disciplined people are rare; otherwise, there wouldn't be so many regulatory agencies in society. Tracking and checking are meant to force grassroots teams to develop habits close to "self-discipline," learn self-reflection, and work under leadership supervision.
Diagnose, find the "cause." If a system supplier can effectively identify the brand's "cause," it provides a good entry point for system integration and makes solving the brand's current confusion more efficient.
Prescribe the Right Medicine, Implement the System
In the Internet era, FMCG enterprises cannot do without digital systems. So, what role do systems play in solving these problems? I'll list three points:
1. Performance assessment: No outlets, no sales. Take the outlets we care most about as an example. Assessments for outlets include quantity, quality, activity rate, monthly sales, outlet level, etc. When outlet problems are found in the market, if processes and execution are in place, the SFA function in the system can effectively evaluate monthly performance levels, providing a basis for performance assessment.
2. Incentive policies: For example, Jinmailang was the first in the industry to propose an outlet points system, converting market actions into points, achieving more work for more rewards for salespeople's outlet actions, turning management into incentives, thereby stimulating grassroots initiative and improving human efficiency. This requires the system's powerful functions.
3. Multi-functional system implementation: For example, at the distributor level: some distributors feel their expenses are increasing but effects are diminishing, hoping to monitor expense value; some distributors are still struggling with profitability, subsidizing employees, and want to monitor employee daily work behavior during the subsidy period; some distributors want to monitor inventory, sell-through, and product age across business lines and terminal outlets; some distributors want to use tools to improve the verification efficiency (TPM) among outlets, salespeople, distributors, and the enterprise; some distributors want to dynamically monitor outlet levels, display competition status, visit frequency, sell-through status, and inspector market checks, etc. Overall, there should be a sense of priority.
Final Thoughts
Returning to the initial question: How can system suppliers achieve a soft landing for enterprise digital transformation? There are many answers, but also only one. Many because implementation is complex, and every aspect must be considered. Only one because only by understanding the industry and the enterprise can you provide customized processes and outcomes, truly assisting digital transformation. This requires deep thought from system suppliers.
Extended Reading