---
title: "Refined Expense Management: The Essential Path to Improving Cost Efficiency"
description: "In times of great change, leveraging digitalization for refined expense management enables companies to navigate with greater composure and confidence. This article shares how Feihe has implemented technical support for expense management during its digital upgrade."
author: "葛帅"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-11-23"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/refined-expense-management-the-essential-path-to-improving-cost-efficien-c279b603/"
markdown: "https://xinjignxiao.com/en/articles/refined-expense-management-the-essential-path-to-improving-cost-efficien-c279b603.md"
original_source: "https://mp.weixin.qq.com/s/w8yiPsVfdKhIs-LGuKAM4A"
translation: "https://xinjignxiao.com/zh/articles/%E7%B2%BE%E7%BB%86%E5%8C%96%E7%9A%84%E8%B4%B9%E7%94%A8%E7%AE%A1%E7%90%86%E6%98%AF%E6%8F%90%E5%8D%87%E4%BC%81%E4%B8%9A%E8%B4%B9%E6%95%88%E7%9A%84%E5%BF%85%E7%BB%8F%E4%B9%8B%E8%B7%AF-c279b603.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/refined-expense-management-the-essential-path-to-improving-cost-efficien-c279b603/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Refined Expense Management: The Essential Path to Improving Cost Efficiency

> In times of great change, leveraging digitalization for refined expense management enables companies to navigate with greater composure and confidence. This article shares how Feihe has implemented technical support for expense management during its digital upgrade.

**Introduction: In times of great change, leveraging digitalization for refined expense management enables companies to navigate with greater composure and confidence.**
Refined expense management is the essential path to improving cost efficiency, especially for FMCG companies that pay close attention to expense outlays. Today, I will share how Feihe has provided technical support for expense management during its digital upgrade.

**The World's First Industrial Cluster for Infant Formula**
Feihe was founded in 1962, and this year marks its 60th anniversary. Over the past six decades, Feihe has focused on the R&D and production of infant formula, dedicated to researching the physiques of Chinese babies and the nutrition of breast milk, and committed to crafting fresher, more suitable formula for Chinese babies. Feihe's milk source is located in Qiqihar, on the world-renowned golden milk source belt at 47°N latitude. This region has a northern temperate continental monsoon climate with adequate precipitation and abundant sunshine. The temperature difference between winter and summer can reach 70°C, which naturally sterilizes the soil. This black soil is more suitable for crop production and also for the growth of dairy cows. For this reason, many world-famous pastures are concentrated at this latitude, such as those in Wisconsin (USA), Alberta (Canada), and Hokkaido (Japan). Qiqihar is also the hometown of the red-crowned crane, a bird with very demanding environmental requirements; they will not inhabit areas with any pollution. Feihe's exclusive farms, self-owned pastures, and modern processing plants are distributed throughout the Qiqihar region, making Feihe's milk source exceptionally natural and pure. At no small cost, Feihe spent ten years building the world's first industrial cluster for infant formula on the golden milk source belt at 47°N latitude, achieving end-to-end control from source pasture planting, large-scale dairy farming, to production processing, logistics warehousing, channel management, and after-sales service, forming Feihe Dairy's unique industrial cluster model. Each Feihe factory is equipped with a nearby pasture. The advantage of Feihe's pastures is their location and proximity to processing plants, which has enabled Feihe to establish a "two-hour ecosystem": from milking to processing into powder, it takes as little as two hours, maximizing the freshness of the formula.

**The "3+2+2" Strategy: Digitalization Empowers Production**
To support Feihe's rapid development, the company initiated its digital transformation journey in 2016 and officially released its digital transformation strategy, abbreviated as "3+2+2," at the end of 2018. The "3" refers to the construction of three business system platforms: the business operations and management platform with ERP at its core, the smart manufacturing platform supporting the implementation of a smart manufacturing system, and a unified digital and intelligent office platform. Through the construction of these three system platforms, Feihe has achieved comprehensive digitalization across all business, processes, and touchpoints, enabling timely, complete, and accurate collection of data from business operations and management processes. At the same time, the systems have solidified Feihe's core business processes, standardized business operations, reduced risks in business operations, and achieved automation through system integration, thereby enhancing business efficiency. The first "2" refers to new sales, namely the data middle platform and business middle platform. The data middle platform collects internal and external data, cleans, analyzes, models, outputs, and presents valuable data insights using big data capabilities, supporting management decisions and feeding back into business operations, while also supporting the continuous evolution and innovation of Feihe's front-end and back-end business systems based on data. The business middle platform has built common centers for Feihe's e-commerce business, including product, member, order, inventory, marketing, and settlement centers, supporting the rapid development of Feihe's various e-commerce business models and the innovative development of online-offline integrated business. The second "2" refers to two business explorations: smart marketing and smart supply chain. The smart marketing exploration leverages Feihe's dual middle platform capabilities, combined with new technologies, to establish effective customer processes and allocation mechanisms, achieving full-lifecycle business operations and services for all users. The smart supply chain exploration is based on data from Feihe's internal business system platforms, leveraging big data capabilities to provide early warnings and monitoring of key production and supply chain indicators. Feihe has also implemented intelligent algorithms to enhance the ability to explore and predict data.

**How to Achieve Refined Expense Management?**
Regarding expense management, Feihe has identified common issues raised by many brand owners in daily exchanges. These can be summarized into three main aspects: "disconnected processes and isolated data; separation of business and finance with limited control; low efficiency and limited value." The entire expense management process chain is long, from initial application, execution, summary, verification, and payment to final cost-effectiveness analysis, with budget control at the financial level. In such a long chain, without a system for professional management, the various links may be scattered outside the system, in local systems, or even in OA or Excel spreadsheets, making effective data correlation and analysis impossible. Second, the separation of business and finance limits control; many companies manage expenses primarily through budget control at the source and final reimbursement review, but during the process, it is difficult to conveniently cross-check actual business occurrences, leading to a lack of control. Third, in the approval process for expense management, decisions rely solely on human experience, lacking approval support, and data cannot be directly traced, resulting in limited control and low efficiency. Additionally, when analyzing expense data, many brand owners extract data from separate fixed systems, and some even require layer-by-layer reporting and aggregation of data. If data is reported manually, accuracy is hard to guarantee, and the workload for data verification and conversion is enormous, time-consuming, and labor-intensive. The granularity of statistical analysis data is not fine enough to support analysis of marketing policy impact and effectiveness. When increasing or cutting expenses, there is insufficient data support, making it difficult to spend money where it matters most, thus limiting value. When Feihe manages expenses, it incorporates all project-related expense items into the system, mainly categorized into activity, contract/agreement, and material types. For different types of expenses, analysis and sorting are conducted before system construction to connect the application, approval, execution, summary, verification, and final payment processes. In designing the overall information system solution, Feihe also designed a closed loop for this chain and set up business control points at different stages to support refined management. The system construction aims to standardize business processes, support refined management, and support subsequent data statistical analysis. Feihe collects data at the smallest granularity in front-end business systems to support its specified data analysis. Thus, Feihe designed the overall solution from three levels. After implementing this design, the system's effectiveness was evident, and many common industry issues in expense management were resolved at Feihe. First, it achieved control over every link in the full process for each expense item, with mutual constraints between links and integrated data display, significantly reducing the workload on the front line. Additionally, for expenses that have been applied for but not executed, the system automatically reminds the expense coordinator to handle them and releases the budget in a timely manner. For expenses that have occurred but not been summarized or verified, the system can automatically identify them based on rules and remind relevant personnel to take further action.

**Value of the Expense Management System: Visibility of Expense Status and Control of Expense Progress**
Taking expense payment as an example, Feihe has designed five business stage statuses in the entire payment process, with finer-grained sub-statuses under each to support more refined control. Furthermore, the entire expense execution and flow process is clear and transparent. Feihe's expense coordinators and business personnel can clearly see the current stage of an expense, how it changes from application, approval, execution, to verification and payment, and at which stage and for what reason it was deducted or rejected. The entire process is transparent. In fact, a crucial aspect of expense management is expense analysis, which serves as the basis for reviewing the past, supporting current judgments, and making future expense allocation decisions. From a store perspective, expenses are categorized: those that occur directly at the store and directly generate revenue are one category; those that occur but cannot be directly collected can be allocated according to certain rules as a second category; and those not directly related to store revenue are a third category. Feihe designs different treatments for different categories, entering the system in appropriate ways during collection to support store-level expense analysis. After the aforementioned design and information system management, expenses can ultimately be analyzed across different dimensions: vertically by time series, and horizontally by space, product, and expense item, enabling analysis from store, distributor, region, to province levels. This allows the system to obtain data anytime and as needed, supporting data analysis across different dimensions, enabling Feihe to make scientific decisions in expense control and future allocation. Finally, I hope friends in the FMCG industry can embrace new technologies, use digital intelligence to help enterprises achieve refined management, and face new changes with greater composure and confidence in the new cycle.

Ge Shuai is a core member of Feihe Group's "3+2+2" informatization strategy formulation and a pioneer who steadfastly promoted and led the implementation of this strategy. Ge Shuai designed and created Feihe Group's PMO management system and formed a PMO team, driving and monitoring Feihe's digital transformation throughout the process, earning him the IDC China Digital Transformation New Talent Award.

_PS: For those interested in the on-site speech content, please follow the recent posts on the New Distribution WeChat official account. We will compile and publish all speakers' speeches for readers._
_Click **Read Original** to see more highlights from the 7th China FMCG Channel Innovation Conference..._


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671