Since the pandemic, the topic of digitalization for FMCG manufacturers has become a hot industry topic. But faced with a dazzling array of digital strategy plans, many companies still seem to be at a loss. How to correctly understand the true connotation of digitalization and avoid falling into misunderstandings may be the more urgent demand for bosses. The author combines some cases to interpret possible problems in the process of enterprise digitalization, hoping to provide some inspiration for manufacturer and distributor friends.

Treating Informatization as Digitalization As the person in charge of the company's digitalization project, Manager Zhang had a disagreement with the general manager when communicating the plan. Manager Zhang believed that the ultimate goal of the digitalization project is to achieve a precise portrait of consumers, establish a deep connection with them, and then through differentiated brand, channel, and promotion strategies, achieve high-frequency interaction between products and consumers, establishing category advantages. Therefore, the project focus should be on the "product code," giving products an identity first, and then quickly advancing the improvement of channel and consumer scan rates. However, the general manager, who came from a business background, felt that what Manager Zhang talked about was not down-to-earth and expressed his concerns: "Manager Zhang, I understand what you're saying; it's a good vision. But our current situation is that we don't even have system reports. Our SFA system isn't even being used. Things like distribution, activity, and distribution are all self-reported by our office brothers, with poor accuracy, and the reports still need processing." "Don't you think we should first improve this system, first digitize our internal management, and then consider your beautiful vision? The most urgent thing now is to combine our business needs, optimize reports on distribution rate, activity rate, poster posting rate, etc., to achieve our goal of quick query and precise analysis." The boss's words left Manager Zhang speechless. He also understood the boss's thoughts: if informatization hasn't been achieved, how can other things be convincing? In fact, many companies have this situation: should they pursue informatization or digitalization? What is the difference between informatization and digitalization? Many companies haven't sorted out informatization; is digitalization worthless? The informatization mentioned by the general manager in the case is the predecessor of industry digitalization. It is a way for FMCG companies to optimize internal business processes, improve operational efficiency, and achieve closed-loop management of people, finance, and goods. Many frontline FMCG companies had already implemented it as early as 2000, and those that did well had already achieved closed-loop integration of internal systems like SFA, SAP, DMS, and BI. The digitalization approach mentioned by Manager Zhang is different; it is a management method that connects the enterprise with external channels and consumers, reflecting real sales scenarios, and is the only way for enterprises to enhance external competitiveness. Therefore, informatization and digitalization are two ways for enterprises to achieve internal and external competitiveness. Currently, due to high consumer demands and product homogenization, external competition occupies the main direction for FMCG companies. So, regardless of the level of enterprise informatization, digitalization is imperative. Only by communicating deeply and personally with consumers one step ahead can you seize consumer mindshare one step ahead.

Ignoring the Completeness of Underlying Data The establishment of digitalization requires enterprises to accumulate a large amount of C-end scenario consumption data, and this process also needs the help of B-end forces to be better realized. Therefore, enterprises must not only think about ways to improve C-end scan rates but also consider promoting B-end cooperation. For example: Many companies that have launched "one can, one code" use consumer scan-to-red-packet promotions to boost product sell-through and simultaneously build consumer profiles. However, this approach currently has two problems. First, the consumer scan-to-red-packet method is limited by the company's budget, with average winning amounts of 2-3 mao, possibly up to 5 yuan, but the winning rate is extremely low. So more and more consumers are becoming tired of scan-to-red-packet methods, and the scan rate is declining year by year, which cannot truly enhance consumer purchase rates. Another aspect is that data directly scanned by consumers can only show age, gender, location (requires consumer authorization for positioning), purchase time, and frequency, lacking information on purchase channels and stores, i.e., B-end related information. This information is very important for brands, as it can reveal which channel and terminal the product actually sold to, allowing brand manufacturers to formulate channel strategies with a clear target. Therefore, in the digitalization process, it is necessary to consider the comprehensiveness of data accumulation; key data cannot be missing. Also, from the perspective of each data role, think of more effective stimulation methods. For example, a points mall mini-program is a good approach, offering differentiated rewards for terminal customers and consumers to increase repeat purchases.

Insufficient Application of One Code, One Object Enterprise digitalization cannot do without the "one code, one object" approach, but many companies have limited application of this method. The underlying logic of "one code, one object" is to give products (bottles/boxes) their own unique ID, allowing them to participate in various stages of product circulation, using them to monitor and record data at each stage. However, many companies currently focus on a few methods: one is direct cash incentives, i.e., scan-to-red-packet, and box codes are similar, with rewards usually given to terminal store owners; another is product authenticity identification; and another is store registration. These are the most common operations, but there are many innovative ways to fully leverage the power of "one code, one object." For example, in a case of Dongpeng Special Drink, terminal store owners who scan the box code can receive dual rewards: when registering the store, they get cash and points, and the system grades members; the more they scan, the higher the level, and the more rewards. If the company links the box code with the bottle code, after the store owner scans the box code, when consumers scan the corresponding product, the store owner first receives cash and points, and the store owner also gets the sell-through incentive from the consumer's purchase, with cash or points uploaded to their account in real time. This approach creates a huge incentive for terminal owners, prompting them to do the two actions brand manufacturers most want: quickly open boxes and put products on shelves, and become salespeople for the product. Therefore, in the application of "one code, one object," through multi-code integration or multi-circulation information recording (e.g., production, shipping, distribution), more functions can be achieved, such as solving the problem of abnormal product flow monitoring.

Not Breaking Data Silos As mentioned in the previous case, if a company runs informatization and digitalization in parallel, it will encounter the issue of whether to break down data silos. We know that from the SFA system, we can understand regional market distribution, purchasing situations in different channels and terminals, business personnel terminal execution, and channel expense allocation. This data is internal management data, some uploaded by business personnel, and some based on subjective judgment of expenses. The consumption data accumulated through "one code, one object" in digitalization reflects the actual market situation objectively. So at this point, senior executives easily have a demand: use actual market sales data to judge whether current business actions and expense investments are truly focused on core consumers and core channels. Therefore, data silos still need to be truly broken to unleash the 1+1 >2 internal and external competitive synergy. Let precise data guide business actions, and let business actions enhance product sell-through.

Lack of Downstream Management in Application Another pitfall enterprises easily fall into during digitalization is that data sharing is limited to management meetings or giant displays in executive offices. Undoubtedly, helping management make decisions is the fundamental purpose of big data, but if data from the frontline is not fully fed back to the frontline, allowing the sales team to fully feel the empowerment of digitalization, the digitalization process will be greatly compromised. Enterprise digitalization first requires a unified mindset across all levels. Only management values it, while frontline sales personnel have no perception, merely implementing decisions handed down without understanding the reasons. Once they encounter instructions inconsistent with their own cognition, they will complain or even resist. What brand manufacturers need to do is organize data by management level and role, provide analysis conclusions and corresponding decision instructions, so that data-related personnel can know both the what and the why, form a consensus on digital thinking in practice, enhance the dimension and vision of digital analysis, and also gain more recognition from customers for the company's professionalism.

Unclear Long-term Planning The establishment of enterprise digitalization should combine short-term and long-term goals. Short-term goals include comprehensive collection of consumption data, BC integration to improve channel sell-through, internal system integration, and data-driven precise decision-making. But many brand manufacturers may not have a clear long-term goal, which easily becomes a bottleneck for digital development. The author believes that establishing a customer operation system for long-term deep links between brands and customers, differentiating operations for target channel partners and consumers in terms of activation, activity, and average order value, and forming core competitiveness in precise strategy planning and execution from product development, private domain operations, and online-offline marketing, should be the long-term goal of enterprise digitalization. This requires enterprises to combine their digital development process and make comprehensive professional arrangements in internal management structure, professional talent introduction, and other aspects. The wave of digitalization is coming head-on. Whether to ride the waves, drift with the current, or wait and see, every manufacturer should quickly make a rational judgment. Business is like a battlefield, with situations changing rapidly. Everyone wants to grasp trends and reap dividends, but without establishing a professional digital system that connects internal and external, without receiving frontline information in real time, and only being an island within one's own cognitive framework, the competitive advantages accumulated by the enterprise will be depleted year by year. Understand the trend, choose the path, optimize the tactics. In the new year, I hope manufacturer friends can see the situation clearly, avoid detours, break through waves to forge ahead, and set sail at the right time.

About the author: Xing Renbao, with 14 years of marketing management experience, has served in Coca-Cola, Yili, Red Bull, and other well-known FMCG companies, focusing on enterprise marketing diagnosis, manufacturer-distributor relations, channel operations, and digital transformation.

-END-