Recently, senior executives from Nestlé and Cainiao CEO Wan Lin held a secret closed-door meeting. Despite the meeting being repeatedly extended, it was filled with warm applause and laughter. The two parties did not disclose specific details, but Tony Domingo, Senior Vice President of Supply Chain and Procurement for Nestlé Greater China, told China Business Journal reporters with excitement, "The cooperation between the two parties is about the future, how consumers will change, and how to maximize user satisfaction through new brand strategies, technology, and talent. " This is a unique moment for both parties. On the eve of the meeting, Gartner announced the 2021 Global Supply Chain Top 25 list, with consumer goods giant Nestlé ranking fifth. Nestlé's selection comment: "Nestlé is upgrading every aspect of its supply chain to face the massive e-commerce and direct-to-consumer channels, including product packaging customization, agile fulfillment services, and last-mile delivery, successfully adapting to new business models and improving end-to-end supply chain planning. " A week after the closed-door meeting, Wan Lin announced a redefinition of "Cainiao": "Cainiao will be a customer value-driven global industrial internet company." It is not an exaggeration to view the deep cooperation between Nestlé and Cainiao as a strategic direction and important sample for Cainiao's next steps. Consumer-Centric The Gartner Global Supply Chain Top 25 ranking has always been regarded as the only cross-industry benchmark for evaluating supply chain level and maturity. It has been published for 17 consecutive years, and due to strict selection criteria, review processes, and transparent evaluation standards, the release of this list attracts significant attention each year. "This year's ranking is particularly different," said Mike Griswold, Vice President and Analyst of Gartner's Supply Chain Practice, in the report. "We see various responses from companies to the COVID-19 pandemic, with resilience and agility becoming necessary conditions for survival. This ranking highlights companies with these strategies and other differentiating capabilities." "What helped us achieve this ranking and performance is our 'direct-to-consumer' business model and strategy," Domingo told China Business Journal. "To achieve this, we have repositioned the supply chain in different ways through technology." An example can more directly illustrate Nestlé's current speed of response on the consumer side. "Double 11" is a characteristic scenario of "Chinese-style e-commerce," and even supply chain "masters" like Nestlé face a major test. A screenshot from a user during last year's Double 11 showed that at 0:30 AM on November 1st, the user paid the balance and placed an order, and at 0:31 AM, Nestlé's package had already arrived at a Cainiao station near the user. How is minute-level delivery achieved after paying the balance? Nestlé used Cainiao's "Presale Express Delivery" service, which pre-stocks pre-sale goods at express stations near consumers' homes or even in residential communities based on forecast data, allowing packages to be delivered directly from downstairs after payment, "like receiving takeout." "In China, speed to market is key, and the supply chain needs to be adjusted around this," Domingo believes that "China Speed" is the key to winning. "Our customers are changing their networks, and having the right inventory in the right location within communities is an important part of our logistics strategy. Additionally, the availability, visibility, and accessibility of brands and data are key components of the logistics process, ensuring we continue to win. " Supply Chain Digitalization "Order online, deliver in minutes" is just one aspect of the Nestlé-Cainiao cooperation. The real change is based on the digitalization of the supply chain jointly promoted by both parties. DSCC (Smart Supply Chain Brain) is one of the projects that excites Nestlé the most. Through DSCC and supply chain digitalization, Nestlé has become the first in the market and the first globally within Nestlé to be able to view online product inventory availability at any time. "We can even see sales in each province, each city, and each inventory location," Domingo told reporters. According to Cainiao, the biggest feature of the "Cainiao Smart Supply Chain Brain" is visualization and intelligence. It can integrate data from multiple platforms for brands, monitor and analyze in real-time, creating a "visible supply chain" for brands. With the "Cainiao Smart Supply Chain Brain," tasks that previously required significant manpower for data collection and analysis can now be done by simply checking a phone after waking up, with a comprehensive view of supply chain information. Which products sell well, where inventory needs replenishment, and how many items to transfer can be decided in the time it takes to eat breakfast. Supply chain digitalization enables rapid and agile access to data from all parts of the logistics supply chain, making management and decision-making more "informed." Using digital supply technology, pre-warehousing and sales forecasting can be done in advance, predicting how many units of a product will sell in which city in the next two weeks, allowing for precise pre-positioning of inventory in different warehouses and placing goods closest to consumers. This prevents stockouts or overstock, greatly improving capital turnover. Supply chain digitalization not only solves inventory issues but also makes Nestlé's consumer insights and product innovation agile through precise data insights. Based on consumer location and consumption experience, Nestlé can reclassify data. "For example, for babies, we know which households have children, and the child may cry all night or have stomach pain. With this data, we rethink what products are ideal for babies in this city or province." "Based on technology jointly developed by both parties, we can intelligently identify market penetration in each province and city, and the sales volume and differences of a certain product in different cities. Why is there a difference? Why do consumers here prefer liquid coffee over instant coffee? " Then, specific strategies are developed for target consumers based on precise consumer insights. As a consumer goods giant, such insights are crucial for Nestlé. Although Nestlé Group already owns famous brands such as Nescafé, Nestlé Maternal and Infant, Starbucks Home, Gerber, Hsu Fu Chi, and感café, new brands and strong competitors continue to emerge, such as Satuday and Yongpu, with novel packaging, rapid product development, and sharper brand images, making these purely online-born brands quickly popular among young people. Beyond New Retail In fact, the partnership between century-old Nestlé and Cainiao has lasted five years. It started with new retail but does not stop there. "From B2C to B2B, to the entire digital supply chain, and global supply chain, the cooperation between the two parties is a package solution," said Shuai Yong, General Manager of Cainiao's Domestic Supply Chain. The cooperation between Cainiao and Nestlé initially started with Cainiao as a logistics service provider for the supply chain, but customers also needed digital capabilities, IoT technology solutions, etc., so the scope and depth of cooperation have continuously expanded. Beyond B2C and B2B cooperation, Cainiao has deeply participated in the digitalization of Nestlé's supply chain. In the digital supply chain field, Cainiao's digital products are also applied to Nestlé. For example, WMS (Warehouse Management System), order management systems, etc. Nestlé also uses a series of Cainiao algorithms, such as box-cutting algorithm (the system automatically decides which express box size is most suitable for a certain order's goods, improving full-box rate and saving packaging costs), box-merging algorithm (the system decides which orders from the same customer can be combined into one package to save packaging costs), etc. At the same time, Cainiao is also the logistics supply chain service provider for Nestlé's cross-border import business. For products imported into China by Nestlé, Cainiao handles the entire chain from customs clearance, transportation, and cross-border bonded warehouse distribution after departure from China. Behind this package of solutions lies the evolution of Cainiao's own positioning. Eight years ago, when Cainiao was founded, its goal was to build an open smart backbone network. At the 2021 Global Smart Logistics Summit, Wan Lin redefined Cainiao's positioning as a customer value-driven global industrial internet company. "Once we clearly understand this, we can then consider what model to match, whether to be asset-light or asset-heavy." "Compared to five years ago, Nestlé's product innovation time is now only 10% to 15% of what it was," Domingo told reporters. Due to the pandemic, Domingo has not returned to Vevey (Nestlé headquarters) for two years. But every two months or so, Nestlé holds online business meetings, and he is very enthusiastic about telling stories from China. Using Chinese experience to persuade European colleagues to create or redesign supply chains during and after the pandemic to meet the needs of consumers who can only stay at home and are afraid to go out, "this is an online opportunity and business opportunity." Source: China Business Journal, Author: Li Li -END-** You"Are you watching?"Me?