Click to read the original article for details. P&G's business logic in Greater China can be summarized in one English sentence: 'Design for China, Decide in China, Deliver at China speed.' With supply-side reforms, the shift from consumer-side prediction to supply-side customization is gradually becoming the mainstream approach for brands and channel platforms. As a wave of emerging social e-commerce platforms like Pinduoduo and Yunji begin to explore supply chain branding and reverse customization, P&G, a global daily chemical giant that has long been at the forefront of this trend, may serve as a model for many companies in supply chain and niche brand customization. Recently, at the 17th China ECR Conference, Chen Yu, President of P&G Greater China Supply Chain, elaborated on P&G's 'essence' in supply chain and reverse customization. Chen Yu believes that in the face of rapidly changing markets, P&G's most important capability is to always develop products around consumer needs and adapt its supply chain to market changes. 'This flexibility and agility are the most important capabilities for future development.' Chen Yu stated that P&G's supply chain operations have been continuously developing in digitalization, intelligence, and collaboration. In the future, P&G hopes to forge its supply chain capabilities into a 'Monkey King'—highly flexible, able to serve both upstream and downstream suppliers, and capable of opening up this capability as a middle platform. It should meet the growth needs of major brands while also accommodating the flexible needs of niche, beautiful brands. In Chen Yu's view, in the future, all supply chain enterprises need to consider consumer needs entirely from the consumer's perspective, and based on such needs, create more personalized products that combine supply and demand sides. This remains an unchanging principle. Product Strategy in the Greater China Market Chen Yu told Ebrun that P&G's business logic in Greater China can be summarized in one English sentence: 'Design for China, Decide in China, Deliver at China.' Chen Yu explained that P&G's product design in Greater China revolves around the Chinese market and Chinese consumers, rather than simply taking overseas products and making basic customizations to meet Chinese market needs. 'We make decisions for the Chinese market primarily in China. All our business presidents in China live in China. They experience the lives of Chinese consumers every day, which allows them to empathize more and make decisions that suit the Chinese market.' In addition to design and decision-making in China, P&G's product supply chain in China is also local. Chen Yu stated that P&G hopes to meet market product demands through continuously digitalized supply chain capabilities. In Chen Yu's view, P&G's supply chain not only uses P&G's traditional internal supply chain innovation capabilities but also leverages the entire ecosystem, including suppliers, activity architects, and other innovative partners in P&G's ecosystem, integrating all capabilities to provide the best products for the P&G market, thereby demonstrating and leveraging P&G's advantages. 'We hope to be flexible and adaptable, creating a competitive supply chain capability based on our market, our consumers, and our customers.' Chen Yu believes that in times of rapid change, returning to the first principle of customer-centricity will enable P&G to sustain growth. Chen Yu believes this is also the underlying product logic for P&G's Greater China business: all products and supply chains are centered on customers and consumers. The Logic and Challenges of Product Customization Under the product strategy of 'born here, grow here, sell here,' P&G's supply chain not only meets the needs of traditional major brands but also supports various niche, beautiful products customized for Chinese consumers, beginning to explore reverse customization. Chen Yu told Ebrun that P&G's reverse customization is not just about creating products that best meet the needs of precise users, but more importantly, knowing how to use products and packaging to give target segments a sense of satisfaction, making them feel a spiritual connection with the product, and enabling communication and dissemination. 'Reverse customization for the supply chain means not only making products but also creating products that users remember, are willing to spread, and have influence. It should directly impact consumer touchpoints, which may be on packaging or in customized design. These are new requirements for us.' Chen Yu stated that P&G Greater China also plans to launch customized brands specifically for certain channels in the future. For example, some Watsons products are not sold in Walmart. P&G may also reverse-customize different products for different channels. For brands, the biggest challenge in reverse customization, in Chen Yu's view, is not whether there is a clear business model or relevant technology. Business models and technology implementation are entirely possible; the difficulty lies in the support of a flexible supply chain. Even harder or more important is how to treat reverse-customized products as a means of communication, allowing them to better reach target segments and trigger secondary fission and secondary dissemination. 'This is the most important. On one hand, reverse customization meets the needs of specific groups; on the other hand, it should serve as a base to drive overall business growth.' For international brands like P&G, reverse customization will also lead to the emergence of more sub-brands, potentially revisiting the past issue of having too many niche brands that necessitated slimming down. Chen Yu analyzed to Ebrun that for P&G, the logic is to solve the balance between achieving sustained growth for P&G's large, broad main brands while enabling niche, beautiful brands to achieve breakthrough growth. Chen Yu stated that in the past two years, P&G China has developed more than 20 niche, beautiful customized brands, and nearly 80% of P&G's growth comes from these niche brands or niche sub-brands created by major brands. With so many niche, beautiful customized brands achieving good sales, P&G is further considering the relationship between main brands and niche customized brands. That is, on one hand, how to create flexible supply chain solutions to support new and smaller-scale businesses; on the other hand, how to find a very good balance point that better supports differentiation while also enabling niche customized brands to effectively create scale. 'Finding a balance between the growth contradictions of large and small brands, and finding an integrated solution, is also the ultimate point for brand reverse customization to consider,' Chen Yu said. Digitalization and Openness of the Supply Chain As a brand consistently ranked among the top global supply chain enterprises, P&G began promoting supply chain digitalization and collaboration early on, and its practices are often emulated by peers. Changes on the product side require more flexible and innovative changes on the supply chain side to respond. Chen Yu stated that P&G Greater China's supply chain operations are also continuously innovating and developing to adapt to and support changes and demands in the Chinese market and product side. Chen Yu told Ebrun that P&G Greater China's supply chain operations aim to transform the original supply chain dominated by scale and internal efficiency into a new flexible supply chain platform that is both agile and capable of creating scale. 'This is very important for us. Otherwise, P&G might fall into a dilemma: either diversify, sacrificing cost and efficiency, or not diversify, potentially losing market share. Neither is an option for us, so P&G must find a new, smarter, digitalized flexible solution,' Chen Yu said. To this end, in recent years, P&G established the China Digital Innovation Center in Guangzhou, setting up DMP data management systems for P&G's entire digital operations and consumer side, including the underlying data foundation, and establishing P&G's China Data Lake. On this basis, P&G has comprehensively built a large digital operations architecture from market to marketing, sales, communication, and supply chain. Additionally, P&G established a Planning Service Center in Guangzhou, consolidating planning from 13 different points into one, forming a large forecasting service center and a central hub platform. Advanced full-chain optimization algorithms and systems help P&G drive inventory reduction and productivity improvement. 'After consolidating to one point, our labor productivity increased by about 30%. At the same time, our inventory efficiency improved significantly.' In fact, the digitalized P&G supply chain not only helps improve its own efficiency but also helps partners improve efficiency. Chen Yu told Ebrun that P&G's supply chain conducted full-chain digital optimization and system collaboration with Metro, ultimately helping Metro reduce inventory levels in its South China warehouse by nearly 40% while increasing shelf availability by 2%. In addition to promoting supply chain digitalization, the P&G Greater China supply chain operations led by Chen Yu are also continuously advancing supply chain intelligence. It is understood that P&G established a Smart Manufacturing Center in Guangzhou, a multifunctional manufacturing center integrating smart manufacturing, smart warehousing, and flexible design. Chen Yu stated that the goals of P&G's supply chain operations are, on one hand, to actively respond to market demands for diversification, personalization, and differentiation; on the other hand, to drive supply chain business growth and improve supply chain efficiency. For the future, Chen Yu said that P&G hopes to forge its supply chain into a 'Monkey King,' able to serve both upstream and downstream suppliers, and to open up this capability as a middle platform, forming an FMCG supply chain ecosystem that empowers similar enterprises and broader FMCG companies. It should meet the growth needs of major brands while also accommodating the flexible needs of niche, beautiful brands. The Change and Constancy of Combining Consumer and Supply Sides As President of P&G Greater China Supply Chain, Chen Yu said that the question he has always pondered most is how to move forward in the future. In his view, compared to markets where he previously worked in Europe, Japan, Australia, and Singapore, the Chinese market is the most changeable and fastest-changing, with the most possibilities for future changes. 'So how to better prepare P&G's supply chain for future changes is perhaps the question I think about more,' Chen Yu said. In his view, the future supply chain, based on digitalization and intelligence, will certainly have several characteristics, including:
First, the shortest possible chain, whether B2B or B2C;
Second, full-chain intelligence: 'How to transform the supply chain from a manufacturing and forecasting-centric operating model to a digital response model driven by customers and demand is something P&G and all supply chain enterprises need to consider';
Third, unbounded supply chain: do not self-limit, maintain openness, closely collaborate and communicate with upstream and downstream industries, and find a relatively certain direction amid future uncertainty;
Fourth, flexible customization, achieving 'thousands of scenes, thousands of chains.' 'Shorter chains, smarter supply, an unbounded ecosystem, and customized supply solutions—these four points are the most significant differences between the future supply chain and the past,' Chen Yu told Ebrun. He hopes that these four points he advocates will allow P&G to return to the principle of consumer and customer centricity in a rapidly changing market. Facing the rapidly changing market, how to better combine the supply side with consumers? Chen Yu said one can draw from Amazon founder Bezos's philosophy: you can't answer what will change in the next ten years, but you can know what won't change—consumer experience. 'For manufacturers and channel providers alike, it is essential to truly and completely consider consumer needs from the consumer's perspective, and based on such needs, create more customized products that combine supply and demand sides. This is an unchanging principle,' Chen Yu said. Source: Ebrun (ID: iebrun)