Feihe, established in 1962 in Qiqihar, the hometown of the red-crowned crane, is one of China's earliest infant formula manufacturers. In November 2019, China Feihe Limited was listed on the Hong Kong Stock Exchange, becoming the largest dairy company by initial market capitalization in the exchange’s history and creating a legendary success story for Chinese infant formula brands.
Currently, Feihe ranks among the leaders in market share within China’s premium infant formula sector. It is in a rapid growth phase, actively expanding internationally with facilities in countries like Canada. The company has also diversified into health-related sectors, focusing on human health and wellness.
The retail industry is entering an era of increasingly diverse demands, differentiated customers, and personalized services. A company’s ability to build and maintain its competitive edge depends on its capacity to "precisely capture needs, quickly satisfy customers, and continuously create value." Future competition will be between supply chains rather than individual enterprises.
Feihe is experiencing rapid expansion, with annual growth of 5 billion RMB propelling it to a leading position in the industry within just a few years. Looking ahead, the ability to fuel its growth engine and embrace digital transformation will be key to determining Feihe's trajectory. This requires supply chain management to become one of the company’s core competencies, providing vital support for market expansion, consumer service, and value creation. It must also align with the company’s strategic goal of increasing its revenue from 40 billion to 100 billion RMB.
Feihe Supply Chain Management Strategy and Implementation
Considering Feihe's supply chain management strategic requirements and current capabilities, Realscheme Consulting believes that the future development of Feihe's supply chain management should begin with the standardization and digitalization of its management systems. On this foundation, the focus should shift to prioritizing the development of key product supply chain management capabilities. Once these capabilities are established, the company can steadily expand the scope of its supply chain management coverage.
Key initiatives include:
Building a "1+6+3" supply chain system: This refers to developing a supply chain framework centered on "one control model, six core business areas, and three supporting elements."
Establishing an integrated "organization + processes + performance" supply chain control model for Feihe.
Defining a 3-5 year strategic roadmap for the supply chain, including key development paths and a three-tiered process framework.
Optimized Supply Chain Operations: Enhanced the planning, procurement, and overall operational systems of the supply chain, creating a solid foundation for Feihe to develop supply chain core competencies that align with its long-term strategic goals.
Procurement Transformation:
Upgraded the role and strategy of procurement, reshaping its strategic trajectory.
Built robust interfaces and rules between planning and various business departments through the development of planning systems and strategies. This improved resource coordination, enhanced planning functionality, elevated customer delivery service levels, and reduced supply chain costs.
S&OP Mechanism:
Established an S&OP (Sales and Operations Planning) mechanism from the ground up to ensure long-term resource readiness and mid-to-short-term supply-demand balance.
Improved customer delivery satisfaction while reducing operational costs.
Procurement Enhancements:
Optimized category classification standards and strengthened procurement strategy mechanisms.
Developed a comprehensive supplier tiered management system to enhance lifecycle management precision.
End-to-End Order Management:
Developed differentiated order management processes and rules, enabling end-to-end order management tailored to customer needs, improving customer satisfaction.
Talent and Organizational Development:
Based on Feihe's strategic and business needs, established role responsibilities and 1-4 level qualification standards for planning roles.
Created clear career development pathways for planning professionals, fostering talent development and enhancing organizational performance.
Digital Transformation Support:
Standardized business processes to lay the groundwork for IT integration and data quality improvements.
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