Recently, Master Kang has been included in the Harvard Business School’s “Harvard leadership in China” case library after being selected as an excellent case in the report on sustainable development of Chinese enterprises by the United Nations development program. This food and beverage giant, which started from a bag of instant noodles and now has an annual revenue of more than 60 billion, has also ushered in its own “highlight moment”.
Interestingly, as a representative of local traditional food enterprises, Master Kang has been “liked” by Harvard Business School this time because of its advanced digital strategic layout and transformation ability.
“We have seen the magnificent turn of Master Kang, an enterprise in a traditional industry, in the digital era. Master Kang’s thinking on digital” three in one “and digital empowerment upstream and downstream, opening up the whole data chain, has reference value for the direction and thinking of digital transformation of Chinese and even global enterprises in the post epidemic era.” Li Liangliang, general manager of enterprise learning in China at Harvard Business School, commented.
How did a packet of traditional Master Kang instant noodles start the “digital journey” and successfully pass the epidemic test? Now, let’s restore it.
Digital counter attack
It is not difficult to find that as a traditional food manufacturer, Master Kang’s pursuit of digitalization even exceeds other manufacturing companies.
Over the past two decades, Master Kang, with its intensive cultivation of traditional channels, has begun to notice the rapid rise of new retail channels such as e-commerce in the past few years, and has decisively joined hands with Alibaba, Jingdong, Tencent and other Internet platforms to comprehensively open the digital transformation of offline channels with the help of the technical advantages of retail link. The company’s specific plan is to upgrade the traditional offline sales channels by fully connecting the stores, supply chain, marketing and enterprise decision-making, so as to lead dealers and retail outlets across the country into the digital era.
To be specific, Master Kang has set out to digitalize the supply chain, function support and channel service.
One example is that Master Kang has launched a customized online channel management tool “Shijitong”. Its built-in artificial intelligence analysis module has opened up more than ten big data sources of life consumption, such as Gaode map and public comments, so as to accurately obtain the characteristics of the business district and successfully achieve the goal of “presenting the right products to the right consumers at the right time and in the right place”.
In addition, in 2018, Master Kang also upgraded and enabled the intelligent management of raw materials in the ERP system. Through the automatic simulation and calculation function of the system, it can quickly and accurately estimate and adjust the purchase time and quantity of raw materials, so as to accurately share the rolling demand plan for the next 18 months with the upstream cooperative enterprises, so as to maximize the freshness and quality of raw materials Stability and price advantage.
In Master Kang’s opinion, further integration of online information flow, cash flow and offline logistics will be the focus of enterprises to actively promote digital construction.
The company disclosed that in the future, with the help of artificial intelligence algorithm, it will lay out a more rigorous information integration RDC regional logistics center, and realize cross factory, cross warehouse and cross regional resource integration and allocation, and create a smart industrial ecosystem with the digitization of the whole industrial chain.
Wei Junxian, executive director of Master Kang, also said that the company will actively participate in the profound changes in the era of digital economy, expand the circle of digital friends and build a data closed loop. Through big data and artificial intelligence technology, we will innovate the operation, management and development mode, and realize the integration of information flow, capital flow and logistics.
An examination of epidemic situation
This year, a sudden epidemic sweeping the world has brought severe tests and challenges to the economy of various countries and even all walks of life. On the other hand, the epidemic is also a “trial” for enterprises.
At the end of January when the epidemic broke out in full swing, Master Kang first faced the challenge of returning to work ahead of schedule to ensure supply. First of all, it is the Lunar New Year holiday. In order to ensure the normal production and supply of instant noodles, which are essential materials for people’s livelihood, the company must deploy employees to return to work in an orderly manner, and at the same time implement epidemic prevention and control to ensure the health of employees. Secondly, in the case of traffic and transportation obstacles, Master Kang should not only arrange all employees to return to the factory safely, but also try to find ways to make instant noodles Supplies were delivered to the most affected areas.
Therefore, the company quickly launched the crisis response mode. Through the cooperation of the digital supply chain system, the company grasped the market demand, the production capacity of factories in various regions and the demand gap of raw materials at the first time, timely coordinated the personnel to work for rework, started to resume work and production, and steadily improved the production capacity. As of January 28, the fourth day of the new year, 40% of the instant noodle factories of Master Kang have successfully returned to work and production.
However, this is far from being able to do it overnight.
It is understood that during 2017-2019, Master Kang focused on the rationalization of “organization”, “supply chain” and “channel”: at the organizational level, it adapts to regional market differences, improves the team’s response speed to market changes through organizational flattening; in terms of supply chain, it reasonably arranges the supporting supply chain and realizes the rationalization of asset allocation by combining the new opportunities of consumption classification; and In terms of channels, we should actively expand diversified channels, including self vending machines, convenience stores, e-commerce and other modern channels to cope with the trend of channel fragmentation.
Earlier on, the company implemented the “three deletions, one reduction and one subsidy”, that is, de capacity, de inventory, deleveraging, cost reduction and short board replenishment. By the end of last year, this series of reforms had basically come to an end, laying a good foundation for this year’s response to the epidemic.
In addition, Master Kang continued to increase investment in ensuring food safety, while adhering to the principle of “cash is king”, reducing the financial expenses brought about by asset depreciation expenses and interest bearing liabilities, so as to ensure sufficient self owned funds and healthy financial structure. These two measures also make enterprises have a better ability to deal with the crisis at the critical moment.
According to the semi annual report data, in the first half of the year, the overall revenue of Master Kang increased by 8% to 32.934 billion yuan year on year; the profit attributable to shareholders of the company increased by 58.37% to 2.38 billion yuan; the net profit was 2.653 billion yuan, up 47.26% year on year.
Looking forward to the post epidemic period, accelerating recovery and accelerating growth are undoubtedly the key goals that enterprises are striving to promote. In a period of time, continuous innovation and breakthrough in consumption scenarios may become an effective way for enterprises to seek new market opportunities and promote performance growth.
In order to seize more growth opportunities in the post epidemic period, Master Kang has been focusing on promoting innovation in consumption scenarios in the past few months.
The company notes that after a period of home life, consumers are enthusiastic about cooking at home. Based on this insight, Master Kang released a number of creative cooking videos through social media, breaking the traditional simple meal scene of instant noodles for office workers and students in the past, and opening up new scenes such as family consumption and dinner.
Recently, Master Kang has also launched new products such as hand rolling noodles and Jin Shuang ramen, which not only meet the consumers who like non fried dough cakes, but also are mainly for the family’s three meals of breakfast, lunch and dinner.
Master Kang Express Express noodle shop has also launched a new specification of cooked noodles for family to share, as well as multiple packages to facilitate “Stocking” and other new needs.
In view of the white-collar workers’ higher requirements on the intake of calories after home, Master Kang has launched soup vermicelli, which focuses on “zero fat” selling point.
In addition, aware of the trend that consumers pay more attention to food health during the epidemic period, Master Kang announced its entry into the “cooked water” market in May this year and launched a new bottled water “drink boiled water”.
Master Kang’s self-care spring also launched a 4.5L package, focusing on home and office consumption scenarios.
In fact, in the past few years, Master Kang has driven performance growth through scene innovation. Wei Junxian, CEO of Master Kang holdings, said in an article published in CNBC in June this year that in order to get rid of the stereotype that instant noodles are unhealthy, the company began to carry out sports marketing and set its eyes on the marathon.
Master Kang has built brand awareness among marathon enthusiasts by providing targeted high carbohydrate instant noodles and other professional diet guidance to marathon runners. It is reported that Master Kang has provided services to more than one million runners.
Wei Junxian said in the above article that some people eat (instant noodles) once in a while, but he hopes that two-thirds of the people will think that Master Kang’s products are good enough, “even if they don’t eat them every day, they may eat them every week.”.