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China Feihe Limited

Project focus

Feihe is the leading manufacturer of dairy foods for infants and children in China. The company sells most of its dairy products through a nationwide distribution network of over 2,000 wholesalers and more than 114,000 retailers.


Feihe received the INDUSTRIE 4.0 AWARD for a pioneering, already implemented project for the digital transformation of its supply chain in China, which included all production sites, local warehouses and distribution warehouses.

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Solution

Before starting the project, Feihe evaluated the status quo of its supply chains in six areas of action: Program Control, Purchasing, Manufacturing, Warehouse Management, and Transportation and Customer Management. Pain points were analyzed for these areas, KPIs were selected, and specific change targets were defined.


Industry 4.0 technologies were to support the elimination of pain points such as the previously non-existent end-to-end integration. In addition, the aim was to move from in-house processes to standardized processes and to increase the performance of the transport network.

Highlight: Re-organization of the supply chain

Feihe successfully established a new supply chain organization, including a new model for controlling processes and performance. Procurement management now operates centrally and with ideal scope for independent decision-making. In addition, the award winner introduced a standardized S&OP mechanism across the group and redesigned its distribution network to guarantee a 72-hour delivery time to its 2,000 wholesalers and e-commerce companies – in 2019 this was still seven days.

Highlight: Optimization of the value stream in the sites

Feihe restructured the processes in its plants, combining several Industrie 4.0 technologies in a comprehensive smart manufacturing system. For example, an integrated MES system now coordinates the entire production planning and control process “end-to-end”. A special feature here is the integration of smartphone applications: via WeChat messenger, employees on the shop floor receive push notifications if certain target parameters are not met.


Extensive networking via mobile devices also characterizes a connected business center solution. Customer-specific web stores and marketing activities via TikTok and WeChat enable targeted implementation of different business models here. In addition, Feihe uses “smart” algorithms to create precise demand forecasts and thus continuously improves its inventory management, purchasing processes and production planning.

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  • Sales up 70 percent from 2019
  • On-time delivery for 96 percent of orders
  • Factory-to-shelf delivery time reduced from nine to less than six months
  • Reduced energy consumption by 6 percent, reduced carbon emissions per unit produced by 17 percent

China Feihe Limited

Winner Category:
Smart Supply Chain
Industry:
Dairy
Employees:
< 10,000