Helping Mengniu Dairy reengineer its business processes to double productivity and achieve high performance

With Accenture's help, Mengniu Dairy has developed a detailed blueprint for process improvements that will help the company achieve its ambitious goals for growth. Accenture's recommendations, which are currently being carried out by Mengniu, are aimed at helping the dairy giant optimize its cost structure and double its productivity in the coming years.

Founded in 1999, Mengniu Dairy Company Limited has quickly become a manufacturing and distribution giant for dairy products in China. The company also is the country's number one liquid milk seller, with more than 33 percent of the market share by volume in this category. In addition to liquid milk, the company offers a portfolio of more than 100 products, including yogurt, ice cream, milk powder and milk tablets. In 2006, Mengniu reported annual sales of more than US$2.1 billion (CNY16.25 billion).

Business challenge
Despite strong sales, growing profit margins by more than 59 percent and a production capacity of 393 million tons, Mengniu knew better than to become complacent. Fierce competition in China's consumer dairy market and continually rising production costs posed potentially serious threats to its leading market position.

To sustain its notable success, Mengniu set an ambitious goal of doubling its productivity in two years. At the same time, the company wanted to reduce costs by streamlining business processes and minimizing redundancy in its operations. Mengniu's decision to reengineer core processes is supported by Accenture's ongoing research into the characteristics of high-performance businesses. The research confirms that top companies establish processes that enable them to accelerate insight into action, optimize value chains and differentiate themselves in core areas of the business. In the area of supply chain, for example, highperformance businesses rigorously execute against their strategies, and constantly adapt their capabilities to changing market needs. When it comes to customer relationship management, a significant investment in marketing can spell the difference between success and failure.

However, the skill levels that constitute marketing mastery shift constantly, and today's leading practice can become tomorrow's price of entry. Mastery may be fleeting. The commitment to high performance is not. In 2006, the dairy giant completed its first round of business process reengineering activities to optimize workforce roles and responsibilities, which produced significant cost savings. Believing that business process reengineering is a continuous effort, Mengniu decided to start second round improvements in 2007 covering core business processes in all major business units, with an aim to further improve operational efficiency and people productivity in broader business areas.

To drive higher levels of business performance and maximize the value of its business process reengineering activities, Mengniu turned to Accenture. Accenture was selected because of its highly regarded business process reengineering methodologies, its deep industry expertise and its proven ability to drive value across multiple areas of a business. Also important was the fact that Accenture brought extensive experience in helping Chinese organizations reengineer operations and achieve high performance. Over the past 20 years, Accenture has become one of the leading business and technology consulting service providers in Greater China. Today, Accenture has more than 2,500 professionals in Greater China with offices in Beijing, Guangzhou and Shanghai, and delivery centers in Dalian and Shanghai.

Working closely with Mengniu resources, Accenture applied a rigorous and methodological approach to optimize the client's core business processes across a number of strategic areas. The first step was to assess Mengniu's as-is management practices. This month-long analysis allowed the team to compare Mengniu's ways of operating to industry-leading practices, and also identify gaps in process performance and opportunities for productivity improvements. From this assessment, Accenture proposed enhancements to several of Mengniu's core business areas. The second phase of the project, which lasted approximately 10 weeks, involved designing a new target process model and documenting the detailed process specifications. As part of this initiative, Accenture conducted an analysis to better understand the impact the proposed process changes would have on the organizational structure, operating model and people performance. Agreeing that the proposed reengineering programs and organizational changes would deliver the desired improvements in productivity, Mengniu's management team asked Accenture to carry out the next phase of work, which involved designing a detailed solution implementation roadmap. The Accenture-designed roadmap prioritized the change recommendations and identified "quick-win" opportunities that Mengniu could pursue immediately to gain momentum. The roadmap outlined a proposed schedule of process transformation and identified dependencies that would need to be considered when Mengniu began its change process. Finally, the roadmap included recommendations for an enterprise resource planning system, which would support the rollout of the proposed process changes and drive greater productivity improvements.

High performance delivered

With Accenture's help, Mengniu Dairy has developed a detailed blueprint for process improvements that will help the company achieve its ambitious goals for growth. Accenture's recommendations, which are currently being carried out by Mengniu, are aimed at helping the dairy giant optimize its cost structure and double its productivity in the coming years. The main components of the upcoming initiatives will focus on minimizing redundancies, improving governance, reducing the size of the workforce and improving employee performance. Key to the transformation program's success will be Mengniu's ability to ensure that employees are dedicated to strategic and value-adding activities. This imperative aligns to Accenture's research, which reveals that high-performance companies encourage their people to shoulder three simple but powerful responsibilities: Doing their work in a way that satisfies day-to-day requirements Improving the way work is done to continuously improve performance Revolutionizing the work by seeking out the next wave of products and processes that could disrupt even the most efficient status quo.

How Accenture helped

Given Mengniu's goal of doubling productivity in two years, Accenture realized that the reengineering effort needed to look beyond generating process efficiencies in a few distinct areas. Rather, the team needed to focus on revamping core processes across the enterprise, including manufacturing, quality management, research and development, and sales and marketing. It also needed to focus on transforming key enterprise structures such as the supply chain and finance management models. Nearly every process within the sprawling enterprise was up for review. Accenture was up to the challenge. The Accenture team brought extensive experience in delivering strategic solutions for clients in the food manufacturing and consumer products industries. The team also brought deep skills in marketing, supply chain management, and finance and performance management, as well as in the design and delivery of global business solutions. Above all, the team brought process excellence know-how.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills and technologies to help clients improve their performance. With more than 158,000 people in 49 countries, the company generated net revenues of US$16.65 billion for the fiscal year ended Aug. 31, 2006. Its home page is www.accenture.com.

Copyright 2007 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.