By the end of 2018, Digiworld became Nestlé's general distributor for Medical Nutrition products, partly relieving previous doubts but leaving many curious "How did Digiworld do it?"

Nestlé and Digiworld signed a strategic cooperation agreement in early 2019.

Transparent financial platform and effective logistics solutions

At the end of 2018 - early 2019, Digiworld (HOSE: DGW) signed a cooperation agreement with Nestle Group as a general distributor for medical nutritional products of this global corporation, opening a completely new challenge and experience. Known as a leading ICT distributor in Vietnam for more than 20 years, now entering the consumer industry, what is the foundation for Digiworld to confidently grasp this opportunity and challenge?

According to Digiworld, finance and logistics solutions are the basic foundations that help Digiworld sustain its role as a distributor, while market development capacity brings high competitiveness to Digiworld, creating a competitive advantage for Digiworld, make its different from the traditional distribution model.

Building an ERP (Enterprise Resource Planning) system since the 2000s is the main factor creating Digiworld's transparent financial foundation and effective logistics solutions today.

Digiworld's representative shared that the ERP system has helped Digiworld greatly improve efficiency in real-time inventory management (first in, first out), so businesses can make quick decisions to optimize profits. This helps reduce manual work for all departments, allowing employees to focus on complex tasks that require more of their soft skills.

ERP not only helps Digiworld effectively manage costs and significantly improve profitability in a business with inherently low profit margins such as ICT; but also creates great advantages when expanding into other industries, such as: fast delivery time, accuracy, and reasonable costs.

Besides, transparency is a must for a listed company like Digiworld and extremely important when wanting to cooperate with foreign corporations. Transparency does not stop at information disclosure activities but requires more than actual work needs. For example, partners all need "clean" and "continuously updated" data to have data to analyze and adjust close to reality, not limited by monthly or quarterly reports, or depending on people... All these requirements are resolved by the Company using the professional SAP ERP system.

In addition, the advantage comes from Digiworld's market expansion services capacity (MES). With available resources and systems, Digiworld fully provides 5 basic market development services: Market analysis - Marketing - Sales - Logistics - After-sales service, so the company can easily deploy Launch any product at any stage: from taking over a product with an existing distribution system, to introducing a completely new brand to the market. With a sales team and extensive point-of-sale system, Digiworld's venture into a new product line is completely reasonable.

Mr. Nguyen Duy Binh, Marketing Director of Digiworld shared: “According to statistics from IBM market research firm, the Health Care market size in 2017 was about 4.7 billion USD and will reach 16.1 billion USD by 2026. Meanwhile, the distribution picture in this industry is currently very fragmented with more than 550 large and small distributors. Along with that, in the context of many Vietnamese businesses' weak technology applications, technology businesses like Digiworld will completely dominate. Furthermore, Digiworld now has a chain of distribution systems, synchronous and modern sales management processes and abundant resources, so we are looking for room to expand business opportunities. And the fact that Nestle chose Digiworld as a distribution partner in the specialized nutritional milk industry is a testament that Digiworld is on the right track and is trusted by partners."

Always be flexible and adapt to new market requirements

To become Nestlé's partner, in addition to relying on the existing platform, Digiworld had to continuously change and shift to adapt to the business goals of each industry, as well as each partner. And for global companies like Nestle, for health-related products, Nestlé always applies strict standards on warehousing, storage, and transportation conditions... In particular, the specialized nutritional milk industry Nestlé's products are distributed through ETC (prescription drugs) channels such as hospitals, clinics, pharmacies... with a doctor's prescription - the most difficult distribution channel. Therefore, the first 6 months were a challenging time for both Digiworld and Nestlé. Digiworld had to change, supplement, and perfect the standards of human resources, warehousing, transportation... that Nestlé had introduced.

Mr. Nguyen Huu Trong, Digiworld's Head of Logistics, shared: "To meet the needs of partner Nestlé, Digiworld is forced to change from operations to warehousing. Therefore, in addition to the existing facilities and human team, we have rebuilt the motorbike delivery network and added trucks to meet the delivery requirements for hospitals and private clinics, drugstore…".

Despite many challenges, thanks to Digiworld's solid system foundation and agility in changing and capturing the market; Along with maximizing the strengths of both parties, the cooperation between DGW and Nestlé has brought impressive business results. Although not disclosing specific numbers, DGW said Nestle has achieved the highest sales in history ever in the medical nutritional products industry.

This success has created a new mark for Digiworld in the market and will be an opportunity for Digiworld to move deeper into the Health Care industry with new brands. And the biggest challenge now for Digiworld is to create a long-term reputation in the new industry, which is not easy to achieve in the short term. Surely to do this, Digiworld must enter the industry with a serious and prepared attitude as it has succeeded with the ICT industry.

Dong Tu

FILI