Digital transformation is blowing towards the upstream of semiconductors, and WPG aims to achieve win-win results

Blue ocean! Blue ocean! These two words are the hottest terms in the business world in the past decade. When talking about the digital transformation of enterprises, WPG Holdings CEO Ye Fuhai shared a 16-word motto: "Focus on customers, technology empowerment, transaction security, and everyone has money." Only by working together for the good and the great can we win together. He believes that the blue ocean is not far away, but right beside us.

The wind of digital transformation is blowing towards the semiconductor upstream. Even though it is already the world's largest semiconductor component distributor, WPG Holdings has already set its sights on 2030, or even further. CEO Ye Fuhai shared two major experiences in digital transformation: focus on customers and empower technology. But even if we transform ourselves, we still need to work with our friends to achieve a win-win situation.

On the 19th, WPG CEO Yeh Fu-hai attended the Future Business Expo hosted by Taiwan's "Digital Age". With the theme of "Transformation and value creation of distributors under the intelligent wave of Industry 4.0", he shared his experience in the digital transformation strategy that was decided in 2015. He bluntly stated that in order to transform and head towards the blue ocean, one must know one thing: the future does not exist, so one must continue to research and find ways to find the future.

Ye Fuhai said that WPG Holdings is a B2B company. In the past, it always spent a lot of time thinking about competitors and how to surpass them, but this is B2B thinking. Now WPG has changed its perspective and is rethinking "customer needs" from a C2B perspective.

WPG Holdings CEO Ye Fuhai said that WPG decided to transform into a data-driven enterprise in 2015.

——Photo credit: Digital Times, photo by Cai Renyi

WPG has a global market share of 12% and has 15,000 customers, including large companies like Hon Hai Group and small enterprises. Each customer has different needs, so the first lesson learned during the transformation is to spend time with customers and think about solutions based on their needs.

"Focusing on your competitors will lead to an endless battle. You should focus on your customers." Ye Fuhai said frankly, will Walmart know that its competitor in 10 years will be Amazon? It is better to focus on your customers than on your competitors.

The second transformation experience of WPG is: technological empowerment.

Ye Fuhai said that now many technologies can give WPG new capabilities, such as AI, big data, and blockchain. Judging from its development history, WPG can only "respond" to customer needs now, but starting tomorrow it should "satisfy" customer requirements, while making good use of technology to find ways to "create" customers' future needs.

WPG started its digital transformation in 2015, and set a goal to become a data-driven company by 2025. How should it be done? Ye Fuhai said that the company has been constantly researching how to focus on customer needs and how to empower technology.

The first move of Wanda was to digitize data and build a digital platform. Therefore, in 2018, Wanda launched "Dada.com", which consists of five sub-platforms: Dadajia, Dadabang, Dadatong, Dadagou, and Dadapin. Each sub-platform is precisely positioned and personalized.

Why launch so many platforms and make it so complicated? Ye Fuhai said that because there are 15,000 customers in total, some large and some small, with different locations and needs, it is impossible to use the same platform to meet all of them.

As early as 2015, WPG set its transformation and growth curve.

——Photo credit: Digital Times, photography by Wang Yulun

The second move of WPG is to transform traditional warehousing into intelligent commercial logistics, using data management to allow supervisors to see warehouse information at any time. However, Ye Fuhai emphasized that these two points are only "responding to customer needs" and cannot be said to be "creating" customer needs. This is also the mission and positioning of WPG after 2025 and in 2030.

Therefore, WPG has observed that customers are focusing on smart manufacturing in their preparations for Industry 4.0, aiming to reduce production time from three hours to one hour, but often overlook one thing: the machines on the production line need parts and materials. When the parts are moved from the warehouse to the workshop, and the workshop then puts the parts on the machines, it will take three hours to change the entire process if there is a single supply in between. In other words, smart manufacturing saves two hours, but the customer's supply chain logistics still takes three more hours.

After observing the customer's pain points, WPG rethought. After the digital platform was built, Ye Fuhai said that WPG began to ask itself: Do we have the ability to integrate commercial logistics into the digital platform and deliver goods directly to the customer's production line or even to the designated machine according to the customer's smart manufacturing requirements, timing and machine scheduling? This is the "short chain revolution."

WPG Holdings CEO Ye Fuhai admitted that the company has a market share of 12%, and 88% of the parts for a mobile phone are supplied by peers. If only WPG can achieve the short-chain revolution, customer needs will still not be met.

——Photo credit: Digital Times, photo by Cai Renyi

Ye Fuhai said that what Industry 4.0 is actually about is smart manufacturing and short-chain revolution, because customers’ waiting time is longer than manufacturing time. The smarter the customer’s manufacturing, the higher the waiting time. WPG has the opportunity to become a smart manufacturing logistics supplier in the industrial revolution. This is the way to change.

But thinking more advanced, WPG found that although it is a semiconductor component distributor with a 12% market share in the world, 88% of the parts of an iPhone are still supplied by other distributors. The component distributor industry cannot be monopolized. If WPG is the only one in the industry that can achieve smart manufacturing logistics, and other companies cannot do it, is there a way to solve customer problems? (Editor's note: Customers must have all the materials and parts before they can start production, and even a single one cannot be missing)

Ye Fuhai said that the purpose of WPG's data-driven transformation is not to surpass its competitors, but to focus on solving customer problems. Therefore, if WPG wants to reposition its development after 2030, it will start with three ideas: altruism, technological empowerment, and alliances to establish a large competitive and shared platform.

How to do it? Ye Fuhai said that WPG will share industry technology with its friends, and everyone will share and serve 15,000 customers together. The purpose is to embrace customers, focus on customers, and start with good intentions and altruism.

Relying on the immutable nature of blockchain, WPG allows enterprises to use the blockchain platform to establish transaction security and trust when exchanging data, and finally create a sharing platform to help customers increase production capacity and output value, help customers make money, and create future demand. Only in this way can WPG also make money, and achieve a win-win situation for all.

When talking about finding a blue ocean market, Ye Fuhai mentioned "Taiwan Taxi" (Note: Taiwan Taxi is the largest branded taxi fleet in Taiwan. It uses GPS satellite positioning to monitor vehicle conditions around the clock and provides a 24-hour, all-weather satellite positioning dispatch ride service that is ahead of its competitors).

He said that "Taiwan Team" itself started out by matching transportation needs, but he observed that "Taiwan Team" is now transforming to match life needs, such as accompanying parents to see a doctor, delivering laundry, and helping to charge electric vehicles. The customers have not changed and are still a group of people, but "Taiwan Team" has changed its "mission."

Ten years ago, the most popular business book was "Blue Ocean Strategy". Everyone wanted to find a blue ocean market, but Ye Fuhai asked: Have you found the blue ocean? He said frankly, ten years later, another book called "Sailing to the Blue Ocean" was published, so have you found the blue ocean? Why can some people find a new blue ocean, but some people can't?

In response to these questions, Ye Fuhai said: There is no new blue ocean market in the world. The only way is to find the right blue ocean strategy and turn yourself into a blue ocean enterprise or turn the market into a blue ocean market.

He gave an example, the market of Taiwan Truck Group has not changed, but the mission has changed. Taiwan Truck Group embraces customers and focuses on customer needs. This is the blue ocean market, and the blue ocean market is actually around you.

WPG Holdings CEO Ye Fuhai shares his thoughts and ideas on the transformation.

——Photo credit: Digital Times, photography by Wang Yulun

Ye Fuhai said that WPG used to focus too much on its competitors, but in fact it should explore its customers more and treat its 15,000 customers as oil wells to be explored. The deeper it drills with technology, the more opportunities it can discover. Therefore, WPG changed its approach, found tasks and solved problems. This is the way to become a blue ocean enterprise.

Customer Focus

Technology empowerment

Safety of tradement

Everyone has money

Ye Fuhai said that all the companies in the book Sailing to the Blue Ocean are in their original markets rather than looking for new blue oceans. Taiwan often says "eat from the inside of the bowl and look outside the bowl", which is wrong. Everyone should focus on customers, make good use of industry technology, bring in friendly companies to serve customers together, and redefine the blue ocean market, then they can become blue ocean companies. Taiwan Truck Group is a blue ocean company.