Exploring the optimal solution for cost reduction and efficiency increase
Industrial industry development calls for a full-link digital supply chain
Recently, the National Bureau of Statistics released a new round of national economic data. From January to May, the total profit of industrial enterprises above designated size in the country was 2,668.89 billion yuan, a year-on-year decrease of 18.8%. The cost is 85.29 yuan, a year-on-year increase of 0.93 yuan. Under the double squeeze of profit decline and cost rise, cost reduction and efficiency increase have once again been locked by many industrial enterprises as the key path of development.
As the supply chain, which is the cost center and efficiency engine of industrial enterprises, how to make better use of digitalization to reduce costs and increase efficiency has become the focus of industrial enterprises.
In the past, many enterprises equated the purchase cost with the price cost of purchased materials, but in fact this was a misunderstanding. The “2022 Digital Procurement Development Report” jointly issued by Yibang Think Tank and China Federation of Logistics and Purchasing pointed out that procurement cost is a comprehensive cost, including not only the explicit commodity price cost, but also the time cost of procurement and the related management cost of procurement. , operating costs and other hidden costs, among which management costs involve supplier management, product specification management, personnel management, approval process, risk management, etc., while operating costs include capital costs, logistics and warehousing costs, after-sales costs and channel costs, etc. . In the overall procurement comprehensive cost, the explicit cost only accounts for 30-40%, and the implicit cost can be as high as 60-70%.
More critically, these explicit costs and implicit costs are not isolated from each other, but closely related. For example, if procurement costs are reduced, administrative costs may increase because lower procurement costs mean lower profit for suppliers. In order to ensure their own interests, suppliers may adjust product quality, delivery methods and delivery frequency, so companies need to invest more in quality control. Another example is when inventory costs decrease, warehouse inventory will decrease, resulting in an overall decrease in warehousing costs, labor costs, and management costs. However, once out of stock, because there is not enough inventory, it will not only affect the stability of production, but also increase additional costs for temporary purchases. It is also the reason why in the past few years, after many industrial enterprises have realized the online purchase transaction link and digitized the single point of purchase, the cost reduction effect has not been obvious. Because in many cases, only the price cost of goods is reduced, but the corresponding management costs, transportation costs, and operating costs may not decrease but increase.
Therefore, when considering the cost reduction plan of the supply chain, we must think from a global perspective, rather than treating the head and foot with the same pain.
Due to the overall nature of supply chain costs, it is forced that the digitalization of the supply chain must also be a full link. Only in this way can the value of cost reduction be realized. However, there are many links in the supply chain and the collaborative relationship is complex. How to realize full-link digitalization in practice? JD Industry has provided practical references worth learning for the industry.
As a subsidiary group of JD Group engaged in industrial supply chain technology and service business, JD Industry is the first in the industry to propose a full-link digital service model of the supply chain. Links, on the one hand, effectively reduce the additional costs brought by the past information mismatch to each link of the industrial chain; The intelligent scheduling of resources significantly improves the collaborative efficiency of social resources. At present, this set of supply chain full-link digital service model has been applied in many large industrial enterprises, which has significantly improved the comprehensive cost of the supply chain of industrial enterprises.
According to the research data of JD Industry, enterprises can reduce the comprehensive cost of the supply chain by more than 30% by realizing “less purchase and less preparation” of spare parts inventory, improving the efficiency of contract delivery, and intelligent scheduling of warehouse resources. In terms of inventory cost optimization, JD Industry has created a spare parts supply chain solution for Desheng Steel. As a typical heavy industry, the spare parts inventory of steel mills is usually hundreds of millions, which not only consumes a lot of inventory resources, but also takes up a lot of working capital. The Jingdong Industrial Spare Parts Supply Chain Solution will accurately analyze the data such as the quantity and frequency of shipments of various spare parts in the past two years, and use artificial intelligence algorithms to provide the average consumption within a replenishment cycle and suggest replenishment Water level and inventory replenishment cycle help steel mills realize inventory water level control based on spare parts demand forecasting, so as to achieve “less preparation, less purchase, quick use, and quick supply”. At present, the management efficiency of Desheng Steel’s auxiliary spare parts and secondary spare parts, the two largest and highest proportion of spare parts, has been significantly improved, and the inventory cost of spare parts is expected to be reduced by 20%.
In terms of contract performance costs, JD Industry built a number of hydropower stations and wind turbines for the Yalong River Company in Xichang City, Liangshan Yi Autonomous Prefecture, and Kangding City, Ganzi Tibetan Autonomous Prefecture, which can radiate the Yalong River. A new generation of infrastructure for power plants – enterprise distribution center. Through the scheduling of JD’s industrial supply chain intelligent decision-making system, these enterprise distribution centers can centrally integrate scattered packages of multiple categories, multiple orders, and multiple logistics channels in advance, and deliver them to the designated warehouse of the power station at a fixed time every week by special personnel and special vehicles, realizing “ten thousand parcels”. “Single-in-one”, effectively reducing the management cost of performance delivery. In the process of “all orders in one”, Jingdong Industry also designed a brand-new customized material acceptance form based on the warehousing process of Yalongjiang Company, so that the acceptance personnel can easily match the materials with the order.
In terms of transportation costs, JD Industry combined the characteristics and needs of supply chain management in the mining industry to successfully help Shandong Gold extend the management chain and overcome the resource allocation and comprehensive cost problems of supply chain management. Mining companies often have a large number of mines and smelters, and they are generally distributed in remote areas such as Qinghai, Hainan, and Inner Mongolia. The transportation is extremely inconvenient. The distribution of materials needs to be circulated through a large number of links, and the transportation cost accounts for a considerable proportion of the supply chain. Jingdong Industry’s intelligent decision-making system “K2” can use advanced data analysis and algorithms to evaluate variables such as cost, inventory location and supply volume, delivery time, service quality of logistics service providers, and settlement cycle, and evaluate tens of thousands of variables.
The relevant person in charge of Jingdong Industry believes that the supply chain as a system does not pursue the minimum cost of a certain link, but to optimize the overall efficiency and cost by coordinating all links. Therefore, in the process of purchasing digital intelligence, we should not only consider the part, but start from the whole link of goods, procurement, contract performance, and operation to realize the overall digitalization. This is also the original intention of JD Industry to create a full-link digital service model think.