How important is the industrial supply chain in the national economy?
Due to the improvement of the industrial supply chain, the national daily mask production capacity reached 110 million in February, and the daily output reached 116 million, effectively solving the urgent need for epidemic prevention.
Due to a weak supply base, Indian pharmaceutical companies faced production suspensions in March. The reason was that 70% of raw materials were imported from China, but the supply was interrupted due to the epidemic.
1. Digital changes in the industrial chain
In the traditional enterprise procurement link, the entire process is: procurement requirements-gt; customized procurement plan/order-gt; inquiry /Processing quotation-gt; Logistics-gt; Inspection and warehousing-gt; Financial payment, external links involve processes such as finding suppliers, price comparison communication and goods tracking.
However, this kind of procurement supply chain often exhibits the "bullwhip effect". The demander wants to eat pork and ends up purchasing a pig. Behind this situation is the lack of information sharing between the upstream and downstream industrial chains, which distorts and amplifies terminal consumer demand. This extensive upstream and downstream development not only caused a misallocation of resources, but also failed to meet demand. Its root cause lies in the lack of efficient collaboration.
This backward industrial supply chain itself is facing elimination, and demand-side reforms and the black swan impact of the epidemic have increased the urgency for large, small and medium-sized enterprises to improve collaborative efficiency.
The core of demand-side reform is to reduce supply-side costs and better stimulate consumption. These two macro-directions have further accelerated the industrial supply chain's integration of production, distribution, and circulation, achieving precise coordination across the entire chain, and transformation has become inevitable. At the same time, the black swan impact of the epidemic has accelerated the digitalization of domestic industrial supply chains. Enterprises and manufacturers have taken the digitalization of corporate procurement as a starting point to ensure supply and promote production.
The supply chain model based on traditional procurement not only has problems such as information islands and single models, but also personnel flow restrictions and transportation restrictions during the epidemic have led to increased procurement costs and even supply cuts, endangering the survival of enterprises.
Therefore, under the policy guidance, market trends, corporate development and other trends, the digitalization of corporate procurement is irreversible. According to iResearch data, the transaction size of China's B2B market reached 25.94 trillion yuan in 2019, and is expected to reach 31.19 trillion yuan in 2020, with an annual growth rate of over 20.
Not only that, driven by new technologies such as 5G, cloud computing, big data, and IoT, corporate procurement is in the stage of moving from e-commerce to intelligence.
The corporate procurement link connects the company's internal management and external supply systems, with the focus being transparent and multi-source. Through the public display of e-commerce information, companies can improve the efficiency and scope of sourcing, but collaboration with external parties is still separated and the gray area of ??procurement has not been resolved. Intelligence can break down information silos, achieve full-link collaboration for internal and external procurement, and use platform big data analysis to improve procurement efficiency. It has increasingly become the choice for enterprise procurement transformation.
Recently, Alibaba’s 1688 digital procurement platform announced another upgrade, using a one-stop tool to directly connect the supply of hundreds of millions of goods with hundreds of billions of procurement needs. It also announced a key cooperation with Alibaba Cloud to assist traditional enterprises in procurement. Digital upgrade.
2. Closed-loop trend in corporate procurement
The requirements for efficient collaboration in corporate procurement have also led to a closed-loop trend of supply chain digital service platforms. Based on recent trends, intelligence, digitization, globalization, and standardization will be the passing standards for enterprise procurement service platforms.
And 1688 Enterprise Procurement combines Alibaba’s ecological advantages to create an innovative comprehensive solution of “tools, market, and data services” to solve the procurement pain points of enterprises from the “three streams in one” of information flow, capital flow, and logistics.
As mentioned above, the traditional enterprise procurement model we mentioned has long links and many coordination links, and the separation of procurement, supplier management and financial departments is very prone to information opacity, financial pressure, There are many pain points such as logistics coordination that need to be optimized urgently. In addition, under this model, it is difficult for the demand side to find high-quality and suitable suppliers in a timely and efficient manner, and suppliers often have "products piled up in warehouses and gathering dust" due to limited display windows.
In this regard, 1688 Enterprise Procurement relies on 1688’s 20 years of accumulated factory and product resources, collaborates with Alibaba’s ecology and the latest technical capabilities, and uses its unique competitive advantages to solve industry pain points with an integrated enterprise procurement model .
The digitization of enterprise procurement first lies in the digitization of tools. Taking into account the increasing branding trend of enterprise procurement, 1688 Enterprise Procurement is based on Alibaba Cloud, Damo Academy, DingTalk, Alimama and other businesses to help suppliers establish brand portals. For purchasers, it launches services covering demand, finding goods, inquiry, One-stop digital tools for ordering, logistics, and settlement effectively improve the purchasing experience.
If there is no diversified and corresponding supply source, no matter how good the digital tool is, it can only be used as a vase. In this regard, the millions of factories behind 1688 have played a role. The enterprise procurement platform has integrated a large number of suppliers, supply sources and industrial clusters. It has also built procurement scenarios for different buyer groups based on its long-term understanding of B-side services. There are large markets for large quantities of industrial products that are mainly targeted at small and medium-sized enterprises for quick purchase or self-use needs, as well as industrial brand stations with genuine areas for well-known brands, and an open sourcing market for corporate procurement that specifically targets large corporate buyers. This kind of integrated procurement and sales This method can expand supplier channels, reduce customer acquisition costs, and also allows purchasers to compare products in a short time, ensuring high-quality supply with transparent prices.
In addition to matching supply and demand on a deeper level, 1688 Enterprise Procurement also integrates Alibaba Cloud, Cainiao, Online Banking, Alibaba Security, etc. to provide ecological services covering procurement information, supply chain finance, and supply chain risk control. Etc., clear information authenticity, procurement trust, funding shortage and other blocking points, take into account efficiency and risk, and ultimately facilitate procurement transactions.
On the basis of standard solutions, 1688 Enterprise Procurement will also flexibly configure differentiated solutions for different enterprises, which can effectively cover the digital procurement needs of various enterprises.
As the leader in the domestic cement industry, China United Cement has companies spread across multiple provinces and cities, which has also brought about problems of dispersed management, control and procurement. It needs to purchase bulk materials, production equipment, warehousing/packaging materials and other categories, with different requirements on time, local services, and procurement frequency, which makes China United Cement inconvenient in acceptance, confusing settlement, low procurement efficiency, and high investment costs. high.
Through the customized solution of 1688 Enterprise Procurement, China United Cement can purchase all categories of compliant materials online, compare suppliers across regions, match supply and demand in real time, and have more flexible payment and settlement methods. Alibaba Cloud Server, these procurement data and the data of its internal mall module and bidding module can be managed in a unified manner, intelligently analyze the historical transaction prices of more than 100 affiliated companies and different procurement situations of the same material, and assist top leaders to find patterns and further reduce procurement costs. . And these can compound the SASAC’s procurement requirements for central enterprises.
After using 1688 Enterprise Procurement, China United Cement’s sourcing and procurement costs have been reduced by 10-15% on average, which saves 40-60% of the time and cost compared with traditional bidding procurement. Direct supply of single products by platform manufacturers can save the most At a cost of 18, the results are remarkable.
3. The spread of digitalization across the entire industrial chain
The basic value of procurement is to ensure the delivery of purchased raw materials, ensure the smooth progress of production, and reduce costs within a certain period. Therefore, the digitalization of enterprise procurement is not only an improvement within the enterprise, but also a change in the overall efficiency of all parties involved in the procurement link.
1688’s enterprise procurement digital solution not only allows purchasers to reduce internal management costs through the basic platform of “two ends and one chain”, but the platform is directly connected to more than 300 well-known enterprise group customers, and can also provide 20 Exclusive private quotation channels for more than 10,000 suppliers allow factories to exclusively enjoy online 200 billion large enterprise procurement opportunities, increasing transaction completion rates in a shorter time. Each company's cost reduction and efficiency improvement will ultimately promote efficiency changes in the entire industry. According to public data, the current average capital saving rate of large enterprises on the platform is about 8 to 10, and the procurement execution efficiency has increased by more than 60.
With the digitization of corporate procurement, the digitization of industrial supply chains will cut into the design and manufacturing levels, promote the development of new manufacturing, and better assist the internal circulation of the economy.
The essence of optimizing the industrial supply chain is to use digital technology to optimize the flow and layout of production factors. The 1688 enterprise procurement platform connects both ends of supply and demand and can accumulate massive supply and demand data and procurement data. The platform's transaction weather will become the PMI index in the digital era. It can look forward to the development of industrial structure and economic operation direction, timely reflect the balance of market supply and demand, and prevent supply. Blindly expand production capacity.
From a higher perspective, the platform can also promote new manufacturing trends, drive digital technology to deeply reconstruct the traditional manufacturing industry, and realize the intelligence, personalization and customization of the manufacturing industry. From a practical point of view, it is to integrate the entire Alibaba data, gain insights into the front-end, optimize industrial supply chain procurement, better operate the flexible manufacturing model with small order minimum order and rapid response, respond to demand in a timely manner, tap domestic demand to a greater extent, and ultimately form demand. It drives supply and creates a higher-level dynamic balance of demand, improving the overall efficiency of the national economic system.
Author: Qian Hao, Chen Guoguo