From logistician to agent
How long can a supply chain extend? For general production enterprises, the supply chain can be attributed to "warehousing + transportation", that is, after the production of products stored in the distribution center, and then sent by the distribution center to agents around. However, for multinational manufacturers such as Philips, the supply chain is much more complex. Philips products sold to China from the foundry to the terminal need to go through the dock freight, import and export customs clearance, national distribution, distribution system, and other links, and ultimately reach the client.
Previously, Philips outsourced different parts of the supply chain to different logistics providers: a freight forwarder for terminal transportation and customs clearance, a logistics provider for nationwide transportation and distribution, and an agent for product distribution. Until July 2007, Philips will be up to 3 billion yuan of logistics orders to a Shenzhen-based logistics company called Yuehai Global.
This huge order highlights the Philips distribution model of change: a change in the previous supply chain by a number of logistics service providers to split the situation, but by the Sea Global unified management. This from the factory to the terminal are operated by an enterprise to the distribution model, is in recent years in the industry generally optimistic about the "integrated supply chain". Ltd. (hereinafter referred to as the Sea) has also accumulated a complete "integrated supply chain" experience in these years.
Evolution of the "integrated supply chain" model
"The second-tier agents do not care who is the general agent, they are more concerned about who can provide more favorable prices and better service."
"We start from the core of the supply chain and extend to both ends," Zhang Quan, chairman of Yuehai Global Logistics Co. told China Business News.
In fact, the company's initial cooperation with Philips also started with the most basic freight transportation.
The company's core business was freight forwarding when it was first established in 1997. In that year, Philips display factory in Dongguan was completed, the sea contracted Philips display raw materials imported customs clearance, transportation, in-plant turnover warehousing and other logistics business. 2004, the sea also undertook the Philips domestic sales part of the transportation, import and export agency trade business.
In 2005, Philips changed its general agent in South China. Before that, Philips will monitor production lines and another major global monitor production giant TPV integration, the formation of the world's largest monitor manufacturers. At that time, there was no lack of IT agents with huge sales channels, but Philips threw the agency in South China to the IT product distribution "amateur" - Yuehai Global, so that many eagerly awaited IT channel business was shocked. As a result, the sea completed the integration of the supply chain of the last leap, the establishment of their own distribution system, from the logistics business turned into an agent.
"Yuehai's cooperation with Philips has covered most of Philips' supply chain links such as order management, procurement execution, customs clearance, warehousing, transportation, distribution, etc., and no one knows Philips better than we do." Zhang Quan said so.
It is easy to see that the difficulty in Viethai's integrated supply chain model lies in how to establish and manage its own distribution system. Because, for logistics providers, transportation and warehousing is its strong point, but to establish a huge distribution system in the country is not easy.
"Before becoming the general agent of Philips in South China, we were already distributing products for Philips' agents at all levels." Zhang Quan said in one sentence. In other words, before being the general agent of Philips, the sea has been with Philips at all levels of channels to maintain close contact with a large number of channel information. According to Zhang Quan revealed that the sea has more than 100 secondary agents, in Shenzhen computer city, the sea has its own IT retail stores.
"Secondary agents do not care who is the general agent, they are more concerned about who can provide more favorable prices and better service." Zhang Quan told reporters. Therefore, it comes back to the supply chain management itself - who can optimize costs, improve efficiency and "squeeze out" more profit margins.
After taking over the distribution channel of Philips, Yuehai carried out the transformation of process optimization; at the same time, Yuehai set up a management team for the distribution business, the introduction of a number of incentives to encourage downstream distributors, which has been actively supported by Philips and downstream distributors. After the integration, Philips logistics management from complexity to simplicity, logistics efficiency has improved significantly, supply chain costs have also dropped significantly. It is understood that since the channel integration, Philips products from the factory to the client's average cycle from the previous week or so reduced to 3 ~ 4 days time.
On the other hand, the integrated supply chain can be extended from logistics services to financial services. In the current services provided by Viethai for Philips, such as import customs clearance, payment of customs duty, VAT, advance payment and other services in the value chain, Viethai has paid for all of them in advance for Philips. For globally recognized display manufacturers like AOC, Viethai is responsible for the procurement of raw materials and advances. And in the procurement, customs clearance, warehousing, distribution and a series of links are completed, AOC only need to pay to the sea related to a variety of costs.
"In this way, customers don't have to pay a penny at all in the process of supply chain management, because I can completely pay for them first." In Zhang Quan's view, Yuehai's management in the value chain not only improves customers' logistics efficiency, but also greatly reduces their capital costs.
Seamless connection
"From the factory to the terminal, the integrated supply chain involves multiple links, which often affects the whole body. Therefore, it may seem easy but it is difficult to seamlessly connect all parts of the supply chain."
At 6 p.m. on the day of the interview, the reporter saw two 30-meter-long trucks close the heavy vehicle gates and drive out of the South China Distribution Center of Yuehai Global in Shenzhen one after another. This distribution center was established in 2006, from China's largest land port Huanggang Port 6 kilometers away from Yantian Port (7.05,0.01,0.14%) 25 kilometers away from the Shekou Port 20 kilometers away from the first phase of the project 30,000 square meters of warehousing and office areas have been put into use.
"If you had come earlier, it would have been even busier here." Dang Yi Chun, director of express transportation of Yuehai Logistics Co Ltd, told reporters. This warehousing depot is divided into three floors: the first floor stores small electrical appliances and goods with fast turnover, the second and third floors are for products with relatively slow turnover, and the floors are connected by a large freight elevator. In the conference room located on the second floor, you can observe whatever is happening on site through the huge glass windows.
By taking over a customer's entire supply chain, Yuehai is able to master every node in the product distribution process, and through its information system, it is able to form a seamless connection with its nationwide transportation network, as well as with every link in the supply chain. This is very important in an "integrated supply chain" system.
If the entire supply chain is compared to a high-speed computer, the distribution center is its CPU, which methodically handles every shipment in and out of here, and leaves a record in the information system. It is understood that the sea in China's North China, South China, East China have logistics centers, these logistics centers are connected to hundreds of factories and downstream channels of the customer companies.
So how is the so-called "seamless connection" realized?
Every day, customers send orders to their systems. As Yuehai's global ERP is connected to the ERP systems of customers such as Philips, Foxconn, ASUS, etc., you can log into Yuehai's ERP system and see the instruction orders from customers. The order form contains a wealth of information, such as customer name, order time, shipping warehouse, dispatch department, invoice number, destination, number of products and specifications, and even the distribution path of the products are planned in detail.
After receiving the customer's order form, the distribution center's warehouse system operator prints the picking list according to the customer's order information, and the warehouse operator arranges for the personnel to carry out the picking. Corresponding to the customer's order form, the picking list contains the product model, the factory batch, and the warehouse where the product is located, etc. The picking list also contains the product model, the factory batch, and the warehouse where the product is located. While the distribution center staff is picking, the vehicle arrangement is already in progress. In addition, if the goods are to be transported to other regional warehouses, the system will notify the local warehouses to be ready to receive the goods.
Pre-intervention
"The market is always changing, and the focus of the factory's production organization is shifting more and more from keeping an eye on the order to keeping an eye on the delivery date, and consequently the supply of materials for production will shift from purchasing according to the order to purchasing according to the production schedule."
The Yuehai model can be extended to the forefront of the supply chain, when a product is still in the raw material stage, the logistics provider has already intervened, thus minimizing the supply chain links and improving distribution efficiency.
Wistron is one of the world's largest specialized ODM companies, dedicated to the production of ICT products (information and communication technology products), Wistron is headquartered in Taiwan, with branches and operations throughout Asia, Europe and North America. Yuehai performs VMI (Vendor Managed Inventory) services for Wistron's Zhongshan branch.
By definition, VMI refers to the management of inventory by the supplier under ****same agreement with the aim of minimizing costs for both the customer and the supplier, thereby reducing logistics and warehousing costs and improving distribution efficiency. In practice, it is usually left to third-party logistics to carry out VMI services.
According to Peng Zhaohui, director of warehousing at VCI, VCI's customers originally carried out VMI operations internally, and the area of warehouses inside and outside the factory for storing LCD panels and materials was as high as 40,000 square meters or more, and the area of warehouses was reduced to less than 7,000 square meters after Wistron Ares imported the third-party management of the VMI service at VCI. The company also started to analyze the inventory data and set up clear inventory management goals based on these data, which reduced the percentage of overdue inventory from 66% to 17%.
"The goal of implementing 3PL (third-party logistics) management of VMI is to establish a set of effective material supply mechanism between factories and suppliers by introducing 3PL for the management of VMI contracting, 'reducing' or even eliminating the stagnant inventory, and effectively suppressing the 'bullwhip effect' in the supply chain. Supply chain 'bullwhip effect'. Realize the goal of effectively controlling the scale of inventory, improving the speed of material response, and fully guaranteeing the production order." Peng Zhaohui said.
As we all know, today's consumer electronics market is unpredictable, the guest to the factory orders will be increased or decreased at any time or even canceled. Yuehai believes that the focus of the factory's production organization is increasingly shifting from focusing on orders to focusing on delivery, and consequently the supply of materials for production will also shift from purchasing according to orders to purchasing according to production schedules. This requires more timely and accurate forecasting of the inventory of production materials, and the zero inventory advocated by VMI needs to be realized by both buyers and sellers in order to achieve a win-win or even multi-win effect. With this goal in mind, Viethai has designated a corresponding management process, which is set up in the self-developed VMI material management computerized management system with multi-party information **** enjoyment. All parties in the supply chain can carry out a series of efficient and orderly interactions, such as production scheduling, inventory replenishment, and overdue material handling, based on the data reports from this system. Thus, the desired goal of VMI implementation can be achieved.
"This is all done by the WMS (Warehouse Management System) independently developed by Yuehai, each supplier has its own independent account, logging in the account, the supplier can see how much material they need to be delivered at what time." Peng Zhaohui told reporters.
In order to reduce logistics costs and improve distribution efficiency, Viethai VMI management offers different delivery modes, once a day, or once every few hours. "It depends on the full load rate of transportation and the storage space on the factory floor, and the flexible delivery mode makes the supply chain more efficient." Peng Zhaohui said.
There are times when a factory order changes suddenly or a product needs to be rushed at the last minute. This requires an "emergency call". "Generally urgent Call material will be delivered within one hour, but need to add extra logistics costs." Peng Zhaohui said.
The distribution centers are not only connected to downstream agents, but also to the factories of upstream client companies, so there is a process of warehousing products. Similar to the "shipment" process, before the product enters the distribution center, the information system first receives a warehousing instruction order containing product model, quantity, source and other information. After the warehouseman counts the goods and stores them in the appropriate storage space, ERP automatically records the storage space and related information for each item, which facilitates the picking of goods at the time of export.
From the factory to the terminal, the integrated supply chain involves a number of links, which often affects the whole body. Therefore, seamless connection of all links in the supply chain may seem easy, but it is actually very difficult. Zhang Quan summarized the secret is to improve the integrated execution. The so-called comprehensive execution power is actually the management experience accumulated by Yuehai in years of supply chain management. Often it is the details that best test the level of supply chain management.
Take the protection of goods as an example. IT products like CD-ROM drives and keyboards have very strict requirements for the protection of the outer packaging. According to the distribution center staff, if a box of products raised more than 1.5 cm, then the product will be considered unqualified, required to return for quality identification. Such "harsh" requirements pose a great challenge to logistics providers. Therefore, in order to protect the outer packaging of goods and reduce the cost of return, Yuehai puts protective strips on the four corners of the outer packaging of goods and "films" them with plastic film on the outside. In the process of transportation, each box of goods to be filled between, if the gap is too large, and even the use of inflatable bags.
In addition, in order to ensure the timely rate of arrival, in terms of land transportation resources, the Sea opened the Shenzhen were to Sichuan, Shanghai, Beijing, three trunk lines. Viethai uses GPS positioning to manage its fleet and sets up multiple support centers on each trunk line. "We have a support center every 200 kilometers, equipped with repair tools, medical kits and other equipment, the support center is on 24-hour standby. Once an accident occurs in the middle of the road, the support center will arrive at the scene within three hours." Deng Yi Chun told reporters.
Good luck! That's all I can do.