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The Four Pivots of Supply Chain Management (Part 1)

The Four Pivots of Supply Chain Management (Part 1)
The realization of supply chain management is to link suppliers, manufacturers, distributors, retailers and other node enterprises in a supply chain for optimization, so that production materials can be changed at the fastest speed through production and distribution links. It becomes a value-added product and reaches the hands of consumers who have consumer demand.
This can not only reduce costs, reduce social inventory, but also optimize the allocation of social resources. More importantly, through the information network and organizational network, the effective link of production and sales and the reasonable flow of logistics, information flow and capital flow are realized, and finally the products are delivered to consumers at reasonable prices and suitable products in time. superior. Dell in the computer industry has taken a very innovative approach to its supply chain management, reflecting the superiority of effective supply chain management. Constructing an efficient supply chain can start from four aspects:

1. Customer-centric

In a sense, supply chain management itself is the result of customer-centric "pull" marketing. Its starting point and end point are to create more value for customers, and both are driven by market demand. prime mover. Customer value is the core of supply chain management. Enterprises organize production according to customer needs. In the past, the starting power of the supply chain came from the manufacturing process. Products were first produced and then introduced to the market. Before consumers buy, they will not know the sales. effect. In this "push system," there is a risk of running out of stock and poor sales. Now, the product starts from the design, and the enterprise has let the customer participate, so that the product can truly meet the needs of Gu Rong. This "pull system" supply chain is driven by customer demand.

Supply chain management starts with the end user. Its architecture consists of three parts:

The customer service strategy determines how the company responds to customer feedback and expectations from the perspective of profit maximization; the demand delivery strategy is how the company connects customer needs with the provision of products and services; and the procurement strategy determines where and where the company is located. How to produce products and provide services, customer service strategy.

The first step is to segment the customer service market to determine the level of service expected by customers in different segments.

The second step should be to analyze the cost of service, including the company's existing customer service cost structure and the cost of achieving service levels in different market segments.

The third step is sales revenue management, which is very important, but often overlooked by companies.

How will customers react when a company offers new services to different customers? Is it because of increased purchases that need to increase capacity, or is it because of increased customer loyalty that allows the company to raise prices? Businesses must respond correctly to customers in order to maximize profits.

Demand delivery strategy. The combination of sales channels a company adopts to deliver products and services to customers has a direct impact on customer service levels and distribution costs. And demand planning, that is, how a business develops production and inventory plans to meet customer demand based on forecasts and analysis, is one of the most important functions of most businesses. Good demand planning is the key to successfully meeting customer needs and minimizing costs.

Purchasing strategy. The key decision is whether to produce or outsource, which directly affects the cost structure of the company and the risks it takes on labor, exchange rate, transportation, etc.; in addition, how to plan and arrange the production capacity of the company, and how to balance the relationship between customer satisfaction and production efficiency , are very important content.

2. Emphasize the core competitiveness of the enterprise

In supply chain management, an important concept is to emphasize the core business and competitiveness of the enterprise, and to position it in the supply chain, outsourcing non-core business. Due to the limited resources of an enterprise, it is very difficult for an enterprise to gain a competitive advantage in various industries and fields, so it must concentrate its resources on a certain area of ​​its own expertise, that is, its core business. In this way, positioning in the supply chain has become an irreplaceable role in the supply chain.

The core competitiveness of an enterprise has the following characteristics:

The first point is that it cannot be imitated, that is, other companies cannot imitate it. It may be technology or corporate culture.
The second point is that it cannot be bought, which means that there is no market for such resources, and they cannot be bought in the market. All the resources available in the market will not become the core competitiveness of the enterprise.
The third point is that it cannot be disassembled. What cannot be disassembled emphasizes that the resources and capabilities of enterprises are complementary. With this complementarity, they are worthless when they are separated, but only when they are combined.
The fourth point is not to take away. The emphasis is on the organization of resources. Many resources may be like individuals. For example, if you have an MBA degree, your worth is high and you can take it away.

Such resources themselves do not constitute the core competitiveness of an enterprise. What cannot be taken away includes complementarity, or it belongs to the enterprise, such as patent rights. If the patent rights belong to individuals, the enterprise will not be competitive. The reason why some excellent companies can build an efficient supply chain centered on themselves is that they have irreplaceable competitiveness, and once they use this competitiveness to string together upstream and downstream companies to form a business that creates a business for customers. The organic chain of value. For example, as a chain commercial retail enterprise, Wal-Mart's core competitiveness is its high-level service and customer network based on it. As a result, Wal-Mart has surpassed its identity as a "commercial retail enterprise" and established an efficient supply chain.

First of all, Walmart is not only a pure commercial enterprise waiting for upstream manufacturers to supply and organize distribution, but also directly participates in the production plans of upstream manufacturers, discussing and formulating product plans, supply cycles, and even helping upstream manufacturers. Upstream manufacturers carry out work on new product development and quality control. This means that Walmart can always get the most desired product on the market first. While other retailers are waiting for the supplier's product catalog or negotiating a contract, Walmart's shelf has already begun to sell this product. .

Secondly, Wal-Mart's high-level customer service can timely feedback consumers' opinions to manufacturers, and help manufacturers to improve and perfect their products. In the past, commercial retail companies only acted as intermediaries, passing goods from manufacturers to consumers, and in turn, consumers' opinions were fed back to manufacturers by telephone or in writing.

It doesn't look like Walmart is unique, but the results vary widely. The reason is that Wal-Mart can participate in the production planning and control of upstream manufacturers, so it can quickly reflect the opinions of consumers into production, rather than simply acting as a setter or a microphone.

Wal-Mart's ideas are not complicated, but most commercial enterprises are more "acting as a bridge between manufacturers and consumers" and lack the ability to participate in and control production. In other words, Wal-Mart's model has gone beyond the scope of internal management and "communication" with the outside world, but has formed a global supply chain with itself as the main chain linking manufacturers and customers. And this supply chain is guaranteed by advanced information technology, which is its complete set of advanced supply chain management system. Without a unified, centralized, real-time monitoring supply chain management system, Wal-Mart's direct "production control" and high-level "customer service" would be impossible.

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