Editor's Introduction: What problems is the middle office trying to solve? As the daily business of enterprises becomes more and more complex, and the internal demands are increasing, the appearance of the middle office at this time can achieve cost reduction and efficiency to a certain extent, and reduce the burden of business processing. However, there are "good" and "bad" aspects of the existence of the middle office, and we need to look at it dialectically. This article explains the significance of the existence of the middle office and the corresponding design strategy, you may wish to take a look.
In the past two years, many Internet companies led by Ali have begun to build the middle office with the integration of the business, and then with the development of the business, they have begun to split the middle office, which has caused a lot of controversy. From the initial pursuit of thousands of people, to the later fall off the altar, and now the praise and criticism are mixed, as long as it is about the topic of the middle office, it always makes people chatter, but no matter how good or bad, it cannot deny its popularity in recent years.
Is the middle office useful, a booster for business development, or a stumbling block? What is the significance and value of the middle office? How should the middle office be designed? In this article, from the perspective of the middle office of the supply chain, I will share some of my personal summary understanding of the middle office and the design ideas of the middle office.
First, how was the middle office formed?
In order to understand the formation law of the middle office and the underlying operation logic, it is necessary for us to first understand what the middle office is, and first look at a story:
X Company has opened stores on e-commerce platforms such as Tmall, JD.com, Meituan, Pinduoduo, and Toutiao, and its business covers all categories of goods (3C digital, computer office, book imaging, food fresh, medicine and health care, etc.).
So many sales channels, the performance of each platform is not exactly the same, each channel has a wave of business responsible for operation, but the relevant departments of the back-end supply chain are unified, whether it is procurement, or warehousing, logistics operation processes are the same, all platforms share procurement, commodities, warehousing, inventory and other supply chain capabilities, a thousand words, the boss's needs are very simple: commodity inventory can be shared to each platform at the same time and can be shipped from the same warehouse.
Multi-platform supply chain business form
If there is only one business platform, the demand for the supply chain will only come from this one business, and the departments and systems on the supply chain side can directly customize the requirements for this platform.
However, if there are multiple platforms with different demands at the same time, the supply chain alone to meet any party will bring problems to other parties, but we cannot build a supply chain system for each platform.
Therefore, in order to meet the demands of each platform, it is necessary to adapt to the needs of each platform on the supply chain side, in addition to meeting the public demand for invoicing and sales, making business access more simple, it is also necessary to be compatible with the personalized needs of each platform, which has emerged in the supply chain middle office: to solve the multi-service shared supply chain.
We usually say that the middle office is limited to the system level, but in fact, the system is derived from the business, in many companies, the middle office not only contains the middle office system, but also includes the middle office business unit, or take the supply chain to illustrate:
First, the middle office department. Responsible for assembling and providing the existing supply chain capabilities to other departments from the perspective of business, the usual job is to connect with various external business parties as a unified export, and analyze the overall efficiency of the supply chain horizontally, optimize the supply chain process from the overall perspective, and make the coordination of the basic departments of the supply chain better.
Second, the middle office system. The existing supply chain basic capabilities are assembled and provided to other business systems for access, and from the system classification, it can be divided into business middle office and data middle office. The business middle office mainly provides the business functions of the supply chain, and the data middle office mainly provides the integration and analysis capabilities of the data.
Middle Office Department and Middle Office System
Second, what problems will be solved by the middle office
The positioning of the middle office in the company, for example, a classic analogy, it is like the aircraft carrier and fighter on the battlefield, the business is a fighter combat group, and the middle office as an aircraft carrier provides favorable backing and support, so that the business is more lightly loaded and relieved of worries.
Of course, not all companies need the middle office, if there is only one business direction, there is no middle office, but in the multiple platform mode, if you need orders, inventory, warehousing at the same time to dock multiple platform business, and at the same time to meet the business requirements of all parties, this requires the use of supply chain middle office capabilities, we need to turn the basic capabilities of the underlying supply chain into middle office services, provided to each platform business common, it can be a department, a person, can also be a process, or system capabilities.
The construction of the middle office is like building an aircraft carrier
In daily work, the middle office mainly solves the following problems:
1) Reuse of underlying capabilities to reduce business and system costs.
When multiple businesses need supply chain capabilities, the existing supply chain business and support system are upgraded so that they can support multiple business parties at the same time, and reduce business costs and system research and development costs at the same time through reuse.
2) Simplify and transparent the complex underlying capabilities.
The supply chain itself is a huge and complex system, and their own people have not yet been able to fully understand it, let alone let the business understand it, but the business must use the ability of the supply chain, how is it good? This requires the supply chain middle office to be converted, the supply chain can be very complex, but it must be simple and clear enough to provide to the external business department after the middle office conversion, otherwise it is not a good middle office.
3) The mesh structure of multi-point docking is changed to single-point docking, and the process is clearer.
Whether it is the department of the middle office or the middle office system, it is multi-organizational, any business if it is docked separately with the procurement, warehousing, distribution and other departments, the cost will be very high, will become a many-to-many network structure, and the supply chain middle office can be used as a unified door of the downstream supply chain department, the multi-point docking into a single point docking, the process will be clearer, the difficulty is naturally reduced.
4) Aggregation of key information.
Another purpose of middle office construction is to aggregate key information rather than scatter it to all parties, so that when data is needed, it can be provided directly from the middle office, rather than extracted from various systems.
Third, the essence of the middle office: precipitation + reuse
Speaking of the middle office, it can be very complicated, so complex that it involves more than a dozen departments, dozens of systems, and hundreds of people to coordinate with each other, and it can also be very simple, simple enough to use two words: precipitation + multiplexing.
1. Sediment input
The middle office needs to precipitate some services, functions and data that can be reused as much as possible, and do not let each service realize itself, otherwise it is a great waste and will increase the access cost of the service. For example, Company X has multiple warehouses, inventory management functions for commodities, if A business has, B business also has, C business also needs, then it should be considered in the middle stage to centralize the implementation.
But should all the capabilities fall to the middle of the supply chain?
Of course not, the construction goal of the supply chain middle office is not to replace the business side, but to let the business better carry out business, not to be dragged down by the back-end supply chain, so the best way to cooperate is to draw a clear boundary, build together, in principle, only the relatively stable and more common ability to fall to the middle office, and the business logic of the sex will be handed over to the business freely, and the specific realization can be analyzed according to the specific situation.
At the same time, the precipitation of middle office capabilities can never be achieved overnight, it must be a process of slow accumulation, many capabilities are more suitable for the business side when they are not yet formed, and then fall to the middle office after stable maturity.
2. Multiplex the output
As the capacity of the middle office is more and more precipitated, it can output more general reuse capabilities to the business, including the process level, the human aspect and the system level.
Take the procurement business of Company X, no matter how many business platforms there are, they can share the company's procurement process, the manpower and procurement system of the procurement department, in this case, the function of the procurement department is the role of the middle office, the procurement capacity is centralized output, to meet the procurement requirements of all parties.
The essence of the middle platform: precipitation and reuse
The output of the middle office capacity depends on the amount of precipitation, just like making cakes, the more molds that can be used, the more different pattern styles can be made, if the precipitation is not enough, there will naturally be a lack of east and west, and business access will be bumpy. Many middle offices have a bad effect at the beginning of the construction, so that the business perception is not easy to use, and this is the reason.
Therefore, to build a supply chain middle office, please be more patient, to believe that with the slow increase in precipitation, the output capacity of the middle office will become stronger and stronger, the access to the business will become more and more simple and smooth, and more willing to access and precipitate to the middle office, and finally form a benign flywheel effect, so that the potential energy and value of the middle office will play a larger and larger role.
The middle office benign operation flywheel effect
Fourth, the construction idea of the middle office: public precipitation + difference treatment
Whether it is a middle office business or a middle office system, when it is built, it is actually dealing with two things: public precipitation and difference processing.
1. Public precipitation
For all business parties have the same public capabilities, so as to be as common and perfect as possible, in order to better provide multi-party reuse. The content of the precipitation can be business and process, can also be system functions, can also be data, in short, can be shared, valuable, all precipitated to the middle platform, accurate and correct.
2. Handling of Differences
The business cannot be exactly the same, otherwise there is no need for more services, so when the middle office is built, it will encounter differentiated processing scenarios, such as the differences of different platforms, the differences of different businesses, the differences in different processes, and the differences of different scenarios. This requires sufficient compatibility of the middle office to solve the problem of differentiation while public precipitation.
The design idea of the middle office
V. Middle Office Design: Introduction to the Capability Output Model
The value of the middle office is to output the complex underlying basic capabilities into a middle office service that can be quickly accessed by the service, and we abstract the output process into a general model, tentatively called the "middle office capability output model", which is divided into the bottom support - middle office processing - capacity output three layers, Support-Process-Output, referred to as SPO, as shown in the following figure:
Middle office SPO capability output model
Explain this SPO model:
1) Bottom support: This is the bottom of the basic service capabilities, but relatively professional, cumbersome, laymen may not understand. For example, the ability of basic data, fulfillment, warehousing, and distribution, it is more difficult to learn technical terms alone, not to mention the in-depth understanding of its underlying logic.
2) Middle-office processing: This is our middle-stage process, the underlying capabilities for processing output, abstracted into a general service that can solve business problems, so that the business can not pay attention to internal details, directly use on the line. Just like the power strip, we don't have to pay attention to its internal circuit logic at all, and it can be used by all kinds of electrical appliances when it is powered on (so the plug board naturally has the middle-stage attribute).
3) Ability output: This is the performance layer of the middle office service, the service tool assembled according to the business requirements, the business can be used directly, and the performance layer can be interface, message, page and other forms.
Among them, the machining process of the middle office can be divided into two forms: capacity consolidation and capacity splitting:
- Capability consolidation. Aggregate multiple decentralized capabilities together to provide a complete solution for business calls.
- Capability split. A large capability is split into service units that can operate independently for business calls.
Middle office capability merge and capability split
For example: X Company has multiple sets of warehousing systems and multiple sets of distribution systems at the bottom, after processing through the middle stage capacity, all the storage systems are abstracted into standard storage capacity output, the distribution system is abstracted into standard distribution capacity output, and the warehousing and distribution capabilities are combined to output warehouse + distribution capacity, which outputs 3 kinds of supply chain middle office capabilities for the business: storage capacity, distribution capacity and warehouse + allocation capacity, as shown in the figure.
As for how many sets of specific warehousing systems and distribution systems there are at the bottom, how complex the logic is, the business students are completely unaware.
Example of warehouse mating in the middle stage
Sixth, the way to dismantle the middle office
Finally, let's think about the question at the beginning of the article, you see that the middle platform was built and demolished, demolished and built, then is it useful in the end?
Regarding the quality of the middle office, we cannot generalize about the quality of the middle office, because the times are different and the potential is different. The general trend of the world, long-term integration, long-term integration, whether it is dismantling the middle platform or the middle platform, standing in the perspective of business development, it is with responsibility and mission.
Let's look at another story.
When X Company was first established, there was only one self-operated business, and all systems and processes were developed around this business, but with the gradual growth of the company, it began to open stores on Tmall, JD.com and other platforms, and followed the trend to play the new retail model of online + offline.
All parties have their own supply chain demands, the early stage is attached to the existing set of supply chain back-end system, but with the backlog of demand of all parties to a certain extent, this back-end system can no longer independently support the personalized needs of all businesses, the supply chain middle office has been generated, its mission is to solve the supply chain reuse and business personalization problems of all parties' business, at the same time, the transaction middle office, payment middle office, financial middle office, basically in this posture.
With the polishing and shaping of the middle office, gradually improved, giving the business more empowerment, so that the business tastes more sweet, the business is more willing to access the middle office and trust the middle office, this stage is the honeymoon period of business and middle office cooperation, family harmony, everything is prosperous.
As the business continues to run fast, after the next stage, the development capacity of the existing middle office encounters a bottleneck and can no longer well match the flexible and changing business needs, and it is time to split.
At this time, the mission of the current middle office has been completed, and more capabilities need to be delegated to the business team, and each business will solve the problem of complexity and reuse by itself. As a result, the business status quo has become that each business deals with its own supply chain needs, as if it were back to when the company was first established, and a new cycle has begun...
The development route of the middle office
In my opinion, after the middle office is split, it does not mean disappearing and abandoning, but turning energy into another form to better support the business, and its ideas and concepts will surely penetrate into the new business cycle and be nurtured for its reappearance.
Therefore, it is meaningless to simply judge the quality of the middle office by dismantling and merging, the existence is reasonable, it is certain that the middle office must be useful, but we cannot blindly superstitious, because it is not omnipotent, and there is a cycle, its emergence and splitting are the inevitable results of business development, we should look at it rationally and treat it with a normal heart.
#专栏作者 #
Wooden pen, a vulgar product, deeply rooted in the field of supply chain, WeChat public account: supply chain product notes
This article was originally published in Everyone is a Product Manager. Reproduction without permission is prohibited
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