With 100 billion in revenue and 3 billion in net profit, how does Jointown reduce expenditure through digital open source?

The author | Xu Wenpu

Edit | Hai Ruo mirror

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During the transportation of the new crown vaccine, the temperature of the cold chain carriage must be strictly maintained at 2 ~ 8 ° C. No matter where you go, the management system should be seamlessly connected with vaccine manufacturers and the CDC, and the transportation process can be recorded, verified and traced.

Lu Yanhui and Liu Si are two drivers of Jointown's COVID-19 vaccine transport, which was responsible for transporting 19,000 doses of vaccine from The Daxing Kexing Pharmaceutical Factory in Beijing to Ganzizhou, Sichuan Province, more than 2,000 kilometers away. The mission passed through no man's land on the plateau, where the air was thin, and the two took turns to drive, resting and driving, and finally delivered the new crown vaccine to the local CDC 45 hours later.

"Vaccines are the crown of biologics, and they can do a good job in the supply chain of vaccines, and other biologics are not a problem." Liu Zhaonian, vice chairman of Jointown, told 36Kr. As soon as the Kexing vaccine order distribution task is delivered, it will be directly imported into the Kyushu cloud warehouse system, one-click arrangement of vehicles, planning routes, and within 10 minutes, the distribution task will be issued to people and vehicles, and the Jointown National Logistics Center will complete the landing.

At Jointown, vaccine deliveries are available 24 hours a day. Vaccine delivery tasks are sometimes urgent, and software and hardware systems and operation management must be timely and efficient. Liu Zhaonian said: "The management of drivers is like a pilot, there are special people to talk before departure to assess the psychological and physical state of drivers; cold chain car management is like high-speed rail, which must be finely overhauled before attendance." ”

So far, Jointown has undertaken zero mistakes in the distribution task of Kexing vaccines. Being able to do this is closely related to Jointown's continuous iteration of digital systems and logistics technology for more than ten years.

The pharmaceutical circulation field where Jointown is located has traditionally been a chore that picks two ends on both sides - low gross profit margins, high financial costs, upstream and downstream monopolies and other problems have long plagued practitioners. Jointown has been deeply engaged in this industry for more than 20 years, and in the early days, it rose with the "fast batch and fast matching" model, becoming the only private enterprise among the four major pharmaceutical circulation leaders.

It is precisely because Jointown is facing the grassroots market, when others are fully packed and distributed to large hospitals, they must also handle the order of "disassembling and sorting" with high frequency, and if they want to make money for small orders, they need fine management and efficient logistics system, which drives Jointown from manual to automated, and then to digital intelligence.

Since 2008, Jointown has built a pharmaceutical modernization logistics center, and the automation level has been upgraded from 1.0 to the 4.0 version under construction, leading the domestic pharmaceutical logistics level; since 2015, Jointown Logistics has begun to export technical services to the outside world, and has now planned logistics solutions for a number of pharmaceutical companies and consumer brands, changing from the former "cost center" to a new "profit center".

At the same time of digital transformation, as a connector between the upstream and downstream of the industry, Jointown is developing new territories such as CSO (contract sales organization, that is, a sales model that signs a drug sales contract with the owner of the drug sales right to obtain sales rights and gets paid), Wandian Alliance, B2B e-commerce, chronic disease management and other new territory through multi-dimensional capabilities such as supply chain, channels, logistics, and data.

"In 2021, Jointown will invest more than 200 million yuan in digital construction, double that of last year." Liu Zhaonian, vice chairman of Jointown, told 36Kr that in 2015, digital transformation was proposed to the present, such as the upgrade of the BC warehouse integration system and the docking of the Wandian Alliance system, etc. Have entered an accelerated period, "High investment will have a small impact on performance, but we are willing to invest, because this is our future." ”

01 A small profit business

Since 2020, the 3.0 version of Jointown Intelligent Logistics Center has landed in Zhengzhou, Henan and Jinan, Shandong, while the 4.0 version is also under construction in Guangzhou.

Compared with the past version, the picking process of logistics center 3.0 has realized the goods search, that is, the automatic robot is equipped with a turnover box containing different drugs, and according to the order demand, the corresponding shipper is automatically found with the drugs. Robotic operations are also implemented in the collection area.

The core of logistics center 3.0 is the integrated upgrade of BC warehouse distribution, which means that wholesale and retail drugs can be stored, sorted, packaged and distributed in the same logistics center.

For Jointown, drug orders come from the B-end of hospitals, chain pharmacies, etc., as well as small B-ends such as clinics and single pharmacies, and the C-end from end consumers. Orders for small b and To C are sometimes just a few bottles and a few boxes of medicines, but they have high requirements for picking accuracy and delivery timeliness.

At present, Jointown Logistics Center 3.0 automatic zero-breaking and sorting operations, the system will configure different automated sorting equipment according to the scale and format. In order to improve the efficiency of the reservoir area and reduce logistics costs, Jointown adopts the "Heaven and Earth Dual Transportation Sorting System", which is simply understood: for the large B-end orders such as hospital chains, the ground box transportation sorting system is used, combined with robot handling and sorting; for small B-end and C-end orders such as clinics, the suspension chain sorting system is adopted. The "Heaven and Earth Dual Conveying Sorting System" can operate simultaneously in the same space.

"The transformed logistics center is more efficient, and the delivery is also easy under the high concurrent order volume of double 11." Liu Zhaonian told 36Kr that as of now, Jointown has transformed 6 BC integrated warehouses across the country.

In the first half of 2021, as a private enterprise, Jointown's market share in the field of pharmaceutical circulation accounted for 4.7%, and its main business income ranked behind the three state-owned circulation companies - Sinopharm Holdings, Shanghai Pharmaceutical and China Resources Pharmaceutical for many years. In 2020, Jointown's annual operating income was 110.860 billion yuan, an increase of 11.42% year-on-year, and the net profit was 3.075 billion yuan.

Founded in 1999, Jointown started out as a pharmaceutical distributor. The market entry threshold is low, fierce competition leads to a very limited profit space for enterprises, in the entire pharmaceutical field, can be regarded as a typical representative of "high revenue and low profit".

In 2020, the top ten pharmaceutical companies in the A-share pharmaceutical sector revenue are related to the pharmaceutical circulation field, and the opposite of the strong contrast is that according to Southwest Securities, in the eleven pharmaceutical sub-industries, the average gross profit margin of pharmaceutical distribution is only 11.2%, ranking at the end of the industry.

The reason why Jointown plunged headlong into this market is because the founder Liu Baolin was a barefoot doctor, well aware of the lack of medical treatment and medicine in rural and remote areas of China, and went to the sea to do drug distribution, aiming at this most difficult, hardest, and most demanding market for the masses.

Since its inception, Jointown has chosen the development route of "rural encirclement of the city", opening up the hospital, clinic and pharmacy markets in grass-roots areas, and forming a differentiation with the market where state-owned circulation enterprises firmly occupy the terminals of urban hospitals.

In order to gain a firm foothold in the underlying market, Jointown implements the business strategy of "low gross profit margin" and achieves "low sales and supply price" on the basis of "low purchase cost". At the same time, Liu Baolin, the founder of Jointown, also has insights that only "cheap" is not enough, but also has fast and convenient logistics services.

All along, Liu Baolin attaches great importance to the logistics link, "all logistics planning, including how to take the route, how to design the process, I manage this very carefully, this is my preference." ”

In 2003, based on the investigation of many foreign logistics systems and their own experience, the core decision-making level of Jointown introduced a set of Japanese logistics systems, and on this basis, a special logistics management information team was set up to redevelop, and finally customized the LIMS logistics system for Jointown.

From 2003 to 2008, Jointown built and transformed logistics centers in Hubei, Henan, Shanghai and other places with large business volume according to the "Japan Plan", and adopted automatic storage, automatic sorting and automatic transmission equipment to improve work efficiency and reduce the error rate of drug picking.

In 2008, Jointown invested 160 million yuan in Beijing to design and build a new pharmaceutical logistics center with the highest level of intelligence at that time, Jointown Logistics Center 1.0.

At that time, the logistics center had a 22-meter-high automated three-dimensional warehouse system, which realized automatic replenishment. Through bar code recognition, the logistics center classifies and sorts the drugs according to the path and distribution direction, and realizes the automatic confluence of drugs. At the same time, the system can automatically issue replenishment orders, guide the delivery equipment to send the drugs to the corresponding zero-breaking replenishment area, and the operators use the instrument to scan the bar code on the shelves.

This year, the order processing efficiency of Beijing logistics center increased from 3,000 lines /hour before the launch to 5,000 lines / hour, the throughput of the logistics center increased from 5 million boxes / year before the launch to 10 million boxes / year, and the error rate of outbound errors dropped from one in a thousand to one in ten thousand.

Subsequently, in 2011, Jointown began to prepare for the self-planning and design of Wuhan Dongxihu Logistics Center 2.0, which was completed in 2014 with a total investment of nearly 400 million yuan.

The total construction area of Dongxihu Logistics Center is 80,000 square meters, which can accommodate 1 million pieces of drugs stored in the library, and the maximum daily throughput is 100,000 pieces of drugs in large boxes. An order of 1 million yuan, from the order to the loading of the car, the whole process takes less than two hours. In 2017, the pharmaceutical logistics center was rated as one of the "Top Ten National Intelligent Warehousing and Logistics Demonstration Bases" by the National Development and Reform Commission and the Ministry of Commerce.

The serendipity came when the head was immersed in hard work, and gradually, the logistics capabilities precipitated by Jointown had the opportunity to migrate outward.

02 Commercialization of logistics capabilities

In the first half of 2021, the operating income of Jointown's tripartite logistics business (including sifang logistics business) was 262 million yuan, the fastest growth among various main businesses, reaching 103.18%. At the same time, the gross profit margin of the tripartite logistics business was 21.02%, which was much higher than the 7.45% of the main commercial distribution business.

Jointown's financial statements for the first half of 2021

As early as 2014, Jointown invested in the establishment of a logistics company, focusing on professional pharmaceutical logistics, and as a logistics resource integration and strategic control center of Jointown, it is responsible for scheduling the logistics resources of the whole group.

Subsequently, in 2016, Jointown established Kyushu Yuncang Technology Co., Ltd. to provide logistics planning and design, logistics operation management services for enterprises. Kyushu Cloud Warehouse has the functions of real-time visual tracking of logistics full link, active early warning and prevention, intelligent scheduling, collaborative control, data-driven decision-making, automatic analysis and diagnosis, etc., which can realize the integration of warehousing + logistics + business information network.

The official implementation of the marketization of logistics business was in 2017, starting from the Kyushu cloud warehouse, the logistics operation sector of Jointown gradually completed the transformation from "cost center" to "profit center". Internally, Kyushu Cloud Warehouse mainly meets the company's internal logistics operation needs; externally, it provides supply chain solutions and services for the pharmaceutical and health industry (Jointown uses its own warehousing and logistics facilities to provide services) and four-way logistics (Jointown uses each other's warehousing and logistics facilities to provide operation management services).

In January 2021, Jointown received an order for the transportation of domestic Kexing vaccines in the bidding.

In November of the same year, Jointown Logistics stood out in the competition with many well-known logistics companies and operators in China, and won the construction and operation service order of the logistics management system of a famous liquor consumer brand in China.

The Kyushu cloud warehouse management system built by Jointown Logistics undertakes the supply chain management and traceability supervision functions of more than 400,000 products operated and represented by Jointown, and hundreds of thousands of upstream and downstream customers. Relatively speaking, the limited categories of this famous liquor company are easy for Jointown Logistics.

Up to now, Kyushu Yuncang has provided logistics technology integration services for more than 300 enterprises in 12 industries such as pharmaceutical wholesale, retail chain, e-commerce, cold chain, fresh food, and tripartite logistics, including Yunnan Baiyao, Beijing Tongrentang, Henan Lingrui, Tianjin Jinyao, Guangdong Dashanlin, etc.

At the same time, Jointown has established 31 provincial-level logistics centers and 104 prefectural-level logistics centers across the country, with a logistics network system covering more than 98% of the country's administrative regions.

In terms of talent investment, Jointown's technical team has exceeded 1,000 people, including technical talents who have grown up internally and experts hired from outside. At the beginning of 2021, Jointown appointed Zhang Qingsong, Yu Jingtao and Liu Jinghan as deputy general managers of the company, except for Zhang Qingsong, who joined Jointown in 2004 to be responsible for the group's logistics business, yu Jingtao and Liu Jinghan were all external talents who joined Jointown from Huawei and Ali in 2019.

Among them, Yu Jingtao has worked in Huawei for 12 years, served as the chief information officer of Huawei's Representative Office in Germany, the director of Huawei's integrated business MBS solution department, etc., and is currently responsible for information technology research and development and data middle office work in Jointown. Liu Jinghan was a senior operations expert at Alibaba's local life service company and is now responsible for Jointown Pharmaceutical's e-commerce and retail business.

In order to better bring value to the technology, the strategy meetings of all Jointown business units require the presence of technicians. The attention paid to the technical department also prompts all departments to use new technical support for business.

03 An ERP system that connects the inside and outside

Along with the back-office logistics capabilities, jointown's self-developed ERP (Enterprise Resource Management) system.

When Jointown was founded, ERP and other information tools had just appeared in China, when Liu Baolin asked all business personnel to "deliver during the day and learn computers at night."

Before the emergence of the overall connected ERP, Jointown also purchased a lot of management systems internally, including logistics, inventory management, finance, office, etc., but the modules and subsidiaries were information islands and did not open up. For Jointown, which has a national network system, the information collaboration and data sharing between various subsidiaries and business segments are very problematic.

At that time, whether to purchase the ERP system from the outside or develop it independently was controversial in Jointown.

"We have considered the introduction of foreign systems, but now we are very fortunate to have chosen to develop our own research." First, the introduction of the system, the architecture is difficult to tailor according to our business, after buying, there may be 1/3-1/2 functional modules can not be used. In addition, it is more convenient, safe and low cost in the later maintenance and functional upgrades. Liu Zhaonian told 36Kr.

The Jointown ERP system was fully implemented internally, which took a total of three years, from the initial operation in 1 company, to the later 5, 10... In 2017, the systems of hundreds of subsidiary companies under Jointown were all connected, including management modules such as business processes, financial sharing, management processes, and HR organizations. The ERP system has now become an important infrastructure for Jointown's digital transformation and upgrading, and has also become one of Jointown's core competitiveness in the industry.

"We spent a lot of effort to do the total data ERP, and in the actual application process after doing it, especially in the internal collaboration and communication of molecular companies, the overall workload was reduced by more than 80%." At that time, the person in charge of the project, Wan Yougang, shared.

Taking the financial sharing center as an example, between 2016 and 2018, the number of organizations under Jointown grew rapidly from 253 to 403, and the difficulty and cost of financial management also increased.

Through the Financial Sharing Center, Jointown Group will "decentralize the financial work in various systems across the country and manage it with a set of systems", and unify and standardize the treasury tax process/data, financial control system and information system at the level of the subsidiary companies. In addition, in the industrial chain, the upstream procurement payment, downstream business sales, recovery, asset management, construction in progress and salary accounting, etc., are all included in the platform.

"In the past, every subsidiary company probably had 1 million cash on its books, and more than 400 companies added up to hundreds of millions. But the money scattered across the country's molecular companies does not generate new value. Now it is different, we use the financial system to decentralize the funds scattered throughout the country for centralized management, and implement paid assessment for companies that use and collect funds, which makes the use of funds active, effectively solves the needs of the funds of various subsidiaries, and also reduces the cost of using funds. Liu Zhaonian said.

Jointown also disclosed a set of data: since the launch of the financial sharing platform in 2017, the number of group consolidated companies has increased by 78%, while the number of financial personnel has basically not increased, and the efficiency of financial operations has been effectively improved.

In addition, the warehouse "automatic replenishment" system configured on the ERP system also assisted Jointown in expanding a supply chain management service. The automatic replenishment system refers to the automatic generation of orders for replenishment after the inventory reaches the alarm line. Jointown applies this system to hospital scenarios to automatically replenish low-value consumables such as needle tubes and cotton balls used at high frequencies in hospitals.

Originally, each hospital had a central inventory of low-value consumables, and when each department needed consumables, the central library delivered them; when the inventory was insufficient, the central library placed orders from each consumable supplier. The hospital manages the central inventory and delivers it to various departments, which not only consumes warehouses, funds and human resources, but also costs a lot, but also wastes a lot.

Through the automatic replenishment system, Jointown has taken the lead in developing a supply chain management system for low-value consumables in hospitals.

The hospital served by Jointown stores all the required consumables in the Jointown warehouse, and directly replenishes the goods to each department through the automatic replenishment system, and after each department uses the consumables, the hospital will settle with Jointown.

Now, the system allows the hospital not only to save the site, warehouse management personnel, the actual number of consumables used in each department can be queried with one click, which has played a role in supervising the loss of consumables and reducing waste.

While continuously improving the level of digitalization, while connecting all kinds of data to promote business development and improve operational efficiency, Jointown found that the company's digital transformation can be integrated with the resources it masters in the traditional business, and then burst out greater value - to be an industrial connector.

04 Build a pharmaceutical marketing ecology

In the case of the continuous upgrading of Jointown's internal and external digital technology, customers in the upstream and downstream of the pharmaceutical circulation industry can now enjoy the spillover of Jointown's digital capabilities.

For upstream pharmaceutical companies, Jointown launched the "Smart Medicine" app to help pharmaceutical companies manage category flows, customers and drug sales personnel. The business personnel of the pharmaceutical factory will import the customer resources into the smart medicine system, and leave the positioning punch card when visiting the customer, and the pharmaceutical factory can grasp the work situation and business status of the business personnel. This solves the pain point that the business personnel of the pharmaceutical company are scattered throughout the country and the management is difficult. For business people, you can place orders to sell products directly to customers through the system, without the need to bring large bags of drugs to sell products.

For medical institutions, Jointown launched the "Smart Medicine Cloud" service to undertake the outflow of hospital prescriptions, connect with the drug supply chain, and realize online and offline, in-hospital and out-of-hospital, and pharmaceutical collaboration services.

For downstream pharmacies, Jointown uses its own technology to empower single pharmacies and small and medium-sized chain pharmacy enterprises. Since March 2021, Jointown officially launched the "Ten Thousand Stores Alliance" program, and now its "Good Pharmacist" pharmacy brand has completed the joining of more than 5,000 pharmacies, and it is expected to achieve more than 10,000 pharmacies alliance in 2022.

In the takeaway industry, Youzan, as a technical service provider, can help individual small shops connect to online takeaway platforms such as Meituan and Ele.me. In the pharmacy industry, most of the small pharmacies are "Internet access" difficult households, and Jointown is concerned about this problem and provides them with much-needed O2O technical support.

Jointown uses the self-developed "Store Pass" system to connect with the ERP system of the alliance pharmacies, empowers pharmacies to carry out category management, membership management, stock-out management, etc., and diverts orders from Internet hospitals, Internet e-commerce platforms, physical hospitals, commercial insurance institutions and commercial insurance platforms to alliance pharmacies, forming a digital platform that directly contacts C-end users.

Liu Zhaonian told 36Kr that the pharmacy format accounts for 25% of China's total drug sales market share, and this market share is expected to increase significantly as the outflow of prescriptions continues to advance.

There are nearly 600,000 pharmacies in China, of which about 250,000 are single pharmacies. These pharmacies are located in urban and rural areas across the country, effectively ensuring the people's drug demand.

However, independent pharmacies and small chain pharmacies, due to their small scale, wide distribution, high cost and difficulty of services, they do not have the ability to negotiate prices with pharmaceutical manufacturers, and it is difficult to obtain quality services from famous brand pharmaceutical companies. Jointown can use its supply chain capabilities to connect single pharmacies and small chain pharmacies with brand-name customer resources with price advantages.

Liu Zhaonian told 36Kr: "It is expected that in the next three years, the scale of good pharmacists joining pharmacies will reach 30,000, and strive to develop 100 million C-end members."

To become a connector of industry value, Jointown has a grander blueprint and landing products. Build platforms such as supplier platforms, logistics platforms, and consumer-oriented "good pharmacists" to open up all links in the upstream and downstream of the industrial chain and provide value-added services for customers in all links.

Jointown is incubating the "Power Health" platform is a new product carrying this ecology, Power Health through the aggregation of pharmaceutical companies, patients, doctors, Internet hospitals, insurance companies and other parties to achieve value links, the platform has accumulated more than a dozen Internet hospitals.

Taking the chronic disease spectrum as the starting point, Mi Health has established a doctor-patient mutual assistance community for cardiovascular diseases, ophthalmology, diabetes, etc. Whether it is an individual doctor or a hospital, you can directly prescribe drugs through Mi Health. Patients can not only see a doctor and prescribe drugs, but also query disease prevention information according to the health spectrum of Mi, exchange medical experience among patient groups, or purchase commercial insurance.

"Ant Financial has a good cooperation with Mi Health, and they have achieved an average daily fulfillment order of more than 2,000 orders through the Mi Health platform, and during peak hours, more than 10,000 daily transaction orders." Liu Zhaonian told 36Kr that now that the power health test has been carried out for several months, the number of prescriptions issued by the Internet hospital has exceeded 22,000 from 0. The number of prescriptions for the power health platform itself has exceeded the average daily average of 90,000.

In recent years, the pharmaceutical industry has been in a period of drastic changes with the development of policies. Jargon such as "prescription outflow", "two-invoice system" and "quantity procurement" are becoming more and more out of the circle, and they are also deeply affecting every practitioner in the industry.

Under the uncertainty of the general environment, Jointown has continuously strengthened its solid position in the field of pharmaceutical circulation through digital construction, and has played an irreplaceable role in the circulation of high value-added products such as new crown vaccines.

Is digitalization enabling or burdensome? The business side of several companies will explore this topic. For Jointown, the technical service business is the tone that was set many years ago. In 2008, when Liu Baolin, the founder of Jointown, was building logistics centers in Shandong and Beijing, he wrote on a note: "Our technology must be formulated closely around the business and management needs of enterprises... Only then will our technology be valuable. ”

From the current point of view, the digital transformation within the Jointown Group and the expansion of external business formats are parallel to the two lines, which is promoting Jointown to a broader world.

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