Industry chain perspective: reconstructing logistics

Figure: Figure worm

Source: 21tech

Author: Tao Li Jiang Yue

Editor: Zhang Weixian

In May, the streets of Shanghai are gradually becoming more and more wooded, and the shade cast is getting thicker and thicker, but the shade is no longer bustling.

At present, after the recent stage of partitioning and grading of "antigen + nucleic acid" combination screening and targeted related measures, the effect of epidemic prevention and control has become increasingly apparent, the number of sealing and control areas has gradually declined, and the resumption of work and production has been promoted in an orderly manner. At the press conference on the prevention and control of the new crown pneumonia epidemic in Shanghai held on May 6, Zhao Dandan, deputy director of the Shanghai Municipal Health Commission, informed that on May 5, there were 245 new local confirmed cases of new crown pneumonia in the city, and 4,024 cases of asymptomatic infection.

People in the closed area still need to solve the shopping problem through group purchase. The 21st Century Business Herald reporter learned that the services of express delivery companies such as SF, Zhongtong, and Shentong on the C-side have not yet been restored, and the e-commerce platform is still in a state of difficulty in delivering and receiving goods.

For producers in different industries, the inability of materials to come in and the inability of products to go out are also problems that need to be solved urgently. Is it insufficient capacity or weak management coordination? What kind of management can reconstruct the new order?

According to a number of business people and experts interviewed by the 21st Century Business Herald reporter, modern logistics is a very long industrial chain, and no individual can operate in isolation. The warehousing, trucking and data service providers in this chain are also facing structural restructuring. Cracking the logistics problem involves the restructuring of the industrial chain, the future logistics industry or will face drastic changes, including changes in warehousing structure, and enterprises will also reshape the production process, including improving product standardization, modularization, developing alternative suppliers, increasing the inventory buffer of key components, increasing variable production capacity, etc.

Return to logistics resilience

In late April, the head of a water pump manufacturer in Shanghai's Qingpu District told reporters that in the 20-year business history, logistics problems had never bothered her as much as they do today.

The manufacturer undertakes the last 100 meters before the faucet comes out of the water, and the finished product contains many parts such as pumps, smart water meters, valves, pipelines, sensors and so on.

The packaging and transportation of such a modern mechanical product has long been upgraded several times. Different from the past naked transportation, centralized boxing transportation, now before delivery and shipment, special cartons must be used, first package each part separately, and then the whole boxing, to prevent bumps and damage on the way.

However, the company, which had been closed to the supply and production in April, still encountered operational difficulties. "There is still inventory available in production, but the cartons of product packaging are still not available in warehouses in other places." The person in charge revealed that in the near future, the factory can only send loose parts to the outside world, and the packaging required for these products is slightly less, but it will affect the overall sales and gross profit margin. In fact, in today's modern logistics formation, most economic individuals will not build their own logistics fleets, but use standardized outsourced logistics services.

Since its inception in 2000, the pump factory has been using this logistics to procure materials and deliver products, and for the first time encountered today's difficult problems.

"To be honest, the logistics have improved now, and usually a small precision part can be customized for me to be transported to 1,000 kilometers away, which is very fast and accurate." I don't understand why suddenly the most basic cardboard box logistics can no longer be guaranteed. The person in charge said.

In this regard, Xu Shuibo, founder and chairman of Tiandihui Supply Chain Technology, believes that this reflects the lack of resilience of the mainland logistics industry. "In recent years, domestic logistics infrastructure has always emphasized the use of multi-path to meet the needs of customer delivery, and more to meet the needs of customized, high-value-added logistics. However, in the epidemic environment, returning to the fundamentals, the most basic requirement is actually not to break. ”

At present, the logistics chain encounters obstacles in many links, whether it is drivers or roads, supply sources, etc. Why can't a chain of ruptures be resolved in a short period of time?

Xu Shuibo explained the current situation with cost benefits, "In the current situation, the logistics operation body starts from the cost, and the visible losses lead to unsustainable operations. If you can run 30,000 yuan a month in the field, if you can only earn 10,000 yuan in Shanghai, there will be problems. ”

The storage structure needs to be improved

In addition to trucks and roads, the second biggest cause of poor logistics is at the warehousing end. It is understood that a number of international logistics warehouses and e-commerce pre-warehouses in Shanghai and surrounding areas mostly use closed-loop management methods, and the epidemic prevention and control has led to their temporary loss of operational functions, forming a link in the logistics chain.

Why does a single warehouse form a chain effect, and what is the basis for the layout of the warehouse? What market needs should future warehousing adapt to?

Over the past few years, Shanghai has undertaken major logistics needs and supply demands in the Yangtze River Delta. According to the "China General Warehousing Market Dynamics Report", there are currently 32 major logistics node cities in China, and Shanghai is one of the important nodes. In addition, Suzhou, Wuxi, Nanjing, Ningbo, Jiaxing and Shanghai have jointly formed a logistics node area.

On the whole, logistics in the eastern region accounts for more than 50% of the national market demand. Among them, wholesale and retail demand is the most popular, accounting for 44.09%, followed by manufacturing, accounting for 27.6%. Because the demand side and the supply side are relatively concentrated, a "hugging group" pattern has been formed.

Xiang Feng, vice president of YTO Express, believes that the logistics industry will prevent "putting all eggs in one basket" in the future. Domestic logistics infrastructure has focused on flexibility and agility earlier, but it lacks some "redundancy". The so-called redundancy, that is, "the logistics warehouse can not be set in a single place, need to be divided".

CICC's 2021 report pointed out that China's warehousing and logistics market as a whole is still in the development period, although the overall domestic warehousing area is abundant, but the inventory of modern warehousing and logistics facilities accounts for less than 7%, which is significantly lower than that of developed countries, and the supply level between regions is very unbalanced.

In addition to the need to improve "redundancy" in general warehousing, industrial demand for upgrading and customized logistics actually calls for "redundancy".

Feng Tianjun, a professor in the Department of Management Science of the School of Management of Fudan University, said in an interview with the 21st Century Business Herald that unlike traditional products with long cycles and slow iterations, the life cycle of innovative products is generally only 3 months. If the logistics time is delayed for too long, it will lead to a price reduction at the end of the sale of the product. In order to ensure the marginal gross margin of sales, innovative product development manufacturers are often willing to pay a higher premium for logistics and tend to use customized products.

Rebuild partnerships

At both ends of the logistics, not only suppliers and manufacturers are connected, but also terminal users. In the face of the current difficulties, many people in the industry have called for more trust and mutual assistance to be added to the cooperative relationship to help the industry tide over the difficulties.

"Due to the closure of the Shanghai laboratory, we have recently transferred some of our orders to other cities." The head of a company engaged in semiconductor circuit board testing in Minhang District, Shanghai, told the 21st Century Business Herald in mid-April that Shanghai has always been one of the largest chip design bases in the country and has brought a steady stream of orders to the company in the past.

However, the sudden outbreak disrupted the original rhythm. "Now the materials of the design company cannot come in, and the projects we have done well cannot come out." The staff of the company's laboratory further revealed that in order to prevent the loss of customers, the laboratories in other provinces and cities have recently worked overtime to undertake some orders in Shanghai. At the same time, the company also intends to expand its field laboratories.

Due to the short-term imbalance between supply and demand, many companies in Shanghai are also planning to adjust customer relationships to change the status quo. Feng Tianjun reminded that enterprises should pay attention to the negative effects brought about by the "bullwhip effect", that is, the demand variation is amplified to prevent the layout direction from being wrong. "We should still focus on alleviating the current contradiction between supply and demand, enhancing the resilience of cooperation, and stabilizing the form of the supply chain." For example, the dominant party who takes the lead in price increases can moderately make profits and transfer part of the benefits to suppliers to help the latter tide over the difficulties, so as to maintain the stability of the supply chain. ”

In the first quarter of 2022, the global semiconductor industry has already experienced a supply-side imbalance caused by supply chains. Due to the oversupply of some chip products, prices have also fallen sharply.

In addition to affecting people's livelihood and supply and demand, logistics supply may also face a longer-term layout shift. How does the logistics community assess the future situation today? What should industrial manufacturers do to prepare?

Xu Bo pointed out that the re-integration of the logistics industry has formed an unstoppable trend in the world. He believes that in the future, the warehousing link will develop in a more decentralized direction, so as to achieve stable prices and positions. The issue of supply chain transfer is also worthy of attention.

In fact, the epidemic has also brought a "stress test" to the logistics industry. Xiang Feng, vice president of YTO Express, believes that the current risk control should give more consideration to the impact of the "Ucca" phenomenon. Sorting, packaging, labeling and other labor-intensive, but also facing relocation to other provinces and cities, process reconstruction and other issues.

Experts suggest that in the future, companies should consider reshaping production processes, including improving product standardization and modularization, developing alternative suppliers, increasing inventory buffers for key components, and increasing variable capacity.

At present, the resumption of work and production of enterprises in Shanghai is being carried out, and the normalization of nucleic acid testing is also being carried out in multiple stages. In the shade of summer, traffic and pedestrians are also recovering. The logistics industry, which is waiting to be restarted, is also facing a new life.

Editor: Lu Taoran