How to fix supply chain cracks

●Case study

The supply chain is an interest chain composed of manufacturers, suppliers and retailers that provide raw materials, parts, products and services to each other. In this chain, only upstream and downstream Each enterprise establishes a strategic alliance relationship to ensure the interests of all parties, in order to make all links unimpeded.

Cooperation Factors

Modern management is the management of division of labor and cooperation, division of labor must have cooperation, and the basis of cooperation is the sharing and win-win of interests. As a section of different value-added links in the supply chain, ignoring the interests of the middle and lower reaches of the supply chain will inevitably lead to the destruction or even interruption of the supply chain cooperative relationship. The "hometown cow" of a refrigeration equipment company in Foshan thinks so.

Without cooperation, there is no future. "Hometown Niu" believes that the main manifestation of Gome's lack of emphasis on cooperation is that it repeatedly reduces the profit margins of partners. He said that price wars are only one of the many ways of competition, and Gome regards price wars as the main or even the only way of competition, repeatedly compressing the profit margins of partners. This is too extreme and is not conducive to the cooperation between the two parties. .

"Yin Tianqiu" from a technology company also believes that such an approach is a detrimental thing in the long run: "Because it is a buyer's market, blindly lowering the purchase price and delaying payment even The method of arbitrarily adjusting prices seems to be profitable in the short term, but in the long run, it will not only damage the interests of manufacturers and agents, but also be very unfavorable for their own long-term development."

Learn from Walmart and suppliers The operation methods of many retail chain enterprises in cooperation with my country are more or less imitating the international retail giants like Wal-Mart, relying on the advantages of low prices, complete varieties, and wide coverage of chain stores to occupy the commanding heights of the market. It should be said that Wal-Mart has a bad reputation for cooperation with suppliers, but it is worth thinking about why it has lowered prices so fiercely, and suppliers who are willing to supply Wal-Mart are still rushing? "dxz" from an electronics company believes that Wal-Mart has the following practices for reference:

First of all, although Wal-Mart's price reduction methods are fierce, they are not blindly and viciously reducing prices, nor do they only choose suppliers with the lowest quotations. The fact is In order to avoid malicious competition from vicious competitors, the lowest quotation is often not necessarily able to get orders. They will definitely give suppliers a reasonable profit margin, which is the result based on accurate cost accounting, not an unattainable goal, and each supplier knows it well.

Secondly, once incorporated into the Wal-Mart supply system, there are usually huge orders, which fully reflects the principle of small profits but quick turnover.

Third, once an order is placed, a letter of credit will be issued. And it is first-hand delivery, first-hand payment, and never in arrears (automatic payment). Of course, the precondition is delivery according to quality, quantity and schedule.

Fourth, Wal-Mart's promotional activities (such as $5 a color TV, etc.) are entirely its own marketing activities, and have nothing to do with suppliers, and will not pass on relevant costs to suppliers.

Fifth, the products ordered by Walmart are basically best-selling products, especially the products ordered repeatedly. Usually Wal-Mart's buyers will often communicate with suppliers, suggesting that certain market demand products be developed, because they are most sensitive to the market's response. By developing products based on market feedback, it is certainly easy to win the market. This close relationship between merchants and suppliers is also one of the important reasons for the rapid development of Wal-Mart.

Sixth, Wal-Mart has a set of supplier management methods, which evaluate the quality every year. Those who are rated as excellent suppliers can enter Walmart's information management system to keep abreast of the sales of their products and make suggestions for timely replenishment (additional orders).

Even if this is not possible, "Hunan Laogao" believes that Gome should improve the satisfaction of suppliers through various means, at least to form a relationship of mutual understanding.

Internal Management and Market Factors

To completely eliminate the phenomenon of supply chain breakage, Gome also needs to strengthen the standardization of its own management.

First, improve the cost control system through internal management. "My heart is flying" from a company in Guangdong believes that Gome should increase its efforts to establish its own ERP system, so that the logistics, capital flow and information flow of the company can be fully and efficiently combined to reduce various operating costs. "Haihong" from Shandong also believes: "The real low price should not only be made on these special machines that lose money, but should focus on internal management, especially strengthening the management of the value chain. Reducing operating costs to provide real benefits to consumers is fundamental, and this is also conducive to establishing a better relationship with supply chain partners."

The second is to strengthen the information circulation mechanism. "Hunan Laogao" suggested using modern network technology to make the inventory of commodities reflected in real time, while severely punishing bureaucracy and delegating the approval authority for small payments. "Feby" from Nanjing also suggested that Gome should formulate a reasonable process to improve efficiency, so as not to increase the operation cycle due to complicated approval procedures.

The third is to improve the service quality of personnel. "My heart is flying" that Gome should use its own personnel more than the manufacturer's promotion personnel. He analyzed that an important feature of Wal-Mart is that the awareness and quality of staff services are very high, thus forming a strong brand advantage. From the perspective of cost, Gome uses a large number of manufacturers' promotional personnel, which saves costs in the short term, but brings certain difficulties to the formation and instillation of its own corporate culture and the management and assessment of personnel.

The "Northwest Wind" from a firm in Xinjiang suggested that the professional quality of purchasing personnel should be improved in particular. He said: "In the eyes of most dealers, the procurement of hyperterminals is not specialized enough, it is too big, and it is difficult to communicate." He also suggested strengthening the training of sales staff within the mall. He believes that the proportion of special machines in the sales ratio is so large that there is a problem with sales skills.

Another point to note is whether Wuxi Gome's supply chain disruption is related to the local market. "Hunan Laogao" concluded that there are three reasons for the supply chain breakage, one is supplier dissatisfaction, the other is poor information flow, and the third is destructive competition strategy. He believes that all Gome stores have the above problems, why is only the supply chain in Wuxi broken? Therefore, he believes that the following questions should also be considered: How much mobile phone accounts for the 2 billion home appliance market? What are the consumption habits of Wuxi people? How about other opponents? Does the sales of mobile phones in Wuxi have their own characteristics? Is it a mistake to choose the location in Wuxi or the positioning of the Wuxi store?

"Haihong" believes that in general, strengthening internal skills, reducing channel costs, management costs, strengthening value chain management, and doing well in their own market positioning are the keys to winning in the future market. Otherwise, it will be like what "Hunan Lao Gao" said: "The price war can only be used for a while. There will always be times when the big shop bullies the customers."

This article is organized by Marisa Wang , for more case studies and online discussions, please visit the CEConlines website (www.cec.globalsources.com).