Many people mentioned that investment is considered to be a brand, and in fact, investment is ultimately the industry behind the brand, and the investment industry must understand the supply chain.
Editor’s note: This article is from WeChat public account “Qingshan Capital” (ID: cyanhillvc) < / a>, author Zhou Jianhong.
Dismantling a company that operates “goods”: whether it is brand, channel, or retail, online or offline, it actually includes both sides A and B.
A face to downstream customers, there are corporate customers and consumer customers, the core goal is to better “sell goods” (for more information on how to sell goods can refer to the previous Qingshan public number article: sales game | Aoyama said ). The B side is relatively “low-key” and needs to be managed through supply chain, with the goal of better “controlling goods.” “Sellers” and both “controlled goods” complement each other, are indispensable.
First of all, let’s talk about our understanding of the definition of supply chain management. Supply chain management should be “end-to-end” management, in addition to the so-called back-end product development, supplier relationship coordination, In addition to logistics warehousing, it should also include front-end consumer insight, customer relationship management and order fulfillment, which is a complex systematic project. Supply chain management includes the management of business flow, information flow, logistics, and capital flow.
In this article, let’s talk about the three dimensions of supply chain management.
Using dimensionality reduction methods to project a complex N-dimensional system of supply chain management into three-dimensional space, we can disassemble supply chain management into three dimensions, namely customer experience (from supply The customer experience at the chain perspective is somewhat different from the customer experience mentioned daily, cost structure and cash level.
Customer experience means what you can provideProduct type, quantity and difference, customer order satisfaction rate (to meet customer’s expected delivery time, location and quality), customer order flexibility (quantity frequency limit, order quantity, order modification).
Cost structure refers to the front-end business costs, including the purchase cost of goods, warehousing logistics costs, and order fulfillment costs.
Cash level refers to the level of working capital required. The most simplified definition is the inventory of goods + accounts receivable – accounts payable.
From each single dimension, each of the three dimensions has its own optimal direction. The more satisfied the customer, the better, the lower the cost, the less the cash is, the better. But in reality, the three dimensions interact with each other in the short term, and even mutually exclusive.
For example:
In order to reduce procurement costs, we need to find suppliers upstream, but the more upstream purchases, the earlier the order is required, and the upstream purchases require a larger number of purchases. Large, these will increase our average inventory level and capital occupation.
In order to improve the customer experience, we need a rich product type, quantity, difference and availability, which will increase our stocking inventory, while more product types and differences will also Increase the complexity and cost of purchasing, warehousing logistics, and order fulfillment.
In order to reduce capital use, we need to reduce inventory, reduce payment time downstream, and lengthen payment time upstream. Then the customer experience will encounter challenges and the cost of procurement will increase.
So in the short term we need to balance these three dimensions according to our resource endowment, development stage, market conditions and competitive situation.
The materialist dialectics tells us that the opposition and unity between things drives the progress and development of things. Then, from the medium and long-term perspective, do these three dimensions have a unified direction?
We can do a simple deduction. The customer experience affects the company’s revenue. The cost structure determines the company’s business cost. The difference between the two is the company’s operating profit. In addition to the cash level, it gets the working capital. Input-output ratio. The optimization of each of the three dimensions will lead to a larger return on working capital. From the above figure, the volume of the “triangular pyramid” becomes larger. Furthermore, we can say that the medium- and long-term unified direction of supply chain management “controlling goods” is the “maximization” of the return on working capital.
Understanding the short-term endogenous contradictions and the direction of the medium- and long-term reunification of the above three dimensions, we can guide us to analyze the various enterprises that operate “goods” from the perspective of supply chain. And assessment to determine the viability, competitive advantage and development trend of the business model.
Finally, we look at the executive organization structure of companies that operate “goods”. In general, there will be CEOs, marketing/market leaders, procurement/logistics/supply chain leaders, and financial leaders. In addition to the CEO, each has a clear function and goal (KPI).
-The marketing/market leader is responsible for business growth and customer satisfaction is of the utmost importance.
-The person in charge of procurement/logistics/supply chain is responsible for the procurement and delivery of goods, and reducing costs is the core.
-The financial controller manages the company’s cash flow and maintaining high liquidity is a priority.
It is conceivable that according to the short-term endogenous contradictions of the three dimensions of supply chain management, mutual “conflict” is like a commonplace, especially when the company’s growth slows down and faces fierce competition.
It is therefore necessary for the executive team of the company that operates the “goods” to establish a cognitive system for supply chain management. Clarify the mutual relationship between each other’s work focus in supply chain management, and understand the objective laws of the evolution of supply chain management capabilities to promote mutual understanding and cooperation.
The CEO should, in the short term, selectively tilt the three-dimensionality of the supply chain according to its endowment, different stages of development, market conditions and competitive situation, and at the same time build the ability of other dimensions to promote Long-term balanced development; in addition, the CEO should also consciously build an internal assessment system with key returns on capital to coordinate the functions and objectives of each business line.
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