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    A Glance at the Supply Chain, Supply Chain Management and Relevant Services

    Source: Creation date:2019-06-01 Clicks:

    Preface: all kinds of supporting polices are launched for the supply chain industry since 2017. The State Council enacted and issued the Guiding Opinions on Promoting the Supply Chain Innovation and Application (“the Opinions”), in which the supply chain is leveled up as one of China’ national strategies. It is clearly specified in the report at the 19th CPC National Congress of the Communist Party of China that we should work faster to foster new growth areas and drivers of growth in medium-high end consumption, innovation-driven development, the green and low-carbon economy, the sharing economy, modern supply chains, and human capital services. This paper will show you what are the supply chain and supply chain management, and how the supply chain management works.

     

    All kinds of supporting polices are launched for the supply chain industry since 2017. The State Council enacted and issued the Guiding Opinions on Promoting the Supply Chain Innovation and Application (“the Opinions”), in which the supply chain is leveled up as one of China’ national strategies. It is clearly specified in the report at the 19th CPC National Congress of the Communist Party of China that we should work faster to foster new growth areas and drivers of growth in medium-high end consumption, innovation-driven development, the green and low-carbon economy, the sharing economy, modern supply chains, and human capital services. This paper will show you what are the supply chain and supply chain management, and how the supply chain management works.

     

    What’s the Supply Chain?

     

    What’s the supply chain? According to Chinas national standard of Logistics Terms (GB/T18354-2006), supply chain refers to the demand chain network jointly established by the upstream and downstream enterprises for the purpose of delivering products or services to end users during production and circulation.”

    In the Guiding Opinions on Promoting the Supply Chain Innovation and Application issued by the State Council on October 13, 2017, supply chain is defined as “a customer demand-oriented organizational form that aims to improve the quality and efficiency and to realize efficient coordination in the whole process of product design, purchasing, production, sales and service through resource integration.”

    Broadly speaking, the product supply chain refers to a process that the product is delivered from the upstream supplier to the downstream users via manufacturing, processing, transportation, warehouse, marketing and many other links. There is a typical example: iron ores and coal excavated from the mine are transferred to steel mills after processing, transportation and marketing. The steel mill will then produces steel products with iron ore and coke, which will be then delivered to the  household electric appliance plant after processing, transportation and marketing. The household electric appliance plant then manufactures all kinds of household electric appliances with steel, plastics, glass and other raw materials, which will be then delivered to consumers.

    In the supply chain, products are delivered from the upstream suppliers and their suppliers to the downstream customers and their customers. For example, steel products will also be sent to the automobile manufacturers in addition to household electric appliance plants, thus forming a chain network integrating multiple supply chains. It should be noted that what circulate in the supply chain are not only products/ physical items, but also diverse information like supply-demand data and cash flow (for exchange of products), so the supply chain can be regarded as a product chain, an information chain and a capital chain. In addition to products, the supply chain also applies for services. For example, in the logistics industry, cargo owners place orders for transportation services from the NVOCC platform which acquires transportation services from the fleet or individual vehicle owners. The fleet or vehicle owners then cover insurance from insurance companies, and buy repair and maintenance services from repair shops. This is a service supply chain.

     

    Whats the Supply Chain Management

     

    What’s the supply chain management? According to Chinas national standard of Logistics Terms (GB/T18354-2006), supply chain management refers to planning, organization, coordination and control of all the activities involved in the supply chain.

    Generally speaking, supply chain management is the management of information flow, product flow, capital flow and business flow (i.e. transaction objects) in the supply chain, as well as planning, purchasing, manufacturing, delivery, recycling and other activities (i.e. planning, organization, coordination and control) of enterprises. Moreover, supply chain management is not only internal management of an enterprise, also management of logistics and business activities between enterprises. (Frontier Theory of Supply Chain by Ding Junfa).

    What are the contents of supply chain management? Supply Chain Management Process Standards by the Council of Supply Chain Management Professionals (CSCMP) will show you the answer.


    Planning

    Purchasing

    Manufacturing

    Delivery

    (1) Supply chain

    (2) Supply-demand coordination

    (3) Inventory management

    (1) Strategic purchasing

    (2) Supplier management

    (3) Forward logistics management

    (1) Product process

    (2) Partnership and cooperation

    (3) Product or service customization

    (4) Manufacturing process

    (5) Lean manufacturing

    (6) Basic framework of manufacturing

    (7) Support process

    (1) Order management

    (2) Warehouse/ execution

    (3) Customization/ delay

    (4) Delivery facilities

    (5) Transportation

    (6) E-commerce delivery

    (7) Customer/ partnership management

    (8) After-sales technical support

    (9) Customer data management

    Recycling

    (1) Goods receiving and warehousing

    (2) Transportation

    (3) Repair and renovation

     

    (4) Communication

    (5) Customer expectation management

     

    Execution

    (1) Strategy and guidance

    (2) Competiveness benchmark

    (3) Product/ service innovation

    (4) Product/ service data management

    (5) Process and control

    (6) Measuring

     

    (7) Technologies

    (8) Business management

    (9) Quality

    (10) Safety

    (11) Industrial standards

     

     


    Whats the Supply Chain Management Service?

     

    So, what’s the supply chain management service?

    In the latest national standard of Industrial Classification and Codes for National Economic Activities (GB/T4754-2017), the supply chain service is defined as “a service that designs, plans, controls and optimizes the logistics, business flow, information flow and capital flow in the supply chain based on modern information technologies, and integrates single and decentralized order management, purchase execution, customs declaration and tax refund, logistics management, financing, data management, trade commerce, settlement, etc.” And the supply chain management services are classified into separate statistical categories: Business Services -7224- Supply Chain Management Service.

    Here, the Eternal Asia’s supply chain services are introduced for better understanding.

    1.  Purchasing Platform: Purchasing Execution Service + VMI + Integration of Purchasing Resources

    Thanks to the powerful resource integration capacity, the purchasing platform of Eternal Asia can accurately identify customers’ needs, prepare customized service plans, connect upstream manufacturers and downstream customers as instructed by the customer, execute purchasing, custom clearance, international and domestic logistics, goods delivery and other measures, and offer services regarding purchasing, purchasing execution and purchasing resource integration by integrating the capital flow, information flow, business flow and logistics in combination with supporting  financial services.

    Purchasing execution service refers to helping enterprises purchase in a transparent manner, improve the efficiency of purchasing execution, and avoid out-of-control costs caused by various problems in the purchasing process. VMI helps enterprises strengthen the coordinated management of suppliers and their inventory, realize zero inventory management, improve the turnover efficiency of suppliers’ production inventory, and prevent inventory backlog caused by the gap between planned production and actual sales. Integration of purchasing resources refers to integrating the advantageous product resources to help domestic and foreign merchants purchase products globally. All above services help customers save costs, reduce manpower input and focus more on formation of core competitiveness during purchasing.

    For example, Company H is a world-renowned manufacturer of household electrical appliance who needs to contact with many suppliers due to poor order processing efficiency caused by great varieties of raw materials to be purchased. What’s worse, it also faces such challenges as poor delivery efficiency, complex settlement and high cost as the supplier delivery, international and domestic transportation, storage, customs clearance, foreign exchange payment and other links are not unified, making its supply chain uncontrollable. Eternal Asia provides Company H with innovative supply chain services that cover purchasing execution + supplier management inventory + JIT after in-depth investigations, analyses and argumentation on its supply chain system. Thanks to these services, Company H can inquire about the order execution information, inventory entry and exit records and in-stock status in Eternal Asia’s VMI system in real time. The original raw material warehouse is also closed. As an alternative, Eternal Asia provides Company H with warehouse management and goods distribution services, dramatically reducing its storage costs, optimizing the purchase order management and shortening the purchase order processing cycle.

     

    Company H achieves great success in supply chain management as a whole thanks to the cooperation with Eternal Asia

     

    First, all the suppliers in China are included in VMI. Thanks to Eternal Asia’s ERP system, suppliers can query the inventory situation in real time and replenish goods in a timely manner, improving the response speed in dispatching raw materials. The rapid and efficient local logistics services of Eternal Asia help Company H achieve JIT supply of raw materials on line, thus ensuring the benign operation of its production line.

     

    Second, Most of the inventories are transferred to Eternal Asia for management. The original warehouse can be reconstructed into a production line as all conditions are satisfied, thus effectively expanding its production scale, promoting the sales and occupying more market shares.

     

    Third, the ownership of goods will be transferred to Company H only after Eternal Asia delivers the goods to Company H, realizing zero occupation of inventory and funds.

     

    Fourth, such measures as integrated custom clearance and batch transportation are adopted as all the goods are transported by Eternal Asia in a unified manner, thus reducing the costs incurred in supply chain.

     

    Fifth, Eternal Asia also offers financial services during purchasing to satisfy the customer’s capital demand, thus relieving the financial pressure and improving the turnover rate of funds.

     

    2. Sales Platform: Platform + Distribution + Value-added Services

    Eternal Asia attempts to establish a sales platform between manufactures and distributors with its services covering China’s cities at all tiers, to create a value-added distribution supply chain operation mode and offer such services as sales execution, distribution, channel management, marketing and supply chain finance, thus helping enterprises achieve flattened channels, improve competitiveness and explore more markets.

     

    Sales execution + DC services: it is aimed to enterprises realize the buffer between production and sales, enhance the flexibility of enterprise supply chain, better serve distributors nationwide, and realize the unification of business flow, logistics, capital flow and information flow.

     

    Distribution services: the sales platform links brand manufacturers and downstream channel providers, establishes a supply chain network covering China’s cities at all tiers, establishes and applies an E-commerce platform to provide whole-process supply chain management services, creates a value-added distribution supply chain operation mode, and helps partners break through channel management difficulties, and improves their market competitiveness.

     

    Value-added services: Eternal Asia can provide customized services such as channel management, channel expansion, marketing, media promotion and supply chain finance considering customers’ needs, thus helping enterprises upgrade their brands and develop incremental businesses.

     

    For example, Company R is a world-renowned international brand manufacturer, and its agents pick up goods at its overseas pick-up points. It is mainly engaged in such businesses as international transportation, customs clearance and foreign exchange payment. However, it is difficult to control the timeliness, cost and transportation information of the supply chain after shipment, and supervise the business operation of agents and the market price of products. Other challenges include heavy load in delivery and settlement of goods, complicated operation management, poor performance in E-commerce platform control and bargaining, and slow expansion of diversified channels. To offer satisfactory solutions for above problems, Eternal Asia made in-depth investigation and analysis on Company R’s supply chain. Finally, a satisfactory is presented: Company R focuses on product research and development, with all its supply chain links for products in China are outsourced to Eternal Asia. Eternal Asia provides Company R with customized supply chain services such as overseas goods collection and customs clearance, sales execution, channel expansion management, market price management, promotion planning, product after-sales services.

    Eternal Asia uniformly arranges import customs clearance, standardizes product prices, shortens the customs clearance time to 1 day, and advances time for product launch, thus laying a solid foundation for earning more market shares. Facing such challenges as heavy load in delivery and settlement of goods, complicated operation management and high operation cost caused by the huge agent system, Eternal Asia has flattened the channel and directly connected with various agents on supply and settlement of goods, dramatically reducing the total commodity circulation cost. In addition, Eternal Asia adopts the fine management mode on distributors and unifies the supply price and barcode management, effectively avoiding the dilemma of price war among distributors and decreased profit space of each link. As a result, the annual business volume of traditional agents of Company R increased by multiple. Eternal Asia also leveraged vertical channel resources to assist Company R in developing E-commerce channels, exploring new channels and increasing customer channels and product sales. The business volume of Company R increased by 30% in the same year.

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