Developing modern supply chain to help deepen supply-side structural reform
The report of the 19th National Congress of the Communist Party of China proposed "cultivating new growth points and forming new kinetic energy in the fields of high-end consumption, innovation leading, green and low-carbon, sharing economy, modern supply chain and human capital services". This is the first time that the CPC Central Committee put forward the concept of modern supply chain, which indicates that the development of "modern supply chain" has officially risen to a national strategy. At present, China’s economy has changed from a high-speed growth stage to a high-quality development stage, and it is in the key period of changing the development mode, optimizing the economic structure and transforming the growth momentum. In order to achieve high-quality economic development and build a modern economic system, it is urgent to develop a modern supply chain, play an important role in boosting supply-side structural reform, promoting optimal allocation of resources and improving economic quality and efficiency, foster new growth points and new kinetic energy, and promote quality change, efficiency change and power change of economic development.
Characteristics and development trend of modern supply chain
Modern supply chain is a concept corresponding to the traditional supply chain. It refers to an organizational form that takes customer demand as the guide, takes data as the core element, and uses modern information technology and modern organizational methods to efficiently integrate, optimize and coordinate upstream and downstream enterprises and related resources, so as to realize efficient coordination in the whole process of product design, procurement, production, sales and service. Compared with the traditional supply chain, the modern supply chain has the characteristics and trends of digitalization, intelligence, platformization, service, greening and globalization.
(A) Digitalization and intelligence have become the remarkable features of modern supply chain.
The rapid development and application of modern information technology has promoted the development of supply chain to a new stage of smart supply chain which is deeply integrated with Internet and Internet of Things. Digitalization, networking and intelligence have become the remarkable features of modern supply chain. Digital empowerment endows the supply chain with new intelligent features of big data support, networked sharing and intelligent collaboration, which greatly improves the efficiency of supply chain collaboration and significantly reduces the cost of supply chain. According to the data, an effective digital supply chain as a whole can promote the income growth of enterprises by 10%, the procurement cost by 20% and the supply chain cost by 50%.
(B) Internet platform has become a new form of modern supply chain development.
With the deepening application of modern information technologies such as big data, Internet of Things, cloud computing, artificial intelligence, blockchain, etc. in the supply chain, the organizational form of modern supply chain has gradually extended from multinational corporations to platform-based organizations, and platformization has gradually become an important feature of modern supply chain development. The cross-industry, cross-regional and cross-border industrial supply chain platform with platform-based enterprises as the core realizes resource integration and complementary advantages by cooperating with different countries, different regions, different industries and different enterprises, and builds a close cooperative global supply chain network, realizing integrated supply chain operation, and radiating and driving more and more upstream and downstream enterprises to develop in the direction of scale, clustering and specialization. At the same time, the upstream and downstream related enterprises at different levels form a supply chain ecosystem with cross-border integration, platform sharing and common prosperity under the integration of supply chain platforms, and promote the evolution of platform-based organizations to ecological organizations.
(C) Supply chain service has become a new service industry.
The reform of modern information technology and the deepening and refinement of industrial division of labor have promoted the separation of upstream R&D, raw material procurement, design and downstream brand management, sales, logistics and other service links, promoted the rapid development of supply chain service outsourcing, and promoted the innovation of supply chain service format to become an important trend of modern supply chain development. At present, the number of enterprises providing specialized supply chain services in China is booming and the types are constantly enriched, and a number of integrated supply chain service platforms represented by Yi Yatong and Yi Datong have been formed.
(D) Green supply chain management has become the social responsibility of enterprises.
With global warming, environmental pollution and other major ecological and environmental problems becoming increasingly prominent, green and sustainable development has become a global topic. Under the concept of sustainable development, cross-country cross-regional cross-domain supply chains are gradually required to be sustainable and responsible for society and ecology. In 2015, the "green supply chain" entered the APEC issue and became one of the most concerned topics in the world. At present, many multinational companies regard "green supply chain" management as an important task of social responsibility, and incorporate sustainable development and environmental protection into supply chain management. For example, since 2011, Huawei has included the environmental search of the non-governmental organization Public Environmental Research Center (IPE) in the supplier audit list and self-inspection form, requiring suppliers with problems to rectify within a time limit and strive to build a green supply chain. In 2017, Huawei ranked sixth in the IPE green supply chain CITI index, and domestic enterprises ranked first.
(E) The global economy has entered the era of supply chain coordination.
With the development of economic globalization and the escalation of regional economic and trade agreements, supply chain management has also developed from cooperation among domestic enterprises to cooperation among regional or global enterprises. Especially with the development of Internet technology, the mode of division of labor in the world has changed from industrial division based on comparative advantage to supply chain division based on factor advantage, and multinational enterprises participating in global division of labor have formed a reciprocal interdependence. In recent years, influenced by the rise of trade protectionism and other factors, although the process of economic globalization has slowed down, the global value chain and supply chain division system have been formed, and the trend is irreversible. In the global supply chain coordination system, the trade and investment among countries in the world are increasingly interrelated and influenced each other. You have me and I have you, and the interests are blended and mutually beneficial.
The important role of modern supply chain in supply-side structural reform
Promoting supply-side structural reform is a major strategic deployment made by the CPC Central Committee with the Supreme Leader as the core to profoundly grasp the new global economic pattern and the general trend of China’s economic development. It is an innovative measure to solve the problems of imbalance between supply and demand and overcapacity in economic development and lead China’s high-quality economic development. As a bridge and link between the supply side and the demand side, modern supply chain is an important starting point for promoting the structural reform of the supply side in a market-oriented way. The development of modern supply chain is conducive to the use of advanced supply chain management technology and mode to replace the inefficient and extensive operation mode in the past, promote cost reduction and efficiency improvement, optimize supply structure, supply quality and supply efficiency, and promote high-quality economic development.
(A) is conducive to achieving the goal of cost reduction
For a long time, China’s logistics cost is high. In 2017, the ratio of total social logistics cost to GDP in China was 14.6%, which was 3.4 percentage points lower than that in 2012, but still 5-6 percentage points higher than that in developed countries such as the United States. At present, China is at the critical stage of the transition from high cost and high growth to low cost and medium-high growth. With the deepening of supply-side structural reform, "cost reduction" has entered the stage of tackling difficulties. To further reduce enterprise costs, there must be new ways and new ideas. Modern supply chain can effectively reduce enterprise operating costs and transaction costs by integrating all kinds of resources, optimizing internal and external business processes, and strengthening the whole process and whole chain collaborative management from R&D and design, manufacturing to after-sales service. By integrating and optimizing the supply chain, Haier promoted business process reengineering, which reduced the enterprise inventory by 33%, manufacturing cost by 10%, management cost by 6% and timely delivery rate by 35%.
(B) conducive to improving the quality and efficiency of supply.
Judging from the stage of economic development, since China’s industrialization process has entered the middle and late stage of industrialization, the gap between the general technical level and advanced countries has been greatly narrowed. In this case, to improve the supply structure and create new supply, the most important thing is to improve the supply efficiency. The key to improving efficiency lies in promoting the optimal allocation and integrated innovation of factor resources by market-oriented means. With the help of information technologies such as Internet, cloud computing, big data and artificial intelligence, modern supply chain promotes enterprises to make timely and accurate market reactions, make rational decisions, arrange production in an orderly manner, and get through all links from front-end design, production to circulation and final consumption, greatly improving production efficiency and circulation efficiency, and promoting accurate matching between supply and demand and industrial transformation and upgrading. According to McKinsey’s research report, China’s labor productivity can be increased by 15%-30% by promoting operational transformation through supply chain and other means. ZARA, an internationally renowned chain retail brand, can grasp the sales situation and inventory changes of every store in the world at any time through an efficient supply chain system, and respond quickly to the market consumption trend, and complete the planning and design of new clothes to the factory within one week.
(C) conducive to the cultivation of new economic kinetic energy
At present, China’s economy has changed from a high-speed growth stage to a high-quality development stage, and it is in the key period of changing the development mode, optimizing the economic structure and transforming the growth momentum. Affected by the increasingly complex and changeable international economic situation, China’s economy is facing shrinking exports, overcapacity in traditional industries and bottlenecks in the development of traditional kinetic energy. It is urgent to deepen structural reform on the supply side and cultivate new kinetic energy. Modern supply chain, through resource integration and optimal allocation, is conducive to promoting the development of new formats and new models and promoting the transformation and upgrading of traditional industries, and is a new driving force and engine for economic development. On the one hand, in the process of integrated development of manufacturing industry and service industry, by promoting cross-border integration, optimization and innovation of supply chain, new services and business models can be generated, specialized supply chain services can be formed, and new economic growth points can be cultivated. On the other hand, cultivating new kinetic energy of economic development should not only focus on the development of new formats, new industries and new models, but also attach importance to the transformation and upgrading of traditional industries. In the process of upgrading traditional industries, by transforming the traditional supply chain and realizing the digitalization, networking and intelligent development of the supply chain, it can promote the transformation and upgrading of traditional industries and form new kinetic energy for economic development.
(4) It is conducive to filling the shortcomings of industrial development.
In the international division of labor system, China has long been "locked" in the low-end link of the global value chain led by multinational companies in developed countries. In recent years, under the influence of a new round of scientific and technological revolution and the implementation of the "re-industrialization" strategy in Europe and America, the international economic and trade pattern has undergone fundamental changes, and international industrial transfer has formed a trend of "high-end links returning to developed countries" and "low-end links transferring to lower-cost areas such as Southeast Asia, South Asia and Africa", which has promoted the accelerated reconstruction of global value chains led by multinational companies from developed countries. As a result, the expansion space for China to continue to participate in the global value chain by taking advantage of traditional advantages is getting smaller and smaller, and the original model of global value chain development dominated by developed countries is unsustainable. It is urgent to explore new development models and promote the industry to extend to the middle and high end of the global value chain. By organically integrating all links in the global value chain, modern supply chain ensures the seamless connection of logistics and finance related to industries, promotes the coordinated development of upstream and downstream manufacturing industries, and gradually improves the front-end design, R&D, procurement and back-end brand, logistics, marketing, finance and other service capabilities, which is beneficial for Chinese enterprises to get rid of their dependence on multinational companies in developed countries, promote the manufacturing industry to move towards the middle and high end, and build a world-class advanced manufacturing cluster.
Developing modern supply chain to help supply-side structural reform
To give full play to the role of modern supply chain in promoting supply-side structural reform, we should take market demand as the guide and modern information technology as the support, accelerate the in-depth application of modern supply chain in various industries and fields, build and optimize the supply chain systems of key cities, industries and enterprises, cultivate new formats and models for supply chain development, promote the digital, platform-based, service-oriented and green development of supply chain, form new economic growth points and new kinetic energy, and promote the innovative development, transformation and upgrading of the real economy.
(1) Cultivate a digital and professional supply chain platform to create new kinetic energy for economic development.
Digital and professional supply chain platform is the core force to promote the development of modern supply chain. It is necessary to conform to the development trend of digital economy, accelerate the application of information technologies such as Internet of Things, cloud computing, big data and blockchain in supply chain management, encourage powerful enterprises to build a digital and professional supply chain platform, build a smart supply chain system with big data support, networked sharing and intelligent collaboration, realize the whole system, full life cycle and all-round linkage with software and hardware manufacturing resources of upstream and downstream enterprises, improve the informatization, networking and intelligence level of upstream and downstream enterprises in the supply chain, and improve the rapid response speed.
Digital and specialized supply chain platforms should focus on cultivating three categories:
The first is to cultivate a comprehensive service platform for the supply chain. Encourage third-party logistics enterprises and foreign trade enterprises to transform into supply chain service enterprises, build a comprehensive supply chain service platform, integrate high-quality resources from different regions, industries and enterprises, comprehensively cover the upstream procurement network, the midstream warehousing circulation network and the downstream sales service network of the industrial chain, and provide supply chain integration services integrating transactions, financing, settlement, logistics distribution, import and export agents, brand cultivation and marketing promotion, so as to realize resource integration, complementary advantages and coordinated sharing between the upstream and downstream of the industrial chain.
The second is to cultivate a collaborative supply chain platform for production and marketing. Guided by the demand side, enterprises are encouraged to explore and develop a collaborative supply chain platform for production and marketing, build a large-scale customized supply chain and an intelligent manufacturing supply chain, drive the supply, procurement, stocking and distribution system with accurate demand forecasting, strengthen the synergy of supply chains, improve the response speed and synergy level of raw material procurement, production, logistics and distribution, and promote the integrated development of production and marketing.
The third is to cultivate a supply chain financial service platform. Encourage supply chain service enterprises and related logistics enterprises to cooperate with banks and e-commerce platforms, build digital, intelligent and visual financial services based on the risk control and credit system formed by data sharing of all parties involved, provide online credit, factoring, guarantee, settlement, wealth management and other comprehensive financial services for small and medium-sized enterprises in the upstream and downstream of the supply chain, reduce supply chain financing costs and improve the efficiency of supply chain financial services.
(B) Promote the innovation and application of industrial cluster supply chain, and improve the industrial supply chain system.
Since the reform and opening up, China has set up a number of industrial parks, such as economic and technological development zones, high-tech industrial parks and customs bonded zones, which have effectively promoted the development of industrial agglomeration in China, and formed a number of influential industrial clusters at home and abroad in the Yangtze River Delta, Pearl River Delta and Bohai Rim. However, in recent years, with the rising factor cost and the implementation of "internet plus Strategy", the problems faced by traditional industrial clusters in China, such as squeezed development space, imperfect industrial chain and weak competitiveness of clusters, have become increasingly prominent. It is urgent to strengthen the innovation and application of supply chain in industrial clusters, effectively improve industrial synergy and promote industrial transformation and upgrading. Therefore, on the one hand, it is necessary to build various supply chain collaborative platforms around the common needs of enterprises in industrial clusters in product design, material procurement, manufacturing, inspection and testing, logistics and marketing, and improve the industrial supply chain system through collaborative design, collaborative procurement, collaborative manufacturing, collaborative logistics and financial services, so as to promote the mutual complement and common development of online platforms and offline industrial clusters. On the other hand, it is necessary to give full play to the supply chain resource integration and service capabilities of leading enterprises in different industrial clusters, and design, plan, control and optimize the logistics, business flow, information flow and capital flow in the supply chain, so as to promote the coordinated development of upstream and downstream enterprises and rapidly improve the innovation and application level of the supply chain.
(C) Promote enterprises to implement green supply chain management and promote industrial green transformation and upgrading.
Promoting enterprises to implement green supply chain management and build a green supply chain system is the core meaning of practicing the concept of green development and deepening the structural reform of supply side. At present, the development of China’s green supply chain is still in the initial exploration stage. Compared with developed countries, the awareness of green management of Chinese enterprises is relatively weak, and the environmental pollution caused by various logistics activities in the supply chain is still serious. Take the packaging recovery rate as an example, there is a big gap between China and developed countries. The data shows that in 2017, the actual recovery rate of cardboard and plastics in China’s express delivery industry was less than 10%, and the overall recovery rate of packaging was less than 20%. Most of these packages were directly sent to landfill sites, which brought great pressure to the urban environment. In some developed countries, the recycling rate of cardboard packaging is about 45%, while the recycling rate of plastic packaging is about 25%.
Therefore, we should take industry and enterprises as the core, speed up the construction of a resource-saving and environment-friendly procurement, production, marketing, recycling and logistics system, formulate strict green product standards, explore the establishment of a unified green product standard, certification and labeling system, and realize the green development of the supply chain. On the one hand, we should take enterprises as the core, implement green supply chain management, encourage enterprises to give priority to purchasing and using energy-saving and water-saving equipment, promote clean production and green manufacturing, produce green energy-saving and environmental protection products, expand the supply of green products and improve the quality of green products. On the other hand, it is necessary to build a green supply chain with key industries as the core and promote industrial transformation and upgrading. In agriculture, we should use green technology to protect and improve the agricultural ecological chain, establish and expand the green supply chain of agricultural products, vigorously develop agricultural circular economy, promote the organic and pollution-free development of agriculture, and realize the sustainable growth of agricultural economy. In the manufacturing industry, we will promote green supply chain management in industries such as electronic appliances, automobiles, steel and textiles, and promote the formation of an industrial supply chain with high technology content, low resource consumption and less environmental pollution through green transformation of product design, raw material selection, manufacturing process, logistics, recycling and final disposal, and promote the green transformation and upgrading of the industry. In the service industry, we should focus on the circulation link closely related to production and consumption, adopt modern information technology and management methods to transform the traditional circulation mode, continue to implement demonstration projects such as green procurement, green marketing and green shopping malls, encourage express delivery enterprises to develop recyclable packaging materials, and promote"Green Circulation Revolution" guides consumers to consume green.
(D) Promote the integration of advantageous industries into the global supply chain and help "de-capacity" and "fill shortcomings"
Seize the opportunity of the "Belt and Road" construction and international capacity cooperation, actively promote enterprises to deeply participate in global industrial chain and value chain competition, cooperation and division of labor, deeply integrate the global supply chain system, promote the "going out" of domestic excess capacity, actively build a global supply chain led by China enterprises, and enhance the position of China industry in the global value chain. First, combined with the actual situation of industrialization stage and industrial development in countries and regions along the Belt and Road, we will accelerate labor-intensive industries such as clothing, shoes and hats and capital-intensive industries with overcapacity such as steel, coal and cement to help "de-capacity". The second is to promote the transfer of advantageous technology-intensive industries such as electronic information and equipment manufacturing to countries along the route. By promoting the in-depth cooperation of the upstream, middle and downstream industrial chains, the "Belt and Road" industrial cooperation will be extended from the processing and manufacturing links to the high-end links in the global value chain such as cooperative research and development, joint design, marketing and brand cultivation, so as to build a global supply chain system with China’s initiative, complementary advantages and mutual benefit. The third is to promote the construction of border economic cooperation zones, cross-border economic cooperation zones and overseas economic and trade cooperation zones along the "Belt and Road", encourage enterprises to set up overseas distribution and service networks, logistics distribution centers, overseas warehouses, etc., establish a supply chain system based on the local market, improve the ability of global supply chain coordination and resource allocation, and create a more globally competitive industrial cluster.
(Author: Institute of Circulation and Consumption, Institute of International Trade and Economic Cooperation, Ministry of Commerce)