Looking at the market, who is the pragmatic practitioner of "the integration of the two industries"?

Original Title: In-Depth Interpretation | 14 Departments Jointly Released Cases of In-depth Integration and Innovative Development of Logistics Industry and Manufacturing

In May 2021, the Economic and Trade Department of the National Development and Reform Commission commissioned the China Federation of Logistics and Purchasing to organize experts to publish a list of cases of deep integration and innovative development of the logistics industry. Including 50 typical cases and 60 shortlisted cases. The publication of this case aims to encourage a group of typical innovative and benchmarking and demonstration enterprises to accumulate and form reproducible successful experience under the background of the ever-increasing development trend of the integration of the logistics industry and manufacturing industry, and to explore the in-depth integration development model of the logistics industry and manufacturing industry in line with national conditions , To accelerate the pace of transformation and upgrading of the manufacturing industry, and provide strong support for the high-quality development of the real economy.

                     Picture: Public announcement of the official website of the National Development and Reform Commission of the People's Republic of China

The logistics industry and the manufacturing industry are deeply integrated, what does "deep" mean?

The logistics industry is a basic, strategic, and leading industry that supports the development of the national economy; the manufacturing industry is the main body of the national economy and the main source of total logistics demand for the entire society.

However, there are still many problems in the integrated development of my country's logistics and manufacturing industries that need to be resolved.

According to the analysis of China Logistics and Purchasing Network (hereinafter referred to as "China Internet of Things"), at present, many manufacturing enterprises' internal and external supply chain management and services cannot keep up with changes in demand. The level of logistics and information technology is low. The logistics industry is a manufacturing industry. The industry chain and supply chain lack one-stop solutions for providing services; at the same time, the logistics service manufacturing industry faces high costs, insufficient integration levels, insufficient scope, and lack of personalized services. Especially in the face of the sudden epidemic last year, the logistics industry has encountered problems such as delayed emergency response, mismatched supply and demand, and low efficiency. The logistics industry has a long way to go for the linkage of the manufacturing industry.

Through digital technology, it has become an increasingly urgent need to increase the efficient coordination between enterprises and between manufacturing and production services, and to enhance the competitiveness of enterprises.

Relevant data shows that due to the impact of the overseas epidemic, my country's total foreign trade exports reached 6.33 trillion yuan in the first April of this year, a year-on-year increase of 33.8%. From January to April this year, my country's trade surplus has historically exceeded one trillion yuan, reaching 1027.3 billion yuan. This is an increase of more than 66% year-on-year in 2019. This means that our country is moving from a "manufacturing country" to a "manufacturing power". The expansion of overseas markets has opened a new door for logistics companies, but it also puts forward higher requirements for the integration of logistics and supply chains.

In fact, the state has repeatedly introduced policy concepts to promote the coordinated development of the logistics and manufacturing industries. However, the “Implementation Plan” emphasizes the “deep integration” and “deep integration” on the basis of the “interaction between the two industries”. "Innovative development" and "integration of the two industries" are also the only way for domestic industrial upgrading and dual cycles.

Then, in the face of the challenges of globalization, industrial upgrading, and technological change, what is the significance of the integration of logistics and manufacturing, how traditional manufacturing and logistics recognize changes and trends, and find a path for transformation and upgrading is particularly important .

As we all know, traditional supply chain management is like a blind person, unable to realize visualization and digitization. Each link of the supply chain is in a state of fragmentation, forming an island on its own. There are interruptions in information transmission and low decision-making efficiency. For this, we need to use technological means to break Information islands realize the visualization of the whole process. Moreover, the current B2B supply chain market is still immature, with low management efficiency, and trivial and scattered. Only by realizing the interconnection between the upstream and downstream of the industry can this state be changed from the source.

Aim to cultivate a benchmarking enterprise for the integrated development of "two industries"

The "Implementation Plan" mentioned that it is expected that by 2025, a number of logistics industry manufacturing industry integration development benchmark enterprises will be cultivated, leading to a significant improvement in the level of integration of the logistics industry manufacturing industry.

At the level of promoting the integration and sharing of information resources, the state encourages the promotion of the integration and application of the industrial Internet in the logistics field, giving play to the demonstration and leading role of leading manufacturing and logistics enterprises, and promoting the application of industrial Internet identification analysis technology and smart logistics technology equipment based on the Internet of Things and cloud computing. The logistics industry Internet platform realizes real-time collection of information from upstream and downstream links such as procurement, production, and circulation, interconnection and sharing, and promotes the improvement of the integrated operation level of manufacturing and logistics.

At present, many well-known supply chain companies have increased their in-depth integration of logistics and manufacturing, and a number of industry innovation cases with benchmarking significance have emerged.

Among them, in the extremely challenging B2B industrial manufacturing supply chain field, JUSDA uses the "Sharp Global Supply Chain Management Service Innovation Case" to illustrate its active practice in the integration of the two industries. JUSDA is a leading benchmark enterprise in the industrial manufacturing sector. In 2019, it obtained the highest single financing in the B2B field of the logistics supply chain with a financing scale of 2.4 billion. In 2020, the total network revenue will exceed 13.4 billion.

It is understood that in recent years, JUSDA has been actively deploying digital full-chain enhancement technologies in the industrial supply chain field. It has completed the layout of localized teams and service capabilities in 15 countries, and its overseas revenue exceeded 50% for the first time last year. JUSDA has many successful cases in the "integration of the two industries". The plan reported this time is to cooperate with Sharp, Japan's largest home appliance company, to open up the entire chain from raw materials to manufacturing plants to cost shipments to consumers. This cooperation project with Sharp not only saved Sharp nearly 3 billion yen in cost, but also opened up Sharp's supply chain information data more effectively. It has become a model of the deep integration of manufacturing and logistics, and is very representative in this innovative case. 

                                                      Picture: JUSDA assists Sharp in completing the upgrade and transformation of the supply chain

As a world-renowned manufacturer of household electrical appliances, Sharp has launched countless "Japan's first" and "world's first" epoch-making products since its establishment. With the increasing complexity of Sharp's upstream and downstream supply chains, the global market continues to expand. , Sharp once again attracted a critical moment in the transformation and upgrading of the supply chain.

JUSDA fully integrates the upstream and downstream resources of the global supply chain of Sharp Inbound Logistic + Inprocess Logistic + Outbound Logistic (inbound logistics + in-plant logistics + ex-factory logistics + consumer logistics), providing everything from raw materials to factory manufacturing to brand owners Supply chain management services for the delivery of finished products. In terms of manufacturing procurement coordination, inventory management, and global delivery, Sharp and its upstream and downstream partners have opened up a new path for the deep integration of manufacturing and logistics.

At present, most of the 3PL companies, freight forwarders, and logistics carriers in the market can only assist companies in solving basic problems such as logistics cost control and transportation timeliness. At the end of the manufacturing supply chain, there are few supply chain management companies that can really help manufacturing companies and brand owners reduce inventory backlogs, capital occupation interest, and in-depth intervention in all links of the manufacturing company's supply chain in advance. This is where the 14 departments jointly issued a document emphasizing the importance of "the integration of the two industries".

In terms of manufacturing and purchasing coordination, Sharp has more than 200 core suppliers worldwide and more than 1,000 core materials. Relying on the digital management capabilities of the supply chain and based on the POM digital order management system, JUSDA has comprehensive information control over Sharp's sales forecasts, production plans, and procurement plans, and intervenes in advance in the management of manufacturing purchase orders and supplier stocking, according to the supplier stocking status, Factory production schedules, customer compliance timeliness requirements, pre-plan the transportation mode plan for the procurement of raw materials and delivery of finished products, and lock the transportation resources such as sea, land, air and rail. The JIT Global Control Tower can also flexibly dispatch resources according to the comprehensive needs of global customers and the overall conditions of the market, industry, traffic, weather, etc., so that Sharp can achieve the best cost under the premise of manufacturing full-process inventory JIT delivery. .

In terms of inventory management, JUSDA promotes the supplier-managed inventory (VMI) model for raw materials, strengthens the all-round management of finished products in the warehouse and a stock in transit, and flexibly utilizes containers, yards, automobiles and other resources as mobile warehouses. On the one hand, it saves investment in fixed assets such as warehouses, and on the other hand, it reduces Sharp's channel inventory to a minimum, reduces Sharp's inventory costs and improves corporate cash flow. 

                                                                     Picture: JUSDA assists Sharp in realizing transportation/inventory visualization

JUSDA also configures a visual kanban management solution for Sharp's in-warehouse and in-transit inventory. Through online, digital, and visualization, it effectively realizes the real-time collaboration of logistics information. Through intelligent sorting, electronic racks, AGV and other applications, according to the material production schedule, it is transported to each station to ensure the orderly progress of production. In the practice of manufacturing, the pain point of the procurement and logistics department is that few supply chain management companies can integrate production plans, digitally and automatically replace the manufacturing plants with the ability and technology to establish inventory levels. In the case of JUSDA, JUSDA cooperated with manufacturing companies to go deep into the core of the manufacturing supply chain, and achieved precise control over the cost and timeliness of the manufacturing plant, thus realizing the improvement of Sharp's overall manufacturing efficiency. The best practice of deep integration in integration.

In terms of realizing global delivery for Sharp, JUSDA provides a solution of "one place delivery, multiple delivery", combined with VMI supplier collaborative warehouse, centralized warehouse will realize the shortest link between manufacturing and end consumers. And according to the low and peak seasons of sales, reasonable allocation of sea, land, air and railway and other transportation resources to maximize economic benefits. The significance of this case is that through the global delivery model, in line with the globalization of many manufacturing companies, a supply chain management company can use its existing global network layout capabilities to help manufacturing companies continue to cultivate locally and complete the company. The establishment of the system has given manufacturing companies great support in terms of trade compliance, customs affairs, and comprehensive foreign trade services, and quickly assisted domestic companies in completing global delivery tasks.

What are the future trends of logistics and manufacturing?

On September 9, 2020, President Xi Jinping emphasized at the eighth meeting of the Central Committee of Finance and Economics: “The construction of a modern circulation system must be taken as an important strategic task. It is necessary to coordinate the advancement of the hardware and software construction of the modern circulation system and develop new circulation systems. New technologies, new business models and new models, perfecting institutional norms and standards in the circulation field, fostering and expanding modern logistics enterprises with international competitiveness, and providing strong support for the construction of a new development pattern in which domestic and international double cycles are the mainstay and the mutual promotion of domestic and international cycles."

Promoting the in-depth integration of the logistics industry and the manufacturing industry is of great significance to achieving high-quality economic development, domestic industrial upgrading, and dual cycles.

The "Implementation Plan" mentioned that in terms of promoting the integration and linkage of facilities and equipment, it is necessary to actively promote the construction of a production and service-oriented national logistics hub to support the high-quality cluster development of the manufacturing industry. In terms of promoting the integration and coordination of business processes, it is necessary to promote close cooperation between manufacturing companies and third-party logistics and express companies; accelerate the development of high-quality, specialized and customized logistics.

According to the analysis of China Internet of Things, with the development of AI, artificial intelligence, Internet of Things, blockchain and other technologies, the development trend of the integration of my country's logistics industry will continue to increase, and the linkage and integration of risk sharing and benefit sharing between logistics enterprises and manufacturing enterprises The development pattern is taking shape.

In the future, using intelligent technology and data matching, as well as innovative technologies such as the Internet, blockchain, and the Internet of Things, to improve logistics service efficiency and reduce manufacturing supply chain costs and risks will be the trend and direction of future manufacturing development. The in-depth innovation and integration of the logistics manufacturing industry will also continue to improve the competitiveness of my country's manufacturing industry in the world.

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