The change of enterprise inventory is an important basis for judging the stage of the economic cycle and an important factor affecting short-term economic fluctuations. Data from the National Bureau of Statistics show that in June 2023, the inventory of finished goods of industrial enterprises fell by 1 percentage point year-on-year to 2.2%, which is already at a historically low level. The macroeconomic Research Department of the Development Research Center of The State Council believes that the current round of inventory destocking of industrial enterprises is nearing an end. With the implementation of stable economic policies, demand continues to improve, enterprise revenue is expected to continue to increase, and gradually enter the replenishment stage of production expansion.

But different from the past, this round of replenishment cycle industrial enterprises are also facing a series of new challenges. From January to June, the profits of industrial enterprises above designated size still fell by 16.8% year-on-year, and the year-on-year decline in June was 8.3%, of which the upstream raw material manufacturing industry profit generally negative growth. This means that enterprises should carry out this round of restocking under the background of continuous increase in profit pressure. How to reduce cost and increase efficiency while replenishing inventory has become an urgent issue for industrial enterprises.

As a sub-group of Jingdong Group engaged in industrial supply chain technology and service business, Jingdong Industry serves industrial enterprises to reduce costs and increase efficiency with the digitalization of the full link of supply chain. Jingdong Industry has built a complete set of technical service product system – IPNP (Industrial Performance Neuroscience Project Set) around the digitalization of the full link of the supply chain to help industrial enterprises achieve a balance between inventory and cost through commodity optimization, performance optimization and source optimization in inventory management.

Combine SKUs with commodity standardization and reduce the number of suppliers to achieve “less storage”

In the past, the procurement of industrial enterprises was mainly based on the offline model, and the local bidding was conducted by various factories. However, the material codes of suppliers in different regions are different, and the product descriptions are not uniform, which makes the phenomenon of “one product and multiple vendors” extremely common, and it is easy to have duplicate stocking. For example, product A and product B may only have slight differences in material, the actual use effect is almost the same, in the vast majority of scenarios can be replaced with each other, but because of different suppliers or different codes, enterprises in the inventory will be prepared separately, virtually formed a duplicate inventory.

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To this end, the plan given by Jingdong Industry is to standardize the goods. Through the Mercator standard commodity library created by Jingdong Industry, enterprises can clarify the specifications of each industrial product, so as to merge the SKUs of the same type and effect in the past, reducing the overall number of SKUs and the number of suppliers. This can not only achieve less storage, but also further play the scale effect and reduce procurement costs.

Receive before payment, use how much to achieve “zero inventory”

In fact, the inventory cost of industrial enterprises is not only the commodity itself, but more from the occupation of warehousing and capital resources. A typical representative is spare parts, spare parts procurement of enterprises mainly adopt the “procurement advance” mode, that is, advance funds in advance after mass procurement in the spare parts warehouse, employees need to receive in batches, which will occupy a lot of resources. Take steel mills as an example, spare parts inventory is usually hundreds of millions.

The new generation of end-performance infrastructure such as pre-warehouse and Jinggong cabinet created by Jingdong Industry can break this inherent model. By deploying around industrial enterprises or in the factory, the pre-storage warehouse and the Jingong cabinet can become the “external spare parts warehouse” of the enterprise, and the production line can be delivered by special car or the staff can scan the code at any time when there is demand. More importantly, when the requisition is completed, the procurement and settlement process will only be triggered for the quantity of the requisition, and any storage and financial resources will not be occupied before the requisition, which is the true sense of “on-demand procurement” and “zero inventory occupation”.

At present, this model has been applied in Dessun Steel, the largest private steel enterprise in Sichuan Province, which has significantly improved the management efficiency of the two types of spare parts, auxiliary spare parts and secondary spare parts, which are the largest and occupy the highest proportion, and is expected to reduce the inventory cost of spare parts by 20%.

Nationwide intelligent matching spot temporary demand can also “find the source in seconds”

The essence of inventory is to establish a “buffer zone” between procurement and consumption, and the longer the procurement cycle, the greater the inventory required to ensure production safety. The traditional offline procurement cycle is often several weeks, and low sourcing efficiency is often the biggest factor limiting the speed of procurement. Because the supplier resources of offline procurement are relatively simple, once they do not have spot inventory, they can only go back to the upstream factory to relocate goods.

The “10,000 warehouses in one” supply chain network created by Jingdong changes this point from the source. Through the digital supplier collaboration system, Jingdong Industry connects the inventory information of about 30,000 manufacturers, distributors and agents across the country. Even in the face of temporary procurement needs, it can quickly lock the spot inventory across the country in an intelligent matching way, and realize the optimal value delivery with advanced data analysis and algorithms through the intelligent decision-making system “K2”. Greatly shorten the procurement cycle.

In July this year, a subway in Beijing completed the rapid replenishment of more than 10,000 pieces of flood control materials in this way. On the evening of July 31, Beijing ushered in the strongest rainfall since the flood season this year, and flash floods even occurred in Fangshan and other areas, seriously affecting the normal life of local residents. The subway company urgently added a batch of orders for absorbent expansion bags, flood prevention sandbags, tarpaulins, flood prevention and water baffle to Jingdong Industry. Relying on strong digital sourcing ability, Jingdong Industry mobilized materials and transportation capacity overnight after receiving procurement needs, and successfully completed the performance and delivery of all materials on time.

The relevant person in charge of Jingdong Industry said that inventory management is only a microcosm of Jingdong Industry’s supply chain service for industrial enterprises to reduce costs and increase efficiency. In the face of external environmental pressure, the future Jingdong Industry will continue to supply chain as the entry point, through the full link digital intelligence service industrial enterprises to reduce costs and increase efficiency, sunshine compliance, to help enterprises achieve sustainable high-quality development.