2020 第三届中国智慧供应链与物流创新峰会 2020/10/21 shanghai

2020 第三届中国智慧供应链与物流创新峰会2020/10/21 Shanghai

Long Wong

About the Speaker

• COO of UCO.com, the market leader for cosmetics eCommerce in China

• 2004-05 Amazon.com HQ, responsible for World Wide Operations projects

• 2006-07 Director of Supply Chain & Transportation for Amazon China

• 2009-10 Head of Supply Chain & Logistics at Metersbonwe, a leading Chinese casual apparel retailer

• Various eCommerce start-up experience

Leader in China Beauty Ecommerce

2019GMV

USD~1.5B

Staff

1400+

DSR Service Level

20 shops >industry

average by at least 35%

TmallFlagship

20+ Tier 1 Brands

12 >100M2>1B

ISO27001 Data Security Service Certification

Company Services – Core Service Elements

Evolving Brands

Incubation

• 2019 RMB 10B+ (～USD 1.5B) GMV

• No. 1 Tmall, VIP Beauty Partner,

Selected JD partner

• 40+ Beauty Brands partnership

• Brand China Strategy and

Market Development

• Omni Channel development

• Social and content marketing

service partner that combines

ecommerce conversion and

social index

Social and Content

Marketing

Full Channels Ecommerce

Partner

Offline and Social

Commerce Channel

partnership

• Data driven retail enabler to

extend total Channel coverage

to offline and other evolving

channels

Spinning Off Professional

Service Elements to act as

independent 3rd

party service

• For Individual area of expertise such as Pre-sales and post-sales customer

services, supply chain and E-commerce system application, we are

planning for potential spin off of these services into an independent 3rd

party company to serve clients beyond the Beauty category.

Leading eCommerce Fulfillment Operator for Luxury Beauty

City with Fulfillment DC

Temp Fulfillment OperationCross-dock / Forward DC Ops

• Turnkey solution available at all fulfillment DCs

• Cities with temporary fulfillment operations to overcome peak

• Cities with cross-docking / forward DC operations (mainly for offline retail & bulky items)

Double-11 Beauty Order Shipped

2017 Over 1.8 million



2009-10

2011

2014

2017

China eCom PioneerDeveloped the first generation OMS & courier

management system (TMS) that form the basis of the current solution framework.

Experienced Fulfillment TeamStarted operations for cosmetics eCommerce

fulfillment and firmly established as the leading service provider in this segment.

Proven System SolutionDevelopment of current retail system solution began, integrated with all major platforms &

battle-tested through many Double-11s.

3PL Business ModelExpanded eCommerce fulfillment and TMS system service to cover FMCG, packaged food, apparel &

retail industry.

Omni-Channel FulfillmentIntegrated all supply chain service offerings.

First omni-channel warehouse launched.

Mid-2000

Omni-Channel Supply Chain Expertise with IT & Fulfillment Capability

Company Awards

2017 VIP.com Best Supplier Award

2017 “Jinzhuang” Best Service Partner Award

2018 5-Star TmallPartner

2018 Best IndustryContribution Award

2015 Supply Chain Award for “Best Ecommerce Logistics Operations”

2016 Tmall CosmeticsCategory Golden Partner Award

2015 “Jinzhuang”AwardBest Brand Service Award

ISO27001 Certification(an Internet Security Certificate)

INDUSTRY LEADING SUPPLY CHAIN SERVICES

Winner of THE 2015 SUPPLY CHAIN AWARD FOR

“BEST ECOMMERCE LOGISTICS OPERATIONS”,

Competing against AMAZON AND JD.COM.

·PREMIUM AND CUSTOMISED PACKAGING STANDARD

·OUTSTANDING WAREHOUSE PERFORMANCE KPI

·OUTSTANDING CUSTOMER EXPERIENCE

·INNOVATIVE LAST-MILE MANAGEMENT SOLUTION

·ABILITY TO MEET THE HUGE VOLUME SURGE OF DOUBLE-11

China Omni-Channel Challenges

By piece / package

processing, requiring

different equipment,

processes and skills

“Last mile” logistics

faces millions of

end-consumers

Shorter order

fulfillment lead time

and year-round

operations

Reverse logistics and

handling consumer

refunds

eCommerce Fulfillment is Different than Traditional Distribution

…

Main DC

Retail store

Retail store

Retail store

Manufacturer /

Bonded WarehouseDepartment

stores

Stores

Other outlets

By Carton

Typical Traditional Distribution Model

eCommerce Fulfillment Requires these Changes

• Much higher volume fluctuation (Double-11 volume is 30-500x daily average; promotion from live streaming, super brand day, 6.18, Valentine’s Days can easily be 10-100x)

• Majority of EC sales is through dominant eCommerce platforms rather than official sites

• Increased system integration cost and difficulties due to various integration standards

• Must cater to platform-specific requirements that add complexity and require flexibility

• Much faster eCommerce sales growth that add stress to inventory, warehouse network and order fulfillment planning

• Relative low labor cost makes standardization more difficult and high-level of automation counter-productive

• Lack of reliable and affordable delivery solution partners

Additional Challenges Unique to China

…

Main DC

Retail store

Retail store

Retail store

Manufacturer

/ Bonded

Warehouse

Department

stores

Stores

Other outlets

By Carton

EC DC (TP / 3PL)

By Package / Other Distributors

Tmall, Official Site, WeChat, etc……

Advantages:1. Specialized local EC partners to deal the

challenges that come with the ultra-fast growth

2. No need to disrupt Main DC plan, which was

also experience relatively fast growth

3. Fit into the company selling model (treating

EC as a distributor or store) with minimum

ERP / Finance / Supply Chain impact

Trade-Offs:1. EC partners often compromise quality to attain

speed and flexibility

2. Scaling usually means lack of customizable

and Individualized service

3. Lack of supply chain visibility and inventory

integration which become more and more

important as EC retail share grows

Most Companies Chose to Use a Specialized EC Warehouse

Offline下单订单待处理订单已处理已发货

eCommerce sales as

a percentage of total

retail sales is fast

increasing, and can

be over 50% in the

medium term

Peak Temporary DC?

Regional DC?

Forward DC?

Direct Ship from Store?

…………

客户拍下订单

Moving Towards the Omni-Channel World

Increase supply chain visibility

Consolidate inventory to lower safety stock

Meet omni-channel fulfillment needs

…

Main DC

Retail store

Retail store

Retail store

Manufacturer

/ Bonded

Warehouse

Department

stores

Stores

Other outlets

By Carton

Regional / Temp / Forward DC…

Omni-Channel Warehouse Network for China Retail Business

By PackagePlatform DC

(JD, VIP, Cainiao, XiaoHongShu…)

Cross Border DC

By Package


By Package


By Package

By Package


Puzzles to Support a Holistic EC Fulfillment Strategy

Multi-channel Inventory Management

Flexible Fulfillment Capacity Expansion

Real-time Inventory Allocation & Order Planning

Omni-Channel Fulfillment Capability

Integrated System

Solution

Integrated System

Solution

Our MethodologyMulti-channel Inventory Management




Integrated System Solution

eCom

Distributor(s)

Official Site(s)

/ WeChat(s)Tmall(s)

Inventory &

Order allocation

Accounting ERP

WMS WMS

Offline

Store(s)

Sales/Cancelling Sales/Return Order Sales/Return Order

Delivery/Return Order

Delivery Cancelling

Inventory Adjustment

OMSOfficial Site/WeChat* eCom Distributor* Tmall*Offline Store(s) …

Total Sales/Return

Inventory Transfer /

Adjustment

Sales/Return Order

Allocated Inventory

Sales/Return Order

Allocated Inventory

Sales/Return Order

Allocated Inventory

Channel

Brand

3rd Party

UCO


Delivery Cancelling


TP OMS

WMS


Delivery Cancelling


Our Order Management System (OMS) as the Control Tower for the Omni-Channel Supply Chain



B2BB2C C2C

Unified View of

InventoryFinance

Manager

Logistics

ManagerSales Operations

Manager

Supply Chain

ManagerBy

Warehouse By Brand By Channel

Set / Bundle

Handling

Multi-platform / Multi-Warehouse / Multi-Brand Inventory Management in OMS


Virtual Stock Allocation by Channel without any Impact to Physical Stock Storage



Profile Turns

Age Expiry

ABC Profiling ≠ Sales %

Inventory Age > 90 Days

Days of Cover > 90 Days

Expiry < Within Rules

Inventory Analysis

Check

Act

Do

Plan

FrequencySystematic Control Of Near-Expiration &Slow Moving Inventory

Support Stock Expiry & Batch Management• Expiration date control at receiving (configurable by brand / sku)• Separate storage for different expiry dates / batches• Support FIFO / FEFO, with expiration date control (configurable)• Validation upon returns• Inventory hold for stock unfit for shipping / pending vendor return

Inventory Reporting & Management• Stock expiry report with customizable alerts• Stock replenishment calculation based on sales data (support MOQ,

round to case size, seasonal product, promotion reservation, set/bundle, end-of-life tagging, etc.)


Jurisdiction Engine

Delivery Data Tracking ＆Feedback Loop

•Flexible & versatile rule setting (e.g. air restriction)•Filter out non-applicable ship method

Use tracking data to discover service problem and mitigate proactively

•Solution for delivery area definition (zip code is not commonly used in China)•Solution for parsing Chinese address•Ability to exclude based on key words

Select carrier based on estimated cost & service performance considerations

Integrate with CM & ranking rules

Rule Engine

Ranking Agent

TMS Logic

Sophisticated Courier Selection is Another Key Decision Factor in Rule-Based Order Assignment

Fulfillment Planning Engine (OMS) auto-processes 97%

of Tmall orders (including those with customer notes)


100% of Manual Orders

40%Simple

50%Standard

10%Difficult

Order Planning

Given order priority and inventory constrains, maximizes pre-packed & batch order processing; orders requiring manual processing are further categorized and into 3 groups.

Innovative fool-proof picking solution and practical usage of automation enable effective peak scaling; Process path diversion enforced by OMS ensures production quality & timeliness.

Maximize Pre-Packed & Batch

Order

Prioritize Urgent Orders

Omni-Channel Fulfillment Process that Can Scale Smartly


Comprehensive Training Program that Enables Flexibility in Capacity Planning with Quality Assurance


Self-study video with online test that can be customized by project; classroom lecture / discussion & team building for advanced topics

Innovative Training Delivery

仓储物流人才发展

仓储管理及领导力

项目

仓储通用技能提升

仓储专业技能提升

仓储文化协同项目

仓储专业技能认证讲师仓储通用能力培养讲师

仓储文化类仓储专业技能类

消防安全

规章制度

基础作业

项目体系

制度体系

讲师体系

课程体系

新员工转正制度专业能力认证制度课程开发制度内训师管理制度

仓储通用技能仓储管理类

技能带教

排班技巧

外部门对接

人员管理

团队规划

仓储专项问题解决

项目

项目带班流程

Courier

Consumer

Platforms /

POS

Warehouse

Operations

Customer

Service

Flexible engine for promotion and

offer setup, can work with

membership and loyalty program

Personalized services such as

address change, gift card

messages are enabled through

automated interface with OMS

system; Use big data to

segment customers for

personalized chat response,

product recommendation and

service policy

Optimize courier selection with

TMS; Identify delivery abnormality

with TMS SkyView to preemptively

handle customer problem

AliWangWang Youjie + Real Time

Inventory allows flexible GWP

and offer solution for sales offer

Post-sale customer service and

refund system, all done through

automated system support to

ensure satisfactionSupport multi-warehouse and

omni-channel; Enable single

view of inventory to facilitate

safety stock reduction and

minimize obsolete inventory

Real-time inventory allocation for all

warehouses and platforms,

including support for virtual set

and expiry date management

Financial record reconciliation down to per

transaction level from various platforms and

synchronizes with brand’s in-house POS /

accounting systemSales

Operations

Inventory

Management

Orders are allocated to various warehouses based

on inventory, capacity & logistics constrains to

optimize for cost & quality; OMS & WMS are

battle-tested at peak Double-11 volume and

enables efficient shipping while maintaining quality

Integrated System Solution

Integrated System Brings the Entire Value Chain Together

Our Insights

The Keys to Providing Supply Chain Support for Omni-Channel Network in Dynamic eCommerce Environment

• Accurate information on Available-to-Promise (ATP) Inventory

• Inventory data accuracy, including expiry and stock condition; set / bundle / pre-packed properly handled

• Enforcement of multi-channel inventory allocation and support for multi-warehouse inventory models

• Flexibility in promotion support to make use of available inventory

• SKUs with limited inventory depth / limited GWP offer

• Dynamic sales offer with ever changing GWP combination

• Holistic consideration in order fulfillment planning

• Capacity limit across the fulfillment and courier networks during peak

• Optimize warehouse assignment based on inventory, processing capacity and delivery speed

• Overall supply chain oversight in making strategic decisions in cost vs. risk

• Fulfillment cost vs. inventory cost

• Delivery speed vs. delivery cost

• Network flexibility vs. minimize order split rate

More Difficult for Offline to Move Online Because of Deeper Engagement in End-to-End Supply Chain

• Inventory Allocation: Usually push model rather than pull, as reaction time is usually too long for major allocation adjustment

• Distribution Network: Relative fixed and can be optimized using static methods

• Last Mile: Handle by consumers

• Customer Service: Often handle by distributors

• Team Capability: Mature industry, often lacking “Internet” thinking / speed

Think Differently, Prepare for a Whole New World

Speed Speed Speed

Decision Making—handling ambiguity, be ready to act with cautious instead of waiting for the cloud to clear

Business Cycle goes from year/quarter to day/hour/minute

Agility, think flexibility

Expect things to change, have backup plan for your backup plan

Make technology and automation decision only for mature processes

Organizational barrier

If you don’t have the right team structure, consider using partners to make your life easier

In-House

Relative Stable eCommerce Volume

Excess Capacity

Strong IT Capability and Management Flexibility to eCommerce Needs

Core Logistics Requirements Cannot be Met on Market

Outsource

Management Attention Can be Better Used on Brand/Product/Marketing

Less Capital Investment

Can Lower Cost Specially for Non-Operation Oriented Companies

3PL Market is More Mature Now with Many Capable Options to Choose from

• Be clear about your needs and requirements

• Do you just want a low-cost guy to do your dirty work? Or someone to collaborate to fulfill a long-term vision?

• Low Cost• Think risk

• Understand why cost is low

• Have an exit plan

• Quality Play• Evaluate strategic match

• Understand why its ability to perform is sustainable

• Maintain a spirit of collaboration

Finding the Right Outsource Partner

• Company should evaluate its strategic direction, and can use a mixed strategy

• But many offline retailers have under-estimated the transformation required to meet online fulfillment challenges, and often come up with a solution that is not cost competitive with inferior service and little strategic value (except for a bunch of “valuable” lessons learned)

• And China is a very special place

• The long-term model often includes a mixed of combined and stand-alone facilities managed by both in-house team and outsource vendors

Supply Chain is About Best Fit

专业供应链合作伙伴Professional Supply Chain Partner

Contact: Long WongE-mail: [email protected]

新零售新思维

2020 第三届中国智慧供应链与物流创新峰会 2020/10/21 shanghai

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