GSSC Series: MIT Professor: Supply Chain Isn’t Leaving China

GSSC Series: MIT Professor: Supply Chain Isn’t Leaving China

by Ling Cao

“When many of the department stores were going out of business, some companies are ready (to get through), because they met the supply chain. They understood where products will be produced, where and which product, which final product goes into and which customer it is going to,” Yossi Sheffi, professor of engineering at Massachusetts Institute of Technology and director of the MIT Center for Transportation and Logistics said at the 2020 (GSSC)Global Smart Supply Chain Summit held by JD Logistics virtually today.

“So, in case of a disruption, the supplier can quickly calculate the value trees. They know which product this supplier is supplying. They know which customer the final product is going to and they can set priorities. They are also ready to deal with disruption,” he added.

Yossi shared that successful companies can quickly set up an emergency management center and know about upcoming disruption ahead of the time.

During the pandemic, JD has leveraged its capabilities to build emergency systems for enterprises and local governments. For example, in February,  JD helped Hubei’s provincial government build a supply chain management platform, which makes emergency supplies such as masks, goggles, and protective clothing easier to manage, distribute and trace. JD also opened up its supply chain management capabilities to SMEs to help them resume operation, including its smart supply chain management platform which covers planning, replenishment, and analysis.

Yossi also shared, “What we see is of course the growth of e-commerce, even companies who do not sell only online, their e-commerce business went up tremendously. Companies understood that even if they hadn’t done e-commerce before, it became a necessity. It’s not a question of if you want to do it, but that you have to do it to expand businesses. And as a result of this, e-commerce companies all over the world are investing more and more in fulfillment centers and distribution centers close to the customer.

As a leading logistics service provider in China, JD Logistics has continuously provided services and ensuring people’s livelihoods during the pandemic. At the height of the outbreak, JD’s efforts help address challenges like a lack of transportation and delivery resources.

“We also see that companies are installing digital tools at a much faster clip,” he added.

In addition to JD’s self-built technology system and experiences, JD has partnered with industry leading companies such as LLamasoft and Blue Yonder to provide merchants with end-to-end supply chain optimization services, covering fashion, consumer goods and high-tech.

He shared, “Finally, about (supply chains) leaving China. This is something that I don’t see happening. Many companies spend decades developing not only final assembly, but the entire supply chain, the whole ecosystem of businesses in China or suppliers and their suppliers, their relationship. They have the expertise. These cannot just change in a minute.”

“People now stay in China, not so much because of labor costs. People are going to China because of the sophistication of suppliers and the existence of the entire ecosystem. Also, of course the Chinese market is large and growing.”

 

(ling.cao@jd.com)

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