Nov 5, 2019|
Open Platform for Digital Supply Chain: The Next Wave of Efficiency
By Zhenhui Wang, CEO of JD Logistics
Nearly any company you ask will recognize the importance of having agile, efficient operations, but the role supply chain plays in this is often overlooked.
The fact of the matter, though, is that there is no denying the importance of a good supply chain when it comes to a successful business. The numbers are particularly telling.
Deloitte found that 79 percent of companies with high-performing supply chains achieve revenue growth greater than the average of their respective industries, while only 8 percent of companies with less capable supply chains report above-average growth.
What all this means is that to win in the face of stiff competition from across the globe, an agile supply chain is not just a competitive advantage, but an essential, inseparable piece of the puzzle.
Despite the importance of supply chain across industries, we are not yet at the point where every business needs to or has the resources to operate their own supply chain and logistics department. In fact, many of the companies I’ve spoken to don’t think this is an economical or even viable move. So what to do?
The answer is simple, at least on the surface: an open supply chain platform that would enable everyone, not just the world’s smartest or most technologically advanced companies to participate in the next revolution in supply chain. This is just what we have done at JD Logistics, an independent business group under JD.com. Leveraging our over 10 years of extensive experience in logistics and supply chain, as well as our capabilities in core advanced technologies like AI and even 5G, we are breaking ground on our Open Platform for Digital Supply Chain. It integrates all of our experience and strengths in order to deliver high value supply chain services across a wide range of industries.
The goal of the platform is simple: we want players of all shapes and sizes to reap the benefits of an agile supply chain. As I see it, the Open Platform for Digital Supply Chain will do two important things:
1) Enable a comprehensive and integrated supply chain service that spans across purchasing, production and sourcing, consumption and distribution/circulation. Expanding from purely providing logistics and supply chain distribution service to retailers, to supporting the entire process from production to distribution. With a transparent, open, end-to-end supply chain, the sourcing of a product from a small rural farm, for example, through the purchase of that product and eventual delivery to the customer are inextricably linked.
2）Serve as a smart technology platform. Leveraging advanced technologies, to realize intelligent planning, production, supply chain and logistics. Take for example, our transformation of a logistics park by fully enabling 5G connectivity throughout it, allowing faster communication and even greater integration and productivity.
Looking at the auto industry gives us some insight into what this looks like in practice. Take an auto manufacturer who services the entirety of China stores all of its accessories in one warehouse. It will be nearly impossible for this manufacturer to provide efficient, fast services. But, through digitalization, the manufacturer can benefit from setting up a multi-warehouse layout where the accessories are closest to the offline auto services stores (referred to in China as “4S” stores) who will install them. By incorporating capabilities such as intelligent inventory forecasting and enabling accurate replenishment recommendations, the overall fulfillment costs will be significantly reduced. This just takes care of downstream supply chain. From an upstream perspective, integrating different data into auto manufacturers’ existing systems, and helping them build automated fulfillment facilities, can help auto manufacturers also optimize their own supply chain systems by designing them for more efficiency from the start.
These are the kinds of benefits we stand to gain by further investing in the supply chain. We have been deeply committed to making the investments that will advance our business. Now we are opening up these capabilities to our partners and other enterprises across various industries. Undoubtedly, supply chain will go through several stages of reform before we are able to fully maximize its benefits—from horizontal and vertical opening to improved coordination and integration. However, one thing is for certain – a stronger, more agile and efficient supply chain ensures a better experience for everyone’s customers, and we are already seeing this transformation in action.
(This piece was originally posted on Supply Chain Asia, here https://supplychainasia.org/open-platform-digital-supply-chain-next-wave-efficiency/)
Sep 27, 2024|
Leveraging AI to Drive Innovation, Reduce Costs, and Create Jobs: Insights from JD.com’s Chief Economist
At the 2024 FORTUNE Global 500 Summit in Guangzhou on September 26th, Dr. Shen Jianguang, Chief Economist of JD.com, shared how the company utilizes AI to transform its operations across retail, logistics, and more, while driving significant workforce expansion. “By integrating advanced technologies throughout our business, JD.com has more than tripled its workforce in the past six years from 180,000 to 620,000, all while increasing salaries,” Dr. Shen explained during the panel discussion titled “‘Changes and Opportunities’—Chief Economists’ Perspectives.”
AI tools have enabled JD.com to boost efficiency and elevate the customer experience. For example, JD’s AI-driven digital human livestream hosts have helped over 5,000 brands increase off-peak hours’ sales conversion rates by 30%. Additionally, AI-powered customer service representatives offer more personalized support, and logistics couriers use AI to deliver packages faster and with greater sustainability.
JD.com’s customer service representatives
“The competition in China is so fierce, and that’s what drives innovation—you have to innovate to survive,” said Dr. Shen, underscoring the role of innovation in reducing costs and increasing productivity. This is especially crucial in China’s e-commerce landscape, where consumers are becoming more price-conscious. “Consumers are looking for the ‘extreme quality-to-price ratio,’ meaning they want high-quality products at lower prices,” he added. At the same time, Dr. Shen noted a growing trend in rural and lower-tier markets, where significant growth opportunities are emerging.
Dr. Shen also discussed China’s recent economic stimulus packages. “Policy initiatives are important. When people perceive a shift in policy, the market responds,” he said, referring to the government’s subsidies for home appliance trade-ins introduced earlier this year. This program has stimulated demand for affordable, high-quality products, as reflected in the increased sales of subsidized items.
Guangzhou, the host city for the summit, launched a new round of consumer goods trade-in subsidies on September 1st, positioning online platforms like JD.com as essential providers of seamless trade-in services. Over 800 home appliance brands have partnered with JD.com in Guangzhou, offering more than 8,500 products. Additionally, JD.com is working with its brand partners on a Customer-to-Manufacturer (C2M) model, leveraging consumer insights to drive innovation for more tailored products.
JD.com provides one-stop trade-in services for home appliances and home goods
The panel discussion featured Dr. Shen alongside Minggao Shen, Global Chief Economist at GF Securities, and Robin Xing, Chief China Economist at Morgan Stanley, with FORTUNE Editor-in-Chief Alyson Shontell moderating. The panelists agreed that while AI is still in its early stages, its potential is vast. With China’s stimulus policies and a functioning capital market, the private sector is well-positioned to unlock considerable industrial and social value.
JD.com ranked #47 on the 2024 Fortune Global 500, moving up five spots from the previous year. Guided by its mission to “Make Lives Better through Technology,” the company remains committed to cost management, operational efficiency, and enhancing user experiences, while continuing to invest in employee development and upskilling to foster both business growth and workforce advancement.
(vivian.yang@jd.com)
Apr 1, 2024|
JD Chief Economist: Tech-Driven Supply Chain Revolutionizes Gen-Z Consumer Engagement in China
At the inaugural FORTUNE Innovation Forum in Hong Kong on March 28th, Dr. Jianguang Shen, chief economist of JD.com, highlighted the transformative impact of tech-driven supply chain solutions in meeting the dynamic needs of Gen-Z consumers in China.
“Gen-Z consumers are very discerning and pragmatic,” said Dr. Shen. “They don’t care if the brand is local or global.” Dr. Shen began by discussing the increasing sophistication of younger Chinese consumers. “The rising popularity of local products can be attributed to China’s supply-side reform, which has enabled brands to provide lower-cost products with higher quality,” he said. Shen also emphasized the strategic advantage that brands can achieve by leveraging advanced digital supply chains, which offer deep insights into consumer behavior, thereby tapping into substantial market opportunities.
Joining Dr. Shen were industry leaders including Angela Wei Dong, Global Vice President China at Nike; Pontus Erntell, President and Chief Sustainability Officer at IKEA China; and Doreen Wang, CEO of Kantar China and Global Head of BrandZ. Together, they shed light on the shifting preferences of China’s youth towards quality, sustainability, and enhanced social engagement in their retail experiences, especially amid economic headwinds, prompting brands to adapt swiftly.
Drawing examples from JD.com’s platform, Dr. Shen discussed the rising popularity of eco-friendly mini refrigerators among Gen-Z consumers. These products, aligning with Gen Z’s penchant for tech-savvy and environmentally conscious offerings, underscore the necessity for brands to evolve and align with consumer preferences.
Furthermore, Dr. Shen discussed the positive impact of a new government policy encouraging trade-in of consumer goods, which is expected to boost consumption. Leveraging JD.com’s robust supply chain capabilities, customers not only can easily trade in old appliances for more modern and eco-friendly goods but also benefit from a suite of JD’s attentive services such as doorstep pickup, installation, and recycling.
The conversation also touched upon the strategic collaborations under the Consumer-to-Manufacturer (C2M) model between JD.com and numerous brands, aiming to streamline the journey from product ideation to distribution. This collaboration has welcomed over 4,000 brands to JD.com’s C2M platform, drastically reducing product research and market introduction times by 80% and 70%, respectively, thereby fostering a mutually beneficial ecosystem for brands, retailers, and consumers.
Dr. Shen concluded by emphasizing JD.com’s commitment to technological innovation, with its deployment of AI-driven chatbot customer service, highly automated warehouses, autonomous delivery vehicles, and integrated retail solutions that bridge both online and offline domains. These innovations are designed to meet the dynamic preferences of consumers, enhancing the overall shopping experience and setting a new standard in consumer engagement.
Agility and JD Logistics Expand E-Commerce Ties
