JD’s Supply Chain Map

Original link: https://www.latepost.com/news/dj_detail?id=1192

In the spring of 2022, many people felt how fragile the various infrastructures on which ordinary free consumption relies on weekdays, and the commodity supply chain hidden under daily life has now become an obvious and important role.

“Supply chain” is a word that many people have heard a few times but is extremely unfamiliar. In most people’s cognition, it seems to be a simple action of purchasing goods on an e-commerce platform and delivering them to them through logistics.

What most people don’t know is that the supply chain is a complete system that starts from the procurement of raw materials, produces various parts and final products, and finally delivers the products to consumers through various sales channels. Without any link, it cannot function normally.

A car company needs more than 10,000 parts to produce a car, and it directly connects with more than 200 suppliers. Li Bin, the founder and chairman of Weilai Automobile, said that a car cannot be produced without one part. Even a seemingly uncomplicated skin care product involves more than 100 links. The lack of a pump head will result in the product not being able to be produced.

The process of product production, from the factory to the final transportation to the consumer, also has to go through multiple links.

Taking JD.com’s self-operated B2C model as an example, after the products of suppliers are produced, they are often stored in 43 “Asia No. 1” large-scale intelligent logistics parks and about 1,400 warehouses operated by JD Logistics across the country. After these goods are picked out, they are then distributed by 18,000 trucks to 7,200 terminal distribution stations across the country through 210 sorting centers, and finally delivered to hundreds of millions of consumers by more than 200,000 self-operated distribution personnel. inside.

JD's Supply Chain Map

People can enjoy the world-leading delivery speed of “same-day delivery” or “next-day delivery” at very cheap prices, relying on the efficiency of this system, which is also due to the efforts of hundreds of thousands of people and hundreds of billions of dollars. The investment of RMB and the due harvest after JD.com has been unable to make profits for a long time.

Even such an almost unimpeded supply chain system has become dysfunctional in Shanghai, which was silent in April and May due to the epidemic.

The shutdown of the factory has led to tight supply of goods, trucks are not transporting smoothly on the highway, warehouses and sorting centers are closed, and a large number of delivery personnel cannot arrive at their posts. Even if a product breaks through the previous barriers, it may end up stuck at the end of the community. 100 metres.

The CEOs of China’s two largest e-commerce companies have reached an agreement. Xu Lei, CEO of Jingdong Group, said with emotion that the most important thing in the supply chain is the chain. Once the key link is broken, there will be nothing. Zhang Yong, chairman and CEO of Alibaba, also said that today is not a lack of supply, but all consumer services without certainty of performance are “actually a bit of a hooligan.”

Air only matters when it’s lost. The supply chain system has always existed, but consumers were not aware of it before, so they did not feel precious. Because of the epidemic, the public and companies have truly realized the value of the supply chain. Without it, the things they want cannot be delivered; but the supply chain also pays attention to the integrity, and any problems in any link may cause it to break.

In daily operations, many companies’ requirements for supply chain capabilities are to improve efficiency and reduce costs, but under the extreme pressure of the epidemic, the certainty of contract performance, which is a basic requirement on weekdays, has become the highest standard.

JD.com said 2022 is the first year of supply chain value. This is not only because “supply chain is indispensable” has become a consensus at the social level. Xin Lijun, CEO of JD Retail, told “LatePost” that the development of the supply chain was driven by the market in the past, but now it is driven by strategy, because it can be realized from the national level that the supply chain is a very important central issue in the lifeline of China’s economy.

5,000 people, 150,000 tons of cargo

The whole country helps a super city with 25 million people

At its worst, the map of China on the big screen had more than 700 red lights on.

JD.com’s supply chain is facing unprecedented challenges. In the months of spring 2022, in every “today”, tomorrow becomes unknowable, and new red dots will appear at any time, “production, supply, warehousing, sorting, transportation, distribution, supply chain Every link may be blocked.” said Hu Hao, technical director of the Y business department of Smart Supply Chain.

The red dots come from the epidemic grading emergency system of JD’s supply chain. This system divides the country into more than 5,000 points according to the three levels of province-city-county (district), and evaluates the degree of impact of the epidemic in each place of JD’s supply chain every day, and divides it into different levels – normal green, affected to some extent blue, yellow and red with more influence. For different levels, JD.com will use different supply chain plans, combined with the optimization suggestions given by the algorithm, and link multiple departments to carry out operation scheduling to ensure a smooth supply chain.

On weekdays, Hu Hao’s job is to lead the technical team to use algorithms to deliver JD.com’s products to consumers in the shortest time and at the lowest cost.

In the extreme situation of the epidemic, Xu Lei emphasized on JD.com the general direction of “doing nothing but not taking the account”. The task of JD’s supply chain has become to find the most inventory supply, adjust the logistics network structure, and do his best to support and protect the supply chain in the epidemic area. continuous operation.

During the period of silence in Shanghai, the average performance period of JD.com’s goods once exceeded 10 days, which is already very slow compared to JD.com’s usual delivery time on the same day and the next day. “But it is certain for citizens. At that time, the supply chain in Shanghai was The core is no longer fast, but who can deliver it.” Xin Lijun said.

In order to achieve “delivery”, JD.com has summoned more than 5,000 front-line couriers and sorters from the five regions of central China, north China, south China, southwest and northwest China and other provinces and cities in east China except Shanghai to help Shanghai. 4. In May, the tonnage of goods transported from other places to Shanghai reached 150,000 tons. When the epidemic in Shanghai was the worst, most of the goods were supported by “cross-regional production” in logistics parks in Wuhan, Chengdu, Guangzhou and other places. It is understood that by the end of April, JD Logistics accounted for more than 90% of Shanghai’s properly placed orders.

At the beginning of April, at that time, two-thirds of the first-line couriers of JD.com in Shanghai alone were locked up at home, and there were only nearly 10,000 couriers in Shanghai, less than 20% of the usual rate.

Jingdong can only transfer people from all over the country. Xu Ruofei, head of human resources of JD Logistics East China Branch, said that they began to issue calls to JD Logistics across the country on April 5. The first batch of more than 2,000 people went to Shanghai, followed by an increase of about 3,000 people. The scale exceeds 5000 people.

“The number of people who signed up is far greater than the number of people who came.” Xu Ruofei said. Under JD.com’s self-operated model, more than 300,000 front-line logistics employees are full-time employees with five insurances and one housing fund. From the results, they have a stronger sense of identity and execution at work.

JD's Supply Chain Map

In terms of trunk transportation, Ma Lei, the head of JD.com’s road transport capacity, decided on April 10—the day that JD.com decided to gather its strength across the country to support Shanghai—determined to simultaneously use railways, aviation, water transportation and other means, from National transportation of goods to help Shanghai.

According to the data provided by Ma Lei, in the first two weeks of cross-regional support, the overall transportation volume was more than 30,000 tons, supporting more than 1,000 train trips, 150 railway containers, and more than ten all-cargo and passenger aircraft chartered warehouses.

JD.com has also reused the model of the Wuhan epidemic in 2020 in highway and intra-city transportation – for example, a transfer station was set up around Shanghai, and the vehicles transported between the transfer station and the sorting center adopted the drop-and-hang mode. Many large-scale JD.com The car is a tractor, and the front and the box can be separated. After the tractor arrives at a place, put down the box without unloading the car. The front of the car drives away directly, reducing the waiting time and improving the vehicle turnover rate.

In the early stage of the Shanghai epidemic, the traffic between cities in the Yangtze River Delta was poor. Zhang Li, head of JD Logistics Supply Chain Planning, shared that they joined JD Health and JD Supermarket to temporarily set up two temporary warehouses in Shanghai for supply guarantees, one on April 10. The temporary special warehouse for mothers and babies was put into operation in Qingpu District, and the first batch of more than 80,000 pieces of maternal and child livelihood commodities were directly delivered to the warehouse.

The other is a special warehouse for temporary supply in Jinshan District, Shanghai, which was completed in three or four days. The first batch of more than 88,000 large-packaged milk, rice, flour, grain and oil and other necessities entered the warehouse. The initial area was 2,000 square meters. By mid-May, this The warehouse was expanded to 20,000 square meters.

The special warehouse for guaranteed supply mainly stores emergency commodities for people’s livelihood. The commodities are relatively regular, such as a whole box of milk, which can be shipped out of the warehouse without particularly complicated production, operation, and packaging processes. Zhang Li said, “Supply warehouse is the first time we have built this Shanghai epidemic, and it may be promoted in other cities in the future.”

Epidemic lockdowns have proved that large Internet companies like JD.com can effectively provide basic survival guarantees for hundreds of millions of people in a single city by mobilizing large-scale Internet companies, regardless of cost, by pooling resources from multiple locations.

On June 11, on JD.com’s supply chain epidemic grading emergency system, the employees of Smart Supply Chain Y saw that all parts of Shanghai had returned to green, and everyone on the scene was very excited. A colleague said, “After a few months, finally I saw hope.”

10 million self-operated SKUs

Turnover 12.1 times a year

A typical Jingdong shopping scene is that at ten o’clock in the evening, you place an order on the Jingdong APP to buy a product with the Jingdong logistics logo.

This order is sent to the nearest Jingdong logistics warehouse after hundreds of calculations in the background of the system. A few minutes later, the machine in the warehouse receives a program response, and a series of automated equipment picks, reviews, and packs, and soon your goods will be packed into suitable-sized cartons, lying on the conveyor belt, ready to be sent to the transfer center and end site. The next morning, the item will be delivered to your home by the first-line courier of JD.com.

JD's Supply Chain Map

In the first quarter of this year, JD.com managed more than 10 million SKUs (minimum stock keeping unit) by itself, with an average inventory turnover of 30.2 days and a turnover of 12.1 times a year.

Inventory turnover days is the number of days for goods from storage to delivery. The shorter the number of days, the less working capital is occupied, and the greater the profit margin. For the retail industry, inventory turnover days are a key indicator of supply chain efficiency.

Two retailers with strong supply chain capabilities recognized by the industry, Costco and Walmart, have inventory cycles of 30.4 days and 45.5 days, respectively, and the number of SKUs they manage is only 5,000 and 50,000. JD.com’s 30.2 days is already close to the extreme level of the retail industry.

Xin Lijun said that not only JD Logistics but also JD’s ability to mobilize more than 10 million kinds of commodities in its warehouses supports JD’s core competitiveness.

Jingdong Logistics has a large number of automated system equipment, and more and larger storage facilities. JD Logistics operates and manages 43 “Asia No. 1” large-scale intelligent logistics parks and about 1,400 warehouses across the country, and has achieved same-day or next-day delivery in 94% of the country’s districts and counties and 84% of townships. Cainiao Network has operated more than 230 warehouses during the same period. , the arrival rate between districts and counties on the same day and the next day was 59%.

JD Logistics has built a multi-level infrastructure and warehouse distribution network, including Regional Distribution Center (RDC, Regional Distribution Center), Front-end Logistics Center (FDC, Front Distribution Center) and City Local Warehouse (TDC, Town Distribution Center).

Regional distribution centers are distributed all over the country, forming 8 regional logistics centers of JD.com, which store and transfer all kinds of commodities; front-end logistics centers are mainly distributed in provincial capital cities and logistics hub cities, and the warehouses are mainly placed in the best-selling categories in the region; The warehouses are distributed around the city and directly supply the local and surrounding counties and cities.

JD Logistics can directly move the goods from the factory to the place closest to the consumer as needed. For example, the local warehouse in the city can shorten the process to 2 times to achieve the fastest delivery.

The leading warehouse volume is closely related to the land resources that JD.com has reserved for many years. Since it won the reserve land of Shanghai Asia No. 1 in 2010, JD.com has won the land use rights of more than 30 cities in 30 provinces across the country, which is convenient for JD.com. Warehouses can be built closer to the industrial belt and consumers at any time.

The improvement of efficiency is also inseparable from technology. Taking several common intelligent devices in Asia One Park as an example, the completion of an order usually requires the linkage of intelligent picking robots “Sirius” and “Earth Wolf”, intelligent robotic arms and cross-belt ultra-high-speed sorting systems.

Liu Jinyu, head of JD Logistics Asia-1 project, introduced that it is precisely because it is JD.com’s own warehouse that “Asia-1” can boldly test and configure intelligent equipment to achieve more efficient sorting and processing than its competitors.

JD's Supply Chain Map

The daily order processing capacity of the full-process unmanned warehouse in the “Asia No. 1” park in Shanghai has reached 1.3 million orders. Whether it is an automated three-dimensional warehouse, a wolf warehouse, a siren warehouse or an intelligent sorting system, its operational efficiency is at least 3 times that of a traditional warehouse. more than 5 times.

For different categories, JD Logistics has also explored different supply chain solutions and logistics services. Taking the three major industries of JD.com today – fast-moving consumer goods, home appliances 3C and clothing as an example, the three categories have different warehousing and circulation forms according to their own characteristics.

JD's Supply Chain Map

Based on the characteristics of high turnover rate, large quantity, low cost and omni-channel distribution of fast-moving consumer goods, JD Logistics will directly transport from the factory to the channel closest to the consumer, sometimes without stopping in the brand warehouse, and systematically shorten the performance time and transportation cost.

Home appliances and 3C categories are affected by the difficulty of logistics and the cumbersome installation, maintenance and after-sales processes, etc., and have long relied on the offline dealer network. JD Logistics chose to build warehouses directly near the origin, and JD.com was responsible for the warehouses between multi-level sub-warehouses. Transfer, home delivery, installation and after-sales service.

The clothing category is strongly affected by seasonal factors, with a large quantity but a small individual inventory. For some apparel SKUs with a high return rate, JD Logistics provides a comprehensive inventory management system for brands, monitors offline stores and online sales data in different regions, and helps brands achieve flexible release, distribution and replenishment.

In Xin Lijun’s view, the supply chain is goods + distribution. JD.com has about 1,400 warehouses across the country, trying to allocate more than 10 million SKUs in the fastest time and at the lowest cost. “This capability is basically no other company in China has.”

“LatePost” learned that there are three modes for the 10 million SKUs managed by JD.com today: the first type is the commodities stored in JD.com’s self-operated warehouses, accounting for the vast majority; the second type is the commodities in the warehouses of cooperative brand factories However, this part of the inventory belongs to JD.com, and can be delivered to JD.com’s self-operated warehouse at any time and sent directly to users through JD.com logistics; the third category is the warehouse of third-party merchants (mostly pre-warehouses and physical stores), and the distribution is also mostly done by JD Daojia or the merchant is responsible for it, and the property rights of the goods belong to JD.com at the moment of shipment.

The goods are not only the goods in the warehouse, but also not only the goods operated by JD.com. Jingdong wants to sell more goods, and also wants to provide its own capabilities to the industry.

15 years, more than 420,000 people, hundreds of billions of RMB

build a system machine

From the demand side to the supply side, the mode is from light to heavy. All e-commerce companies today recognize this direction. But maybe only JD.com decided to do this 15 years ago.

In 2007, when JD.com founder Liu Qiangdong decided to build his own logistics, not many people supported him. Investors believed that JD.com would be dragged down by massive investment in infrastructure.

At that time, Liu Qiangdong first proposed the strategic plan of self-built logistics in the board of directors. He said, “If it takes ten years for JD.com to do logistics, it will take ten years for all companies to catch up.” His goal was to raise $1 billion, but in the end he only got $10 million from Capital Today.

The entire JD.com now has more than 420,000 people and manages 25 million square meters of warehousing. This was unimaginable ten years ago.

Xin Lijun said that JD.com has more than 420,000 people, and managing 420,000 people is no different from managing 1 million people, because there is no need to rely on people to manage them, and the management system is also improving.

Looking back at the 15 years since JD.com built its own logistics, there were four key moments that allowed JD.com to build its current supply chain system—JD.com built its own logistics in 2007, and since then began its differentiated supply chain system. In 2014, JD.com’s first Asia No. 1 park was completed, and a complete logistics system began to be built; in 2016, JD.com established the Smart Supply Chain Y Business Department (hereinafter referred to as Y), allowing technology to be more clearly and deeply involved in the supply chain field; Emphasizing the omni-channel strategy around 2020 has brought new possibilities to JD.com.

Since 2007, JD.com has entered a period of rapid expansion, with the annual order volume increasing by more than 200%. During holidays and big promotions, the warehouses are frequently sold out. Hundreds of people are looking for packages on the warehouse shelves. Due to rapid expansion, more than 40% of warehouses need to be relocated every year, and service quality and category expansion are affected.

At that time, it was estimated in Jingdong Logistics that when more than 2 million orders need to be processed every day, investing in manpower will not bring about an increase in efficiency. Larger warehouses and more automated equipment are the best solutions. After that, Liu Qiangdong decided to continue to invest in infrastructure, upgrade automation equipment, build a distributed warehousing cluster closest to consumers, subtract all unnecessary circulation links of commodities, and directly move goods from factories to places closest to consumers.

From manual sorting to approaching automation, the essence is to standardize all processes, replace human hands and brains with as many machines as possible, improve efficiency and reduce the possibility of mistakes. This plan took five years. In 2014, the first phase of JD Shanghai Asia No. 1 was completed, which can store 4.3 million pieces of goods. The automated equipment sent the goods to the front of the sorter, and the sorter no longer needed to rummage. The warehouse handles more than 4.3 million items per day. 100,000 orders. JD.com decided to build more Asia Ones.

Shortly thereafter, JD.com announced the opening of JD Logistics to the outside world and established the Smart Supply Chain Y business department internally.

The nationwide distributed warehousing + distribution capacity can also be used to serve external merchants and provide external contract performance and technical services. According to Liu Qiangdong’s plan, JD Logistics’ revenue from the JD platform must be less than half in the next five years, and this goal will be achieved ahead of schedule in 2021.

The establishment of Y is similar to the background of the establishment of Yayi in that year – deeper technology is needed to improve the efficiency of supply chain operations facing bottlenecks. Y is responsible for using technical means to compress the time spent by JD.com’s products in each supply chain link. A JD.com person said that Y is like a nervous system, directing and dispatching JD.com’s massive commodities.

There are several important milestones in the development of Y in the past five years: in 2018, it completed the milestone of inventory management and procurement automation, in 2019, it started the promotion of turnover optimization goals, and in 2021, it achieved global leadership in turnover efficiency, and began to upgrade JD.com’s omni-channel Supply chain, carry out a comprehensive technical transformation of “one pallet of goods, one pallet of warehouses, and one pallet of distribution”, hoping to tap into a larger business.

In the past, the purchase of a commodity required multiple departments to make decisions, and there were errors in each layer of manual decision-making. Today, through cross-regional and cross-departmental information aggregation, Y integrates all the decentralized decision-making links in the past procurement and operation, using data Cultivate intelligent algorithms to solve procurement problems and enable end-to-end intelligent replenishment decisions. Most of the purchases of products in JD.com’s self-operated categories have been automatically completed by the system, and the purchase automation rate has reached 85%.

Algorithms can help JD.com to better manage inventory turnover. By adjusting storage methods with logistics, optimizing network structure and combining automated procurement, JD.com maintains inventory at the lowest level that meets customer needs and reduces costs.

Omni-channel has brought new possibilities to the entire JD.com, from order sources, inventory supply to distribution methods, “the possibilities of every link are opened.” This means more new combinations.

In the past few years, JD.com has carried out a series of actions around the same city omni-channel, increased its stake in Dada, established the same city business department, and connected hourly purchases to more than 400 cities. Of the four must-win battles in JD.com this year, three are related to offline business.

On the battlefield of retail in the same city, an e-commerce platform delivering food, and a food delivery platform selling mobile phones, are all happening.

Xin Lijun and JD.com’s executive team are discussing the entire supply chain structure. In the past, JD.com’s strongest warehouse and distribution integration structure, whether to re-adapt to the new environmental changes, “We are all considering it.”

Apple CEO Cook wrote in the book “Competing with Time”: “Time is the secret weapon of business competition.” Most companies fear time, and they believe that only by racing against time can they outperform the competition; a few companies fear time, and they believe in one It takes ten or twenty years to do things well.

This article is reprinted from: https://www.latepost.com/news/dj_detail?id=1192
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