This article is a transcript of Li Qi's keynote speech at the FDIC 2018 China FMCG Digital Innovation Conference, titled 'B2B Empowerment and Innovation, the Liberation Thought and Forward Practice of Social Supply Chain', organized by New Distribution for our readers. Over the past few days, we have listened to many wonderful speeches from guests, with many thoughts and collisions of ideas on supply chain and B2C. We are all part of this rapidly developing industry. No matter how the future unfolds, we all need systems and software tools. As a software developer and system provider that has existed for 26 years, Heading would like to share our thoughts and practices on the supply chain. Long, long ago, the harsh natural environment taught ancient people the importance of groups. Human society evolved from individual combat to collective teamwork. Subsequently, groups were improved with organizational discipline and military strategy. When a single entity reaches a certain stage in its development, re-examining it from a chain perspective yields new insights, and the same applies to the social supply chain. However, all trade in the world is supply-demand trade. Why not just have direct transactions between supply and demand? Why does a supply chain emerge? We need to step back and view the whole picture from another perspective. Let us step outside the individual and observe both supply and demand as a whole:
First, information between supply and demand is asymmetric;
Second, demand side generally has a lazy preference for one-stop shopping to meet all needs;
Third, there is an asymmetry between mass production on the supply side and small-quantity demand on the demand side;
Finally, during the transfer of tangible and intangible assets, the need for services and their supply are also asymmetric. These factors led to the emergence of the social supply chain, which is why we have brand owners, distributors, retailers, third-party logistics, and other components of the supply chain present here. It can be said that before 2016, we (enterprises within the supply chain) generally lived comfortably. But after that, as our industry gained more attention, many experts talked about reforming the supply system. As intermediaries, we are constantly reminded that 'this is a matter of life and death' and that we must change. On one hand, we are required to undergo digital and intelligent transformation, and then reform the supply system based on that. On the other hand, we are pressured by public opinion to reduce intermediate links and enhance the value of the supply system. At this moment, we feel anxious: with wolves ahead and tigers behind, which direction should we take? Will we become the eliminated middlemen? But in reality, existence is reasonable. Every part of the supply chain has its value, and enterprises at all levels in the distribution channel play a role in supply chain integration. To put it plainly, 'supply chain' as its name suggests, connects the upstream manufacturers with the downstream consumers. It makes the goal of 'matching socialized mass production with specific consumer demand' possible. Heading has been involved in China's retail wave since 1992, now 26 years, always striving for the aforementioned grand goal. Over the past 26 years, we have served various types of clients in the retail supply chain while also studying the entire retail environment. We have served over 500 regional leading clients, which are also our research samples. This is the foundation for our vision and deduction of an efficient social supply chain model. Let us start with the end in mind and envision an efficient model of the social supply chain. From the forward direction, goods depart from the factory, knowing the 'consumption plan' of a certain region: intermediaries (distributors, agents, wholesalers) observe the progress of regional consumption over time and replenish goods in a planned and rhythmic manner. Within the region, goods flow smoothly like water. End consumers' needs are met, and terminal retailers do not experience stockouts. There is no backlog in warehouses, and each link takes what it needs. From the reverse direction, consumer feedback and real needs flow back to the factory through retailers, wholesalers, distributors, and agents without hindrance. Services at all levels are met promptly during this process. Everyone plays their role in the supply chain environment, leveraging their abilities and realizing their value. Years of practice have made Heading revere the power of the real economy, leading to the grand vision of Heading Qianfan. The purpose of Heading Qianfan is to deeply participate in the social supply chain, helping our brand suppliers, distributors, and retailers overcome past shortcomings, using technology to make retail circulation smoother and more efficient. Our Qianfan initiative has five value points, or dreams:
Deep integration of the social supply chain with the Internet and the Internet of Things;
Better application of informatization, standardization, information system construction, and talent cultivation;
Innovative development of supply chain concepts, technologies, and models;
Better integration of various resources and elements to enhance industrial integration and collaboration;
Based on big data support, network sharing, and intelligent writing, making comprehensive organizational collaboration more efficient and supply-demand matching more precise. The efficient supply chain scenario model we deduced above and the dream goals of social supply chain reform are just a glimpse of the whole picture. We will not elaborate on more detailed aspects, such as 'unmanned warehouses'. However, it must be emphasized that there is no standard path to achieve this ideal scenario. Social improvement theories and reform concepts always outpace actual business practices to some extent. This requires a group of insightful people to lead by example, dare to fight, and continuously iterate cognition and practical details through deduction, practice, and proof. There are many roads to Rome, but we must all personally experience and invest in them, driven by reform theories. Many of Heading's clients have also carved out their own distinctive paths and continue to move forward. Now, when discussing the path of commercial enterprises in transformation, we must first confront the work they undertake, even the pain points beyond normal work scope. On one hand, they must properly handle upstream relationships and manufacturer cooperation; on the other hand, they must find and build warehouses, assemble transportation capabilities; and also act as both father and mother to retail terminals, going to stores to manage inventory and handle slow-moving goods. Of course, throughout the process, they must also provide humanistic care. How do our clients and friends deal with these situations? Shandong Yunbang, based on the distinctive characteristics of commercial enterprises, built a strategy of unified warehousing and shared distribution. They constructed a B2B platform based on warehousing capabilities, transportation capabilities, salesperson capabilities, and store resources. Distributors can join the platform, list their products, and focus on product operations. Goods can be entrusted to Yunbang's warehouse for unified management. After stores place orders, Yunbang picks and delivers goods to the stores. Meanwhile, Yunbang's salespeople also provide distributors with mobile sales, order placement on behalf of stores, and multiple deliveries per day, enhancing product sales and revenue for distributors while giving stores the experience of immediate receipt and real-time communication. After handing logistics to professional Yunbang, distributors can focus more on customer-oriented operations, provide better services, better promotions, and plan better activities, getting closer to customers on a human level. After discussing warehousing and logistics enterprises in the middle, let's observe the other end of the supply chain: various retail terminals. Fifteen years ago, we used informatization to help the store staff (often middle-aged women) of retail chain enterprises that were reemploying laid-off workers, enabling them to check goods upon receipt and collect money upon seeing customers, achieving gratifying results: sales doubled. At that time, the industry generally believed that chains must be self-operated. Once franchising was adopted, corporate goodwill would be hard to ensure, and the brand sign would be affected. But later, our friends and partners created another myth with the franchise development model: they have opened over 10,000 stores. So later, the industry generally accepted a new viewpoint: chains must develop franchising. The fully self-operated model is too heavy and develops too slowly. Have you noticed that the entire change process is actually an evolving one that increasingly respects stores and continuously empowers them? In the early stage of chain commerce, stores were 'empowered through constraints' via administrative management, requiring them to input data into the system and follow system instructions for specific operations. During the development of chain commerce, management shifted to supervision, practicing 'empowerment through guidance', which is less forceful than administrative management but provides more guidance and assistance, and respects store opinions more. So, from strong self-operated chains to supervised franchise chains, can the evolution of attitudes towards stores be seen as chain retail enterprises gradually opening up their internal supply chains? The supply chain is continuously improving its professionalism and expertise, thereby enhancing its own value. I wonder if you have studied 7-Eleven's management philosophy. In our view, 7-Eleven differs from headquarters-responsibility systems; they emphasize respecting the operational individuality of stores, 'giving decision-making power to those who can hear the gunfire'. Personally, I greatly appreciate this approach, especially when post-90s store owners shine on the social stage; they will more accurately tell the world that they are a generation that needs respect. The future store relationship will definitely be a service relationship. Whoever can provide more and better services and care to stores will lead the terminal retail market. So, can this bring some inspiration to chain retail enterprises? We open direct-operated stores to serve stores, and we open franchise stores also to serve stores. So why don't chain enterprises grasp the essence and directly serve social retail stores? Why agonize over what sign the store hangs? To paraphrase the wise old man from 1979: whether it's a direct-operated store, a franchise store, or a social store, a store that provides good service is a good store. Let's look at a real case: our client friend in Meizhou (Meizhou Xiduoduo), based on its position as the leading regional supermarket chain, built its own B2B ordering platform and opened up its advantageous supply chain. Meizhou Xiduoduo, addressing the pain points of local social stores in finding sources and transporting goods, built a B2B platform. It also recruits external distributors, providing one-stop shopping and professional guidance to social stores. Due to brand stickiness, store resources are relatively sticky, and store appeal is strong. Therefore, distributors can focus on product operations and, with the help of Xiduoduo's store operation guidance, further increase store demand. After discussing our partners, let's review ourselves. Heading is providing sharp tools for the pioneers in the social retail industry chain with the 'Qianfan' series of solutions. The Qianfan digital supply chain solution, with inventory management at its core, integrates offline physical stores and online ordering channels, helping distributors and retailers build a comprehensive digital supply chain system. Our solution provides information support from three dimensions. First, Heading Qianfan (Qianfan Commerce) provides distributors with closed-loop management tools for inventory and financial settlement. These tools are deployed in the cloud, used in browsers, are compact and lightweight, and support integration with various logistics WMS systems, breaking the silos of traditional ERP. Second, Heading Qianfan (Qianfan Youhuo) provides a self-operated B2B platform, a tool familiar to our distributor friends. Distributors have business and resources, but lack their own information platform. We often say that the simplest way to approach and embrace the Internet is to first move your business online. The Heading B2B platform is tailor-made for distributor teams, supporting mall orders, salesperson management, mobile sales management, and promotion management. Finally, we have always said that to strengthen ties with store owners, besides goods and people, what else? Information systems! Heading provides store management software for stores associated with distributors, including store cashier, inventory management, mobile payment, member marketing, and supports franchise, chain, and single-store formats. (These are our Qianfan Shopkeeper and field service products.) The Qianfan digital supply chain solution, with distributors at its core, strengthens their own information management, connects upstream and downstream, and ultimately achieves digital upgrade of the supply chain. 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