First, the definition of value chain management
The concept of value chain was put forward by Michael Porter, a professor at Harvard Business School. It is mainly used to seek and determine the competitive advantage of enterprises among the many resources they have. Porter believes that every production and operation activity of an enterprise is an economic activity that creates value, and all these different but interrelated production and operation activities constitute a dynamic process of creating value, that is, value chain. [ 1]
Value chain divides the production and operation of enterprises into two categories: basic activities and auxiliary activities. Among them, the basic activities cover enterprise production, marketing and sales, import and export logistics, after-sales service and so on.
Support activities involve procurement management, technology development, human resource management and infrastructure construction. The significance of value chain analysis lies in decomposing business activities into valuable activities, analyzing the reasons for the differences in value changes and the relationship between activities, thus reorganizing or perfecting the value chain, grasping the "strategic links" in the value chain, effectively controlling costs and maintaining the competitive advantage of sustainable development. JD。 The reason why COM can occupy a leading position in the field of e-commerce is that it reasonably applies the total cost management based on the value chain and firmly grasps the "strategic link" in the value chain.
Second, JD.COM Mall management overview
20 14 on may 22nd, JD.COM was successfully listed on Nasdaq. According to the data of iResearch, a third-party market research company, JD.COM is the largest self-operated e-commerce enterprise in China, and the share of 20 15 in the self-operated e-commerce market in China is 56.3%. The goods sold online include household appliances, digital communication, computers, household goods, clothing, mother and baby, books, food, online travel, etc. 12, with tens of thousands of brands and millions of kinds of goods.
Talking about JD. Regarding the management mode of JD.COM Mall, Group President Liu revealed. COM's "inverted pyramid" management model, which is mainly divided into four levels, namely team, supply chain, key performance indicators and brand. [2] Please see the following figure:
The first layer, the basic layer, the cornerstone of enterprise management is the team. The highest purpose of basic management is to give full play to the greatest role of each individual and achieve the goal of efficient and coordinated work of employees. The second layer, the system layer, is the system flow that guides the daily operation of the company, and its core includes three major contents: logistics, information flow and capital flow. The synergy between the basic layer and the system layer determines whether "cost and efficiency" has a leading edge. These advantages can be reflected through the third layer, key performance indicators. For example, whether the unit express delivery cost is lower than that of competitors, and whether the inventory turnover rate or capital turnover rate is better than that of competitors. Only by taking the lead in "cost and efficiency" can we gain advantages in "product, price and service" and build the core competitiveness of the brand, that is, to achieve the fourth grade, the ultimate goal of the brand. Analysis based on JD. COM's operation mode and development trend, JD.COM mainly focuses on the second and third of these four levels, aiming at realizing the strategic objectives of the enterprise through the integration and effective management of the value chain at the system level, firmly grasping the two curves of value chain efficiency and cost control, continuously optimizing key performance indicators, and reducing costs and increasing efficiency. In recent years, a series of practices in JD.COM have confirmed its business philosophy of trying to comprehensively reduce costs by coordinating all links in the value chain.
Thirdly, JD.COM Mall should improve the value chain management and reduce the cost in an all-round way.
Generally speaking, the dynamic value chain from JD.COM delivery to customer receipt includes the following links: procurement, sales, distribution, payment and feedback. In JD.COM, cost management is fully embedded in every link of the value chain, and targeted measures are taken in every link to optimize the value chain management and reduce costs in an all-round way.
1. Purchase link
(1) Take advantage of traffic to reduce procurement costs.
One of the reasons why JD.COM can become a giant in the e-commerce industry is its competitive price. With the increasing traffic, JD.COM has the upper hand in the negotiations with suppliers. The steady increase of gross profit margin year by year shows that with the increase of scale, JD.COM has gradually improved its bargaining power with upstream suppliers. According to JD.COM's data. In the annual reports of COM, the proportion of operating cost to operating income decreased from 94.55% of 20 1 1 to 85.98% of 20 17, and the gross profit margin increased from 5.45% of 20 1 1. The main reason for the decline in operating costs is the reduction in procurement costs.
On June 20 15, JD.COM proposed to extend the account period of commodity suppliers. According to the mail provided by the merchants, JD.COM Mall requested that the account period be extended from 45 days agreed in the original contract to 60 days from May 20 15. Accounting period is a common problem in retail industry, which means cash flow for both e-commerce and suppliers. Large flow is a bargaining chip for JD.COM to compete with suppliers. After having a certain scale, JD.COM seized its own advantages and turned them into favorable cash flow.
Furthermore, by purchasing goods directly from manufacturers, JD.COM surpassed wholesalers, middlemen and other links, and no middlemen earned the price difference, further reducing its own operating costs.
(2) Efficient inventory management, reducing costs and improving efficiency.
JD。 The inventory management of COM is very orderly and has a fixed operation process. Goods that need to be loaded and unloaded will be loaded and unloaded after the freight car such as the gate stops, and the staff will mark the warehousing record in case it needs to be put into storage at any time. The storage center focuses on the storage according to the size of the goods. Functional blocks are orderly divided, including storage area, storage center area, goods storage area, high-value goods area, heat preservation area, waiting delivery area, scanning area, packaging area, unsubscribe area and so on. All incoming and outgoing records, order receiving and sending are managed by the information system.
In the warehouse, the goods are arranged in the order of letters a-p, and the warehouse keeper's total order is also arranged in the order of A-P. After receiving the order, the warehouse keeper picks up the goods from area A to area P in the above order, just walking around the warehouse and not going back. The warehouse keeper has to take 20 orders at a time. After the warehouse keeper puts the selected goods on the cart, the sorter sorts them according to the order, and then completes a series of follow-up work such as verification, invoicing and packaging. This systematic operation process greatly reduces unnecessary repetitive work, improves work efficiency and reduces enterprise costs. [3]
2. Sales links
(1) e-commerce business model reduces operating costs.
Through rich and humanized websites and mobile phone clients, JD.COM has built a virtual comprehensive department store for consumers. As long as there is a network, consumers can browse and buy their own products at will by tapping the keyboard and clicking the mouse without leaving home. This online sales model does not need to operate offline stores, which greatly saves the store rent and all subsequent related fixed expenses such as maintenance and sales staff salaries. Moreover, physical stores usually face risks such as poor site selection and poor management, and online sales model can avoid these risks. Compared with operating physical stores, the cost of e-commerce business model is undoubtedly lower. Of course, JD.COM must invest a lot in information technology, system support and maintenance, but as long as the website and client are well done, the same website and client can also serve hundreds of millions of customers. The unit operating cost based on customer flow will decrease with the continuous expansion of JD.COM.
(2) Shaping word-of-mouth brand day and precise marketing.
With the help of advertisements on its own Internet platform, JD.COM will timely and effectively deliver commodity information to customers, and use special promotions, snap-up activities and vouchers to stimulate customers' desire for consumption. As we all know, June is the anniversary month of JD.COM every year. During the anniversary month, JD.COM will launch a series of large-scale promotion activities, with "Red June" as the promotion point, and the anniversary of June 18 is the biggest promotion day in JD.COM. 20 17 6 18, JD.COM has created a customized interface for consumers according to their different preferences. Different consumers may see different goods, shops, lists and venues, so "let the goods find people." [4] As of 24: 00 on June 17, the accumulated order amount on the day of the event reached 1 199 billion yuan. Compared with 20 16 tmall double 1 1, the difference is only 800 million. The marketing strategy using the network platform is simpler, more accurate and more effective, without wasting any unnecessary resources and ensuring that every operating cost is spent on the cutting edge. In addition, using cloud computing and big data, JD.COM can effectively record consumers' search records and promote and display related products. This customized product promotion and display can quickly attract consumers and greatly improve the chances of placing orders.
(3) Continuously improve the customer management system and reduce customer maintenance costs.
JD.COM always adheres to the business philosophy of customer first, and is committed to establishing good customer relations and mutually beneficial strategic partnership with customers. In order to improve customer satisfaction and stickiness and reduce hidden costs of enterprises, JD.COM has designated a series of perfect membership systems to cultivate customer loyalty and encourage additional purchases. JD.COM classifies users into five grades according to their cumulative spending amount and activity on the website, namely, registered members, bronze members, silver members, gold members and diamond members. Members of different grades will enjoy different services, and the higher the grade, the better and more comprehensive the service. For example, gold medal members can enjoy free shipping in 59 yuan, while the standard for other members is to spend all their money in 79 yuan. In addition, gold medal members can also enjoy vip telephone special service. Through this perfect membership system, JD.COM has cultivated a considerable number of loyal customers.
In addition to the perfect membership system, JD.COM has a set of perfect procedures in pre-sales and after-sales customer service. Pre-sales consultation includes telephone, website message or email. After the customer service staff answers the questions, the system will automatically send an evaluation request to the customer to rate the performance of the customer service staff. JD.COM will evaluate the response speed and related scores of customer service staff the day after tomorrow. On the after-sales side, JD.COM promised to return the unused goods without affecting the secondary sales. If I is due to insufficient product quality, it can be extended to 15 days. If it exceeds 65,438+05 days, but it is still within the warranty period, JD.COM will carry out maintenance or take other measures according to the specific conditions of the goods to ensure that customers avoid losses. The perfect return and exchange policy provides protection for customers and encourages them to buy with confidence. These systems that are constantly improving in practice are actually JD. Efforts to maintain customer relationship and improve resource utilization by using existing resources and information systems.
3. Assign links
The logistics distribution in JD.COM has gone through three stages:
(1) strategic layout, strive for the lowest cost layout.
Like other e-commerce enterprises, JD.COM also adopted the third-party logistics distribution mode in its early days, and its partners included Shentong, Tong Yuan, SF Express, China Post and other companies. This outsourcing logistics model has given JD.COM the energy to develop its core competitiveness in the early stage of its development. However, with the expansion of business scope, fierce competition in e-commerce market and increasing emphasis on customer experience, JD.COM has gradually discovered that there are some unsolvable drawbacks in the third-party logistics model. Therefore, since 2007, JD.COM has started a nationwide strategic layout and started to build its own logistics system. By the end of 20 17, JD.COM had 9 large intelligent logistics centers "Asia No.1" and 263 large warehouses, covering more than 2,000 districts and counties in China. Delivery methods include 2 1 1 limited delivery, next-day delivery, express delivery, Beijing Zhunda and night delivery. Different orders in different cities can specify different delivery services. This fast, accurate and customizable delivery service has greatly improved customer experience satisfaction. After cloud computing and big data analysis, warehouses and logistics centers are built in strategic departments all over the country, and the logistics network layout is reasonable, minimizing the futility of distribution links and delivering at the lowest cost.
(2) Establish brand image by using self-built logistics resources.
Through the self-built logistics system, JD.COM can not only provide customers with high-quality and efficient services, but also skillfully integrate brand promotion into logistics services by using standardized terminology, unifying personnel's clothing and tools, and promoting brand logo. , and easily complete the marketing process to establish a brand image among customers. Self-built logistics system strengthens the control of logistics cost in JD.COM, reduces the cost through reasonable planning of logistics cost, and makes up for the huge capital investment in the early stage.
(3) Make proper use of outsourcing logistics and optimize the logistics cost structure.
With the development of JD.COM. The business of COM extends to second-tier and third-tier cities year by year, and establishes logistics distribution centers in towns and villages in remote cities. Its small business volume is difficult to support huge operating costs. Considering the cost-effectiveness, JD.COM adopts the way of cooperating with local third-party logistics or manufacturers to complete the distribution. At present, JD.COM has formed a mixed logistics distribution model, which is mainly based on self-built logistics and supplemented by cooperation with third-party logistics. Compared with self-built logistics system, outsourcing logistics loosens the control of the whole logistics distribution process, which may be affected by the operating risks of outsourcing logistics companies. If there is a problem in an operation link of an outsourcing logistics company, which affects the delivery efficiency and service quality of goods, it will lead to customer dissatisfaction. Therefore, JD.COM carefully selects the third-party logistics enterprises according to the information records and economic strength, and establishes a supervision and inspection mechanism to control the outsourcing logistics risks through dynamic contracts. Because logistics itself has the advantage of economies of scale, with the expansion of sales in second-and third-tier cities in JD.COM, its bargaining power with third-party logistics partners will be improved, thus further reducing the cost of outsourcing logistics. In addition, outsourcing logistics can make JD.COM return to its core business, and concentrate the resources of enterprises on the most valuable places.
JD.COM does not invest much in self-built logistics, resulting in a waste of resources; Appropriate introduction of outsourcing logistics but strict control of service quality will not reduce the overall service level and customer satisfaction, making the whole logistics cost more reasonable and perfect. The overall layout of logistics distribution in JD.COM is not only for speed, but also for cutting into the links of industrial chain and value chain. This is a unique value chain integration model in JD.COM. It is a vertical non-integrated online retail format with product flow management as the strategic core, cash flow management as the system support and information flow management as the means of resource integration. It has the characteristics of closed business, open platform and increasing long-term marginal income. This mixed logistics distribution model can not only meet the needs of different customers, but also strike a balance between cost and efficiency, which meets the requirements of different development periods of enterprises.
4. Payment link
In the early days, JD.COM didn't realize the harm of lacking its own payment system. In the early stage, the online payment function was mainly realized through cooperation with Alipay and Tenpay. However, on 20 1 1 and 20 12, JD.COM terminated its cooperation with Alipay and Tenpay, and started to build its own payment system by acquiring online banking. JD。 This move is more to avoid being controlled by others. With the development of the times, rich scenes and convenient services, mobile payment has become people's living habits, and people hope to use mobile payment conveniently anytime and anywhere. With the changes of the times, JD.COM has created its own payment methods such as JD.COM White Strip and Jingdong Wallet through unremitting innovation.
(1) Self-built payment system to master the core data.
Third-party payment companies often know the confidential information of e-commerce companies, such as transaction volume, capital flow and rate of return. The self-built payment system allows JD.COM to hold these core data tightly in his own hands. Big data is a necessary foundation for analysis. Master the core big data and systematically analyze the customer groups, such as the customer's consumption level, the preferred product category, the return rate, etc., so as to promote it in a targeted manner and increase the purchase rate.
(2) The payment system is associated with various functions to enhance user stickiness.
In order to stimulate more people to use JD. The self-built payment system of COM and the continuous innovation of JD.COM in recent years have enabled Jingdong Wallet to have the payment function, and at the same time, it also supports financial management, insurance, credit card and other functions. By opening the small vault in Jingdong wallet, users can purchase wealth management products and improve wealth management income, and at the same time, they can flexibly arrange funds and pay at any time. The policy function in Jingdong Wallet supports users to purchase protection insurance, auto insurance, accident insurance and life insurance.
5. Feedback link
The last link of value chain management in JD.COM is the feedback link. After each order is completed, the buyer can make a comprehensive evaluation of shopping, including goods, logistics, customer service and so on. Encourage customers to make positive comments by rewarding Jingdou. There is a Jingdou reward for taking photos and evaluating the drying list. The higher the order amount, the more rewards you get from Jingdou. Finally, JD.COM will show the favorable rate of this product on the website.
(1) intuitive evaluation information, reducing the invisible cost of customer maintenance.
For each product, JD.COM will intuitively show the favorable rate and detailed evaluation of the product, so that customers can conveniently browse and deeply understand the evaluation of the product by other users. Since the same page contains various commodities with different specifications, JD.COM has introduced a new viewing and evaluation function. After the customer selects the goods he wants to buy, he can select "View only the current goods" to filter out the corresponding evaluation of the locked goods. This convenient and effective new function can always bring surprises to customers, increase the purchase rate, shorten the sales cycle and reduce the hidden cost of maintaining customers.
(2) Comprehensive feedback information to reduce internal management costs.
JD。 The evaluation system of COM covers all aspects, including the star rating of express parcels, the delivery speed and the service attitude of the delivery staff. Through this comprehensive feedback evaluation, JD.COM can know the current situation of enterprise operation and customer satisfaction. Be able to rectify the complaints or suggestions pointed out by customers, consider improvement measures and continuously improve the internal management of enterprises.
Fourthly, the enlightenment of total cost management in JD.COM based on value chain.
Through the effective management of each node in the upstream of the value chain, JD.COM has reduced the cost of enterprises and improved the efficiency of enterprises. JD.COM takes the lead in cost and efficiency, establishes a good brand image among customers with cheap products and high-quality and fast service system, improves customer satisfaction and loyalty, and reduces the hidden costs of enterprises. The implementation of total cost management in the value chain needs the necessary foundation and premise.
(1) Advanced information system is the basis of total cost management based on value chain.
E-commerce enterprises must improve their own information systems, establish a database with massive information, use data analysis and data mining to predict consumers' preferences, improve customer satisfaction, and reduce hidden costs while reducing operating costs;
Use tools such as data search and classification to analyze consumers' browsing records and buying habits, realize real-time inventory management and reduce inventory costs;
Using advanced network information technology to build a payment system to save capital costs.
(2) Instant inventory management is the premise of total cost management based on value chain.
Inventory management is the first step of total management based on value chain. The quality of inventory management is directly related to the operational efficiency of downstream sales and distribution. Real-time inventory management is not only beneficial for e-commerce enterprises to keep inventory at the lowest level, reduce the occupation of enterprise funds and achieve the purpose of reducing inventory costs, but also a necessary means to improve the cost management of downstream nodes in the value chain.
(3) Efficient logistics system is the core of total cost management based on value chain.
Logistics cost has always been the core content of e-commerce enterprise cost management, and the effect of logistics cost management is directly related to the success of all-round cost management based on value chain. E-commerce enterprises should recognize the advantages and disadvantages of self-built logistics system and outsourcing logistics, choose the logistics system suitable for their own actual situation, optimize logistics costs and improve their competitiveness.
References:
[1]. Enterprise strategic management. [m]。 Higher Education Press.201012 3rd Edition: 2 17 pages.
[2]. Tao Yun. Analysis of the development trend of JD.COM [j]
[3] Chen Shuangling. Research on Cost Control of E-commerce Enterprises —— Taking JD.COM Mall as an Example [j]