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'Cross-border gas station' interrogation: Is flexible supply chain a false proposition?

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'Cross-border gas station' interrogation: Is flexible supply chain a false proposition?

Due to a series of problems such as power and production restrictions, the spotlight suddenly fell on the factory.I have written in many articles before that the final barrier of a brand is its product. What is a product?So many friends began to discuss the topic of flexible supply chain again.To be honest, this term is not new, but it has become popular this year with Shein. Countless analytical articles have been amazed by Shein’s one-week performance. Many companies are facing increasingly higher inventory and logistics costs and are thinking: can Can’t produce flexibly?

This article will briefly analyze:

What is a flexible supply chain?

What is the problem with flexibility?

What are the results of Handu Yishe’s flexibility experiment?

How are cross-border e-commerce related to flexible supply chains?

What is the relationship between flexible supply chain and brand?

Is the key to shein's success a flexible supply chain?

Do foreign companies use flexibility?

Is a truly flexible supply chain possible?

1. The development of flexible supply chain and the exploration of Handu Yishe

'Flexible supply chain' is actually a concept proposed by American supply chain experts in the 1980s. It was also at this time that the word 'supply chain' really entered the B school's vision and became a subject.why?The 1980s was the beginning of globalization and the beginning of mass production. Developing countries made products and developed countries put their logos on them, so there was a 'chain' and there was supply chain management.I haven't found out how this flexibility is translated into 'flexibility', but it can be seen that this concept not only has a long history, but also has something to do with transnational production from the beginning.

What is flexibility?To put it simply, it means quick response, replenishing whatever goods are in short supply, and later developed to determine production based on sales, selling first and then producing, etc.To give a simple example, if you order 1,000 pieces at a time, only 500 pieces are sold, and the remaining 500 pieces become inventory.If you can produce 500 pieces from the beginning and then repeat the order if the sales are good, then the pressure of inventory of these 500 pieces will be eliminated.This is probably what everyone is talking about every day as 'small order and quick reaction'.

Although nowadays when flexible supply chains are mentioned, everyone calls them shein, but in fact, when the term really became popular in China, shein was still unknown.Just like at that time, the term 'big seller' did not belong to Amazon, but to Taobao. Around 2010, 'Taomai' was the one that really brought the term 'flexible supply chain' to the media and The initiator in the eyes of the capital circle, and when it comes to Taomai, we have to mention a star company of the year: Handu Yishe.

Instead of rushing to study Shein, friends who make or study clothing today should actually study the company Handu Yishe carefully.Although today’s children have probably never heard of this brand, it was a phenomenon in Taobao back then.In 2014, sales exceeded 1.5 billion. Considering the overall scale of online shopping at that time and the '1 billion bottleneck' that is being talked about everywhere today, it is estimated that the sales are equivalent to 5 billion today.

However, Taomai itself is not the focus of our article. The point is that Handu Yishe was the first to promote 'flexible supply chain' with great fanfare. In 2015, an article titled 'Handu Yishe: Five Major Systems The article 'Strengthening Flexible Supply Chain on Double 11' reads: 'Handu Clothing House's five major ecosystems have more than 240 suppliers, a minimum order quantity of 30 items, and an average of 20 days from order to delivery. cycle, more than 30,000 styles produced and sold, more than 40% of duplicate orders and many other indicators'.Compared with the many previous articles that deeply discussed Shein, Shein has more than 300 suppliers in Guangzhou, and the minimum order size is 100 pieces. It seems that Handu Yishe is even more 'soft' than Shein.

Generally speaking, although Metersbonwe has also proposed the concept of flexibility before, Handu Yishe is the first to actually implement it.This flexible supply chain was proposed together with its later very famous 'group system' concept. The so-called 'group system' is a bit like what the Japanese call 'amoeba management', to the effect that The company incubates many groups within the company. Each group has a certain budget to incubate its own brand. With the help of the company's flexible supply chain system, the new brand can quickly grow from 0 to 1.

Regarding this 'group system', I feel it is very related to the 'brand matrix' and 'brand incubation' that many people are talking about today. The following original text quotes Handu boss Zhao Yingguang's explanation of this model in an interview:

'1.'Group system'

'Handu's model is a 'full-process single product operation system with the product team as the core'.It is decentralization. This product team consists of 1 to 3 people, with a maximum of 3 people. All public resources and services are organized around the team.

There are currently 280 members of this group in Korea.Among the three people, there is a designer, one is responsible for product page promotion, which is called a shopping guide in traditional business, and there is a goods specialist, who plays the role of purchasing and is responsible for the organization of the supply chain.

2. How do three people play?

The first is to set the task, which is usually based on last year's completed sales and this year's normal growth rate of the company.

For example: a certain group sold 1 million yuan last year, and if the company's normal growth is 50% this year, it must complete 1.5 million yuan or sprint for 2 million yuan.

After setting this goal, the financial department will invest 1 million funds in the name of this group, and the group will be able to operate.

3. What are the rights of the group?

  1. What style to choose

  2. How many colors, how many sizes?

  3. How much does it cost

  4. What activities and promotions to participate in?

  5. Discount rhythm and extent

These are all decided by the team itself. This is basically all the rights of the owner of a clothing company. Styles, prices, quantities, discounts, promotions... all are decided upon by the three people through discussion. They have very great rights.

A team integrates R&D, sales, and procurement, and three people become the core operating mechanism. There is no difference at all for each group whether the company has 10 groups or 1,000 groups.

4. How to assess such a group?

The company's assessment of the team and distribution of bonuses are calculated based on the 'performance commission formula', which has three core indicators: performance completion rate, gross profit margin, and inventory turnover rate.

The performance rankings of all groups on the previous day are announced at 10 a.m. every day in Handu Yishe.Excellent teams will receive higher bonuses.The distribution of bonuses within the group is determined by the group leader.

Later, he spent a lot of space explaining this organizational management model, which is actually quite interesting. However, since this article mainly studies the supply chain, I will not analyze this organizational form too much. However, several interesting things can be seen from the above. point:

First,Handu Yishe's flexible supply chain is actually closely related to the incubation of small brands, but its ability to integrate the supply chain is because it is a large company.To put it in layman's terms, these factories are willing to play with you because you are the eldest brother, but the eldest brother actually uses his own resources to bring a bunch of younger brothers. The factory originally did not play with the younger brothers, but because your elder brother came, we gave you face. Show your support.

This is exactly the opposite of Shein. In the Shein model, all factories are part of serving a single brand. Shein's quick response makes a brand bigger and stronger, while Handu Yishe's quick response makes a brand bigger and stronger. Every small brand starts out.This brings up a question: Is the core of flexibility to reduce inventory pressure for big brands, or to lower the startup threshold for small brands?The factory was originally here to be in the lap of the big brother, but now it has become a service to a bunch of younger brothers. So, should we be under a big tree to enjoy the shade, or should the children of the poor be the masters early?

second, does small order have scale effect?In the Handu Yishe model, 'In order to reduce risks, Handu Yishe sets the initial capital limit of the product team to 20,000-50,000, and the usage limit for the next month is 70% of this month's sales. The inventory generated during the period The backlog is borne by the team, so the product team will set the order quantity for new products to 30% of the planned quantity, generally 200-300 pieces, and the order quantity for styles with higher single product prices is 20-50 pieces.'

This unit can be said to be extremely small in the clothing industry, and the supply chain can also be said to be extremely 'flexible'. However, the problem is that when the overall scale is too small, even if calculated at the limit of 50,000 yuan and 50 pieces, there is only With 1,000 SKUs, it is difficult to create a hit in the Red Sea battlefield of clothing.So flexibility can reduce the cost of a single SKU, but at what appropriate level should the cost of a single SKU be set?At the same cost, should we increase sku and reduce production or increase sku and promote a single model?

Regarding the issue of sku, we will talk about it later.

third, this point is closely related to the second point, are the quick response model and the hot model model the same strain?Handu Yishe has established a systematic data model, and 15 days after each new product is put on the shelves, the product will be divided into four categories: 'explosive', 'promoting', 'flat', and 'sluggish'.Hot items and popular items can be refunded, usually around a few thousand pieces, while regular items and late items must be discounted and promoted immediately during the peak sales period.

This model is actually a bit similar to the model testing model of many website groups later, but the problem with this is: how much testing can be done to find a hot model?How long does it take to test out a hot product?Is the reason for flat sales and slow-moving sales due to lack of potential, or because the materials provided are not good enough and the resources are insufficient?

Essentially, because of the possibility of flexibility, there is the possibility of a test model, but can the test model produce a brand?This is another question.

The model of Handu Yishe still sounds very advanced even today, so what is the result?

It cannot be said that it is unsuccessful, because under this model, Handu Yishe has indeed hatched many sub-brands. In 2017, the number of new products reached 30,000, which is twice that of Zara.But it is a pity that these brands did not leave much traces in the end. On Double Eleven in 2020, Handu Clothing House fell out of the top ten women's clothing list for the first time. In the same year, it withdrew its application for listing on the main edition. Instead, Shein came from behind and became a fast and flexible women's clothing brand. The true spokesperson of the opposition.

The reasons for this are of course related to the subsequent changes in the traffic pattern, the fading of the Korean Wave, and fierce competition. But aside from these front-end factors, from the perspective of the supply chain alone, my personal opinion is that the model of Handu Yishe is very good. It is a great attempt to explore spirit and creativity, but it also reflects several core issues:

First, flexibility may divert resources.In the beginning, the purpose of small orders was to break up large orders. However, as small orders became smaller and smaller, each order was allocated limited resources. The risk was reduced, but the scale effect may also have disappeared.

Second, the flexible categories are limited.What was very puzzling at first is that the 'group system' pioneered by Handu Clothing House is actually very innovative, but you are the one who makes clothes, and you also incubate a bunch of clothes makers. This is not what you are doing with yourself. Fight on your own?But then when I studied the supply chain, I suddenly understood: Because Big Brother only has advantages in the clothing supply chain, it may not be so flexible in other categories.

But overall, Handu is still a very powerful company, and its thinking is also very advanced. Let me start with this and talk about some recent thoughts on the supply chain.

2. Several major elements of flexibility

For a long time, the supply chain has been a deep industry. Recently, I communicated with some factory friends and I deeply felt that while China's supply chain is advancing by leaps and bounds, I also felt that although 'flexibility', 'small orders' and the like Nouns have become popular, but there are some real pattern issues worth thinking about.

1) The relationship between flexibility and hot products

Let’s take a look a few steps further. How does this concept actually evolve?

1.0 Because I can't predict which product will sell well at the beginning, I don't want to place so many orders first. I will try each style in small batches first, and then repeat the order if it is good, aka. Small orders are quick to respond.

2.0 I actually don’t need to produce a small order. As long as I have a design concept or product drawing, I can sell it first and then produce as much as I sell, aka. Crowdfunding.

3.0 I don’t design my own designs anymore. I copy other people’s designs and sell them directly if they are popular, aka. sell pictures.

What a coincidence, this happened to be just as popular as the cross-border circle in several stages. Although many of the later website groups told the story of small orders and quick response, in fact many of them were just selling pictures. If the pictures sold well, you could just take them. Ready stock, even the step of quick reaction is omitted.

What is the core meaning here?It is to go directly from the traditional 80/20 rule to the 'hot model': In the past, maybe 20% made money, and 80% became inventory. Now I only promote the 20% that I know will be popular, so in theory I avoid all risks. .

This model is actually closely related to the later 'follow-up sale'. 'Follow-up sale' is nothing more than saying that I don't have to test it myself. I can just do it after someone else has tested it. But the problem is that I don't need to test it at the beginning. On the contrary, those who make money suffer a loss. If I test it and you copy it, then I can only keep releasing new ones, and eat them all once I release them, leaving you to pick up some scraps.

On the surface, this has indeed improved efficiency. For example, big companies like Shein can test thousands of models a day, and big data is getting more and more powerful. However, in fact, everyone feels that 'hot models' are getting harder and harder. why?

Because everyone is no longer differentiated, and consumers are all consumers. If you can test others, you can also test others. The so-called advantage of the supply chain has been completely overwhelmed by the flow advantage. In the end, if you don’t have the flow advantage, you don’t need to talk about the supply chain at all. It's over.

2) The relationship between flexibility and category

The core of the 'hot style' model is style selection, so a large number of styles is the basic condition, so basically when it comes to flexible supply chains, everyone is talking about clothing.Clothing is indeed a magical category. Among many fast fashions, it has the largest market, the highest ceiling, the most fabrics and accessories, and the most styles. However, in terms of the production process, it is relatively simple: no research and development, no mold opening, Big machines can do it, and so can small workshops.

People often discuss questions such as 'Can another Shein be created in the xx category?' Everyone can also give answers from the aspects of user needs, traffic patterns, etc., but the first premise for Shein to test models to the extreme is There are so many styles of clothing that can be tested. Secondly, the production cycle of clothing can be compressed to a few days to meet the delivery time.

For example, it is not that power bank cannot be produced flexibly, but what can you do to flexibly produce it?You can also test models, but are there any popular power banks?Suddenly a power bank is in use all over the street?Even if there is, if you measure that power banks made with little cat heads are particularly popular, it will take several days to open a mold for a small cat head, and it will take more than ten days to produce a shell with a small cat head, let alone You still have to test it, etc. By the time you put it on the market, this model may already be out of date.Therefore, Kitty rarely hears the word 'flexible' in electronics factories.

What do you think about 'shein in the beauty industry'? She is particularly powerful. She pointed out that the overall SKU of beauty and skin care is still relatively small. The most important thing is consumers' perception of the product, so in fact, the quality of the design is judged by testing the model. It cannot play a decisive role.Then a few days ago, I happened to communicate with a friend who makes beauty and skin care overseas. They actually also 'test models' to try the conversion of various keywords, but I asked them if they would have a flexible supply chain, and they said I don’t think it’s necessary, because after testing, either I can place a big order if it sells, or I can change the product if it doesn’t sell, and quick response is even more unnecessary.

Therefore, there are several conditions for flexibility: a large number of SKUs + styles are very important, hot products are timely and the production cycle is short.

3) The relationship between flexibility and logistics

Although everyone is convinced by Shein and it seems that this 'three-day fast turnaround' is a very remarkable achievement, in fact, in the eyes of many domestic clothing manufacturers, this kind of timeliness is not impossible to achieve.Take live streaming e-commerce as an example. Douyin promises to deliver goods within 48 hours of placing an order. Many stores also broadcast sample clothes and place orders for reproduction.It is said to be 48 hours, but many customers will not pay much attention to it if it takes a day or two. This model of front store and back factory, if it is close to the fabric market and has strong ability to mobilize workers, it can be shipped within three days and received within a week. Do it.

But why is it so difficult to cross borders?In fact, from the production side, cross-border is the same as domestic. Douyin sellers can achieve fast response, and cross-border sellers can theoretically do it. But the problem is that the cross-border logistics link is too long. Even if you produce in three days Once it comes out, it’s impossible for you to get the goods within a week.The most powerful thing about Shein is not only the supply chain, but also the logistics. It can almost single-handedly support the entire Zongteng, from overseas warehouses to chartered flights. This is not something that ordinary small companies can do.

So when talking about 'quick response', there is another core capability, which is 'express transportation'.When domestic logistics is not a problem, 'quick response + express delivery' can form an excellent customer experience.

4) The relationship between flexibility and flow

Traffic is the front-end, and the supply chain is the back-end. Generally speaking, the traditional production model is to first have the back-end products, and then go to the front-end for promotion. But now the new model that everyone likes to talk about is to have the front-end testing first, and then go to the back-end production. .It sounds fancy, but the problem is that this model amplifies the power of flow. In other words, if your flow is not enough, or the measurement is inaccurate, it means that your starting premise is wrong, and it will be meaningless no matter how gentle you are later.

how to say?For example, if you test 100 people, 50 of them have placed an order. You feel that the conversion is very good, so you happily place an order. However, when you increase the promotion, you find that the performance of this model is not good when it reaches 1,000 people.Or maybe a lot of people did place orders, but the return rate was surprisingly high.Not to mention common problems such as false measurements.

This is similar to the various pitfalls that mobile apps will encounter when growing, such as the CAC becomes higher as the volume increases, the larger the user base, the lower the ARPU, etc., but for mobile apps, traffic operation does not involve actual products. , relatively controllable, but there are more and heavier e-commerce links, and flexibility relies more on the accuracy of traffic. If the traffic itself cannot explain the problem, the space for supply chain optimization is also limited.

On the other hand, if the traffic is too strong, then no flexibility is needed, and any amount of goods can be sold.This is just like what some entertainment agencies often say, 'As long as you are willing to spend money, you can be flattered by whatever you look like.' When used in cross-border e-commerce, this sentence probably means 'As long as you With Shein's traffic, I can buy you a few pieces of any kind.'So shein's success is the supply chain?Of course it is, but not necessarily.

Three: Flexibility and brand: Are they leading to the same goal or running in opposite directions?

Many brands liked the concept of flexibility from the beginning. Why?Resources are limited at the beginning. Of course, the more tests, the better, and the smaller the order quantity, the better. So I'd better try out a reliable product first, then sell small orders, and then expand it once it's stable.This is also a very reasonable path.

I have always liked to read some historical books, and occasionally read business history. What I find very interesting is that people who were engaged in branding or retailing in the past were more often portrayed as 'business wizards', such as Knight The first time they saw Onitsuka Tiger, or the first time Schultz saw Tiantian Coffee, they shouted: 'Ah, this thing is really good, I think it can make money, I want to start it!' (Original text That’s not how it’s written, but that’s what I think it means).

But later entrepreneurs prefer words such as 'data-driven' and 'intelligent decision-making'. For example, if you are making clothing now, don't you talk about big data selection, AI modeling, and intelligent middle-end , you are too embarrassed to come out to raise funds.

This is a huge change in brand definition: the previous brand was the founder's brand, and it was he who decided the connotation, tone, and direction of the brand. Therefore, various old luxury brands in Europe are themselves named after the founder, and the people who come after him also succeed him. This legacy. But today’s brand is not the founder’s brand, but the user’s brand: I will produce whatever the users say they like. I am not me, I am just the spokesperson of the users.

But this brings up a fundamental question: Is the brand the founder’s brand or the user’s brand?

The path of a founder's brand is essentially neither flexible nor fast-acting. He promotes a product concept or design style, and even if the public does not accept it, he can still make people accept it.Just like Steve Jobs's famous saying, 'Users don't know what they want until you tell them.' When the iPod was launched, everyone thought it was ugly, but later he led the fashion. Instead, production determines sales, and you have to queue up to buy it.

The path of user branding is the opposite. It uses known and ready-made things to test the public's preferences. This makes flexibility a rigid need, because everyone has their own preferences, and if you want thousands of people to have different faces, then everyone must be the same. All tastes are different, it's a complex computing system.

So back to the essence of the brand, is the user brand measured by the model a real brand?This issue is a matter of different opinions, so some people say that strictly speaking, Shein cannot be regarded as a brand, but should be regarded as a platform.Because in a sense, the core function of the platform is to match the needs of both parties, rather than being an athlete yourself. The brand should represent its own position.

There is no need to argue about this issue, after all, everyone has their own understanding.The advantage of user brand is that it truly 'takes from the people, uses it for the people' and serves consumers wholeheartedly. You can say that it has no concept and tone, but in terms of growth, this model can indeed Even though it is very big, it has its own value.But the core issues of this model are firstly where your traffic comes from, and secondly whether your supply chain can fully guarantee that the goods are the same as the original version. After all, the test is a test, and there is a lot of uncertainty in the actual production process. If consumers place an order because of the style, but the quality of the product they get is worrying, and they still return the product, it still doesn’t work.

So basically women’s clothing returns have always topped the list in the industry, with 20-30% being commonplace. I heard that some Douyin live broadcast rooms can reach 80%. To be honest, quick response + high return rate may be a bigger problem than simple inventory backlog. , the inventory backlog can at least comfort you that the traffic is not in place, and you can save it by selling hard. 80% returns can only mean that there is a real problem with the product. Trying hard to sell is just trying hard to destroy the brand, which is even more embarrassing.

There seems to be a strange phenomenon in the brand circle now, that is, flexible quick response is supposed to be a model that stimulates more innovation for brands and gives everyone less trial and error costs, but in fact it makes many brands become lazier and lazier.

Indeed, if I can just test someone else's design, why should I go to such trouble to design and make products myself?So most of the products on the market now, it seems, you are copying me and I am copying you. Turning around, I see that they are all copied from big foreign brands, and then everyone is telling the story of big data selection + flexible supply chain. I have to create a new shein, which actually makes me feel quite scared sometimes.

Fourth, is flexibility a false proposition?

Once I was chatting with a foreign designer. They are a very niche independent brand. I kept asking you how to get such niche traffic. Don’t you think it’s difficult?Then they said that they think the most difficult thing is to predict the fashion trends of the next season, because they have to be ahead of the trend. If something is already popular, it will be too late for them to do it again, so they have to design the elements that will be popular in the next season. Go push.I said, wouldn’t others copy it immediately?They said yes, so we have to do it earlier and more expensively than others, and others will follow our lead, so that’s the way to go.

At this time, I remembered that a friend had told me that the investment data of many foreign DTCs were actually quite unsatisfactory, even not as good as many domestic overseas investment. I suddenly understood: it is precisely because foreigners are not so sensitive to traffic, so Instead, more attention is put on product definition and design. On the surface, it seems that Chinese sellers have reaped the dividends of a large number of copycats, but in fact, the copycats have made their original designs popular, so they have always been ahead of the trend. Frontier has always been more expensive than you.

Because I was researching this topic, I also consulted several factory friends who deal with foreign trade. I said that since China’s flexible supply chain is so developed, why don’t these foreign customers consider flexible production?Is it possible, for example, to place an order for a few hundred pieces with Adinaike, try it out, and then repeat the order?They said that although there are some new product lines that will try this, in general, large orders are still the main focus. Flexible is still a domestic brand, especially various new consumer brands.I said why?They said that on the one hand, they feel that cross-border communication links are relatively long and it is too troublesome to be flexible. Second, foreigners have been doing it for a long time and have a very mature customer research and product selection system in their home markets, so it is not necessary.

I have been thinking, is this a big opportunity or a big trap?From a domestic advantage point of view, this means that the efficiency of foreign supply chains is still relatively low, and there are many new models that have not been tried. But from a disadvantage point of view, if the product definition is always in the hands of others, then even if the supply chain efficiency is improved, Is it high or difficult to achieve brand premium? Can this be sustainable?

I have been talking to many friends recently, and I feel that what everyone is worried about are those things. Except for transactional matters such as logistics payment, in terms of models, we either talk about traffic or financing, and these two are actually of the same origin.

In an era when traffic and money hold everyone hostage, where should we go?What should a real brand look like?


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