The dilemma of traditional retail: inventory

　　How to understand what Alibaba Chief of Staff Zeng Ming said: "The future of the e-commerce industry is the C2B model driven by consumers, and the core of C2B implementation is a socialized supply chain platform"?

　　This problem is too big, so you might as well start from supply chain inventory management.

　　In traditional retail , inventory management is an important part of affecting corporate operations. Insufficient inventory and inability to trade will affect the company's profits; excessive inventory will occupy funds, resulting in waste of resources and affect the company's profits. Researching inventory issues and achieving cost reduction and efficiency improvement is an important topic of supply chain management.

　　"Push" supply chain puts inventory into a quagmire

　　Traditional retail activities are "push" supply chains promoted by manufacturers and suppliers. Under the "push" supply chain model, manufacturers develop and produce goods based on market research and experience analysis, make corresponding target decisions, and push the goals to downstream enterprises and retailers layer by layer. This will lead to a separation of supply and demand, a backlog of inventory, and producers' ability to respond to market demand is often very backward.

　　Specifically:

　　Inaccurate: Traditional retail activities are often conducted by manufacturers and suppliers to determine demand forecasts, inventory status, and production plans, but because they are far away from consumers, these conclusions are often inaccurate and lagging.

　　At the same time, in the entire industrial chain, due to the lack of cooperation and coordination among different companies and departments, information transmission is inefficient, manufacturers and suppliers’ predictions of the type and quantity of products, resulting in inventory pressure.

　　Untimely: In the current consumer market, "fast" is a very important feature. Companies must quickly grasp consumer needs and quickly bring products to the market in order to be profitable. However, it takes an average of a long time for most domestic manufacturers to go public from taking orders to the market. This is obviously inappropriate at a time when fast consumption has become a trend. Often, the product has just been launched and the consumption boom has passed, and in the end, the product can only be processed or accumulated at a low price. If this continues, the pressure on capital and inventory will be very high.

　　Inflexible: There is uncertainty in the supply chain, demand fluctuations caused by market changes, out-of-stock caused by unexpected changes in suppliers, production interruptions caused by emergencies within the company, etc., will all have an impact on inventory. The retail industry has a bullwhip effect, which refers to the inauthenticity of demand information going upstream along the supply chain, resulting in a phenomenon of amplification step by step, which leads to a large deviation between the demand information obtained by the supply chain and the customer demand information in the actual consumer market. Without a flexible correction mechanism, it often leads to an increase in inventory in the upstream supply chain.

　　"Pull-type" supply chain makes light inventory possible

　　New retail reconstructs the value ranking of retail entities, turning supply chain activities into a "pull-type" supply chain driven by consumer demand. Under the "pull-type" supply chain, retailers first restore consumers' life scenarios and consumption scenarios based on the analysis of consumer big data, explore consumers' demand characteristics and preference characteristics, and provide the above data to upstream brands and suppliers. Brands conduct research and development and production activities based on the accurate and clear consumer demand information provided by retailers and arrange reasonable production plans. As a result, a demand-oriented supply chain model has been formed, and consumer demand has become the first step in supply chain activities.

　　Big data makes inventory management based on scientific analysis rather than market forecasts. New retail overcomes the drawbacks of supply and demand disconnection and separation of supply and demand under the traditional business model. Supply and demand are connected directly, manufacturers directly connect with consumer demand, organize production activities based on the precise demand information of the target consumer group, and produce whatever consumers need, thereby solving the inventory problem.

　　Accessible information systems reduce the cost of information exchange in all links. Thanks to the implementation of new technologies, we have coordinated all links in a supply chain to get rid of friction caused by information opacity. They can communicate in real time and follow up in a timely manner, form a rapid response mechanism and a flexible allocation mechanism, and reduce inventory pressure to the forefront.

　　Inventory issues can never be optimized separately, and they need to consider room for improvement from the entire retail industry chain.

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