First, why should we engage in logistics? In the era of network economy, a modern enterprise, without modern logistics, means no flow. Why do you say that? Because this is determined by the driving force of modern enterprise operation. What is the driving force of modern enterprise operation? There is only one: an order. Without orders, modern enterprises cannot operate. In other words, it can't have anything flowing. To realize this order is to purchase according to the order, manufacture according to the order and sell according to the order. If we want to sell, purchase and manufacture completely by order, then the most important process to support it is logistics. If there is no logistics, it is impossible to purchase orders; If there is no purchase order, it means that the purchased materials are in stock, because we don't know who these materials are purchased from; If there is no order manufacturing, it is equivalent to being busy every day, but in manufacturing inventory, dry goods are equivalent to increasing inventory every day. Finally, if you sell without an order, you will deal with the inventory at home, because you don't know who to sell it to. The only way and the only way out is to reduce the price.
This is the essence of disorderly competition and price war that we see in China market now, because it has no other way out. There is no logistics. What is the end of the price war? Lose money and then stop production. Now many enterprises have stopped production. That's what I'm talking about here. Nothing flows. This is brought about by market competition. Without modern logistics, we can only stop production in the end.
This is from within the enterprise. From the outside, if you don't have modern logistics, then you can't connect with the Internet. Not surfing the internet means only death. Nothing can flow. Also, enterprises all over the world are engaged in modern logistics. If we don't engage in modern logistics, we can't talk about big international enterprises, and in the end we will only stop and die. So I think a modern enterprise must engage in modern logistics in the era of network economy. Without modern logistics, there is no chance to live.
Second, what is logistics? Logistics, I think, is two points: first, the management revolution of enterprises; The second is speed.
So why is it a management revolution of enterprises? Because no matter who wants to engage in modern logistics, they must engage in process reengineering and transform their lives. What is life? It is to reform the original organizational structure, the pyramid structure of linear functions, into a flat organizational structure. This is a very painful revolution for enterprises. Without this revolution, there is no way out. So, if the process goes on, what will it create for logistics? It is the two biggest characteristics that distinguish modern logistics from traditional logistics: the first is informationization, and the second is networking. In the process of doing this, we use "first-class three networks" to embody these two characteristics: informationization and networking. "First-class" is the order information flow. The order information flow embodies the informationization. Why? All information within the enterprise must flow around the order. If the information within the enterprise does not flow around the order, then informatization is completely meaningless. So, I think this is the first time we have used a stream to realize informatization. Networking We use these three networks, namely, global supply network, global distribution network and computer management network. These three networks are the foundation and support of logistics. Without these three nets, the transformation of logistics is impossible.
Some people may ask, since modern enterprises must engage in modern logistics and logistics must engage in business process reengineering, let's engage in process reengineering. Why bother? Because process reengineering is very necessary for enterprises, but it is also very painful and arduous. We have been working for two and a half years, and we are deeply touched. Here, I think of a sentence from Dr. Hammer, who put forward the management method of process reengineering. He said that process reengineering is a "revolution" of enterprises. He also quoted a famous saying of Chairman Mao: "Revolution is not a dinner party". From this, we know the arduousness and importance of process reengineering to enterprises. This is very important, but it is also very, very difficult. When I talked about this at the Swiss Institute of International Management, many European and American entrepreneurs were very interested. Why? According to statistics, only 20% can really succeed. If I want to do it, I must be fully prepared. If we want to do logistics, on the one hand, it means the management revolution within the enterprise, on the other hand, it means speed. What speed? In the information age, the winning weapon of enterprises is speed. In the 1980s, the winning weapon of enterprises was quality. Is quality management. In 1990s, the winning weapon of enterprises was business process reengineering. But in 2000, in the new economic era, the winning weapon of enterprises was speed. And this speed is to meet the individual needs of consumers with the fastest speed. How to achieve this speed? This is the synchronization mode we proposed today. For us, as long as we receive the order, everything is related to this order.
All departments and individuals in the department must act synchronously. What we require is synchronous flow and synchronous delivery. If there is no synchronous process, then it is impossible for us to make the order pass quickly and operate quickly. Finally, it will be delivered to users as quickly as possible. This is my second point, what is logistics.
Finally, I want to say: what logistics has given us. What does logistics give us Haier? The first one, giving us logistics, can enable us to achieve the goal of three zeros. Second, it gives us the core competitiveness to win in the market competition.
For logistics, what is the goal of 30? This is Haier's own decision. Three zero is zero inventory, zero distance and zero working capital.
Zero inventory. Three JITs, which are our weapons to achieve zero inventory: JIT procurement, JIT feeding and JIT distribution. This enables us to achieve zero inventory. Now our warehouse is no longer called a warehouse, but a distribution center. It is a temporary place for the next process assignment. I think that for enterprises in China, zero inventory not only means that there is no large backlog of materials, but also will not produce dull materials because of these backlogs. Of course, the most important thing is not here. The most important thing is to pave the way for zero defects. In other words, these materials are the best and freshest. It can make quality assurance have a very solid foundation.
Zero distance. Zero distance means that according to the user's demand, I get the user's order and then meet the user's demand at the fastest speed. During the visit, we can see that both the production process and the flexible production line are produced for orders. We have 42 distribution centers all over the country. These distribution centers can deliver goods to users in time. This can achieve zero distance. I think zero distance for enterprises not only means that my products don't need to be overstocked, but also has a deeper meaning, that is, I can constantly acquire new markets and create new markets in the market. As Drucker, an American management guru, said, "A good company is to meet the demand, and a great company is to create the market." The most important thing for us is to create the market.
Zero working capital. The so-called zero working capital means zero working capital occupation. The best thing in the world is Dell. We have the first two now: zero inventory and zero distance, so I can do it now. To put it simply, I can get back the payment that the user should give me before the payment period for the sub-suppliers comes. Why can I get back the user's payment? Because I can use cash. Why can I do cash spot? Because I made it according to the user's order. So when my product reaches the user, the user can pay me. This is the process of enterprises entering a benign operation. Finally, I want to show these three zeros directly. Logistics brings us these three zeros. But the most important thing is to give enterprises core competitiveness. What is the core competitiveness? In my opinion, it is the ability to gain user loyalty in the market, which is the core competitiveness. It doesn't mean that a core component must be produced. Some people say that I produce this core component, so I have core competitiveness. I don't think so. Dell does not manufacture software or hardware. It can be purchased from Intel or Microsoft. It can gain the loyalty of users, so it has core competitiveness.
What does logistics mean to us? It enables us to seek and gain core competitiveness. In my opinion, one hand grasps the needs of users and the other hand grasps the global supply chain that can meet the needs of users, and combining these two capabilities is the core competitiveness of enterprises.