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Logistics
Supply Chain Management Conference 2004
1
Haier Supply-chain Management
Presented by:
Liang Haishan, Vice President of Haier Group
Logistics
Supply Chain Management Conference 2004
2
Haier Statistics
Haier has experienced continuous turnover increase over the past 19 years after
the establishment.
(Source: Euromonitor)
Sales Ranking on Brand Basis
Logistics
Supply Chain Management Conference 2004
3
Background info of Haier Supply-chain Management
Enterprise
OrganizationShortened product
life spanCustomized
demand increase
Logistics
Supply Chain Management Conference 2004
4
Eliminate “2 Walls” in the way to success
Suppliers are destined to satisfy the
demands of end users.
Distribution contracts are signed not
only for low price, but also for feasibility.
Emerson (China) started in Haier (Jiaozhou) Industrial Complex
Logistics contract signed by Haier and Zhongyongtongtai
ChannelsEnd
User
Global
suppliers
Satisfy
Overseas stores
Home stores
Appliance stores
Supermarkets
Haier franchisees
Design
Haier Supply-chain improves innovations and respects customer value
Logistics
Supply Chain Management Conference 2004
5
Global
resource
Win-Win
Global
users
Products
Global
distribution
Order gained
Marketing
Order performance
Products+ODM
Logistics
JIT
Order info
Distri-bution
CapitalGlobal marketing
network Budgets
GNPGCR
Process supporting
fulfillment of new
orders(3R)
R&D
HR
CR
Process supporting
fulfillment of existing
orders(3T)
TCM
TPM
TQM
Value
increase
Global P/D Network
Haier Corporate Culture
Computerized Info System
Haier Supply-chain based upon business flow restructuring
1. Business flow restructuring is the basis of Haier Supply-chain Management,shifting functional to order centered management.
2. Order centered performance improves coordination in supply-chain management system,reduces supply-chain performance costs and ensures that Haier develops healthily.
Logistics
Supply Chain Management Conference 2004
6
Procurement management
Centralized procurement and
distribution of production raw
materials for 28 divisions (including
overseas factories) to reduce production
costs
Global procurement accounts for 82%,
and 59 suppliers are Fortune 500.
Suppliers establish production
factories in vicinity of Haier industrial
complexes.
Global suppliers are involved in Haier
R&D process to improve product
competitiveness.
Haier Supply-chain Management: Procurement management
Logistics
Supply Chain Management Conference 2004
7
SRM system to improving supply-
chain efficiency (www.ihaier.com)
★ E-purchase order management
★ E-consultancy prediction
★ E-stock inquiry
★ E-settlement
★ Global e-bidding
★ Supplier management
Haier Supply-chain Management supported by fair, practical and win-win coordination mechanism
Logistics
Supply Chain Management Conference 2004
8
Haier Supply-chain Management: FLEX
1. Order oriented production, sorting and
distribution
2. R&D and application of electronic labels for
sorting system to reduce sorting errors and to
improve sorting efficiency
3. Application of VMI enhancing supply chain
flexibility and improvement capability
4. Bulletin displaying the input and output
performance records on the basis of par capita
input and output calculation to reduce material
consumption
Logistics
Supply Chain Management Conference 2004
9
•42 logistics centers
•Tracked in the whole process
•16,000 vehicles available
•Promised 8h delivery in major cities
•Promised 24h delivery outside major cities
•Promised 48h delivery on average along
nationwide main transportation routes
Factory
Distributor
Haier Supply-chain Management: Finished products distribution
Logistics
Supply Chain Management Conference 2004
10
Supply-chain process tracked by bar code visual system
1. The bar code scanning is applied for
terminal data collection through the whole
process from parts and accessories supply to
finished product delivery.
2. Supervising control and visual tracking in
the whole process from parts and accessories
supply to finished product delivery.
3. Performance of the supply-chain
management is improved through automatic
data secession and responsibility traceability.
Logistics
Supply Chain Management Conference 2004
11
Info System improves Supply-chain Management
Bar code info system
Handling
Marketing
Order processing
Purchase
Consumer
Production
Storage
Transport
Service
Settlement
1. The info system drives the supply-
chain sync move and increases the
supply-chain response efficiency.
2. Bullwhip Effect is reduced by
shared info in the process of supply
chain practice.
3. Info interchange makes the supply
chain system transparent for efficient
improvements.
Logistics
Supply Chain Management Conference 2004
12
Warehouse floor reduced by
90% and raw materials stock
period shortened by 77%
Logistics costs reduced
by 5%~15%
Supply-chain performance costs
reduced by 10% ~ 25%
Purchase Production Transport ServiceSupplier
Consumer
Customer
Link relative of purchase cost
reduced by 10% or more
continuously
Supply-chain Management reform ensuring that Haier grows significantly
Logistics
Supply Chain Management Conference 2004
13
Supply-chain Management Achievements increases enterprise competitiveness as a core
Customer
(for stocks)
(Transit Warehouse)
Previous 15 days 10 days
n days7-10 days
Current 1 day
10
days
Sales
plan
Material
deliveryMaking Delivery Customer
Purchase
order
1 day
4-5 hours 3 days 24 hours 4.5 days
36+n
days
Logistics
Supply Chain Management Conference 2004
14
Thanks