Second, what is the supply chain and value chain

What is a supply chain? Definition: Supply chain is a functional network chain structure that connects suppliers, manufacturers, distributors, retailers, and end-users as a whole around the core enterprise, through the control of information, logistics, and capital flow, starting from the procurement of raw materials, making intermediate products and final products, and finally delivering the products to the consumers by the sales network. It is not only a logistics chain, information chain and capital chain connecting suppliers to users, but also a value-added chain, in which materials in the supply chain are processed, packaged, transported and other processes to increase their value and bring benefits to related enterprises.　　The concept of supply chain is developed from the concept of Extended Production, which extends and extends the production activities of enterprises. For example, Toyota's Lean Collaboration approach to control and coordinate the activities of suppliers as an integral part of production activities, which is the forward extension. Backward extension refers to the extension of production activities to the sales and service stages of products. Therefore, the supply chain is through the plan (Plan), get (Obtain), storage (Store), distribution (Distribute), service (Serve) and so on such activities in the customer and the supplier between the formation of a kind of articulation (Interface), so that the enterprise can meet the internal and external customer demand.　　

Image, we can depict the supply chain as a large tree with lush foliage: producers constitute the root of the tree; the exclusive agent is the main pole; distributors are branches and treetops; full of green leaves and safflower is the end-users; in the root and the main pole, branches and poles of a junction, hidden once the circulation of the veins throughout the body is connected to the information management system.　The relationship between enterprises in the supply chain is similar to the food chain in biology.　In such a simple food chain as "grass, rabbit, wolf and lion" (for the sake of argument, assume that only these four kinds of organisms survive in this natural environment), if we kill all the rabbits, then the grass will grow wildly, and the wolves will starve due to the extinction of the rabbits, and even the most powerful lions will starve due to the death of the wolves. It can be seen that every kind of organisms in the food chain is interdependent with each other, and destroying any kind of organisms in the food chain will inevitably lead to the loss of balance in this food chain, and ultimately destroying the ecological environment that human beings rely on for their survival.　By the same token, in the supply chain "Enterprise A-Enterprise B-Enterprise C", Enterprise A is the raw material supplier of Enterprise B, and Enterprise C is the product seller of Enterprise B. If Enterprise B neglects to take care of each of the organizations in the supply chain, it will lead to a loss of balance in the food chain. If enterprise B ignores the interdependence of the elements in the supply chain and pays too much attention to its own internal development, the ability to produce products continues to improve, but if enterprise A can not provide him with production raw materials in a timely manner, or the sales capacity of enterprise C can not keep up with the development of the production capacity of enterprise B's products, then we can conclude that the development of enterprise B's productivity is not in line with the overall efficiency of this supply chain .　Note: The "value chain" is the same concept as the supply chain. There is also mention of the so-called global operations management, in fact, with the supply chain is also common, the scope of the same.　　The national standard "Logistics Terminology" defines it as the production and distribution process involving the provision of products or services to end-users of the upstream and downstream enterprises in the formation of the network chain structure!

Categorization of Supply Chain Management (www.chinatpm.net) According to different division criteria, supply chain can be divided into the following types. 1, according to the different scope: Internal supply chain refers to the supply and demand network of procurement department, production department, storage department, sales department and other departments involved in the process of product production and circulation within the enterprise. External supply chain refers to the supply and demand network of raw material suppliers, manufacturers, storage and transportation providers, retailers and final consumers involved in the production and distribution of products related to the enterprise. The relationship between internal supply chain and external supply chain: both of them **** together form the supply chain of enterprise products from raw materials to finished products to consumers. It can be said that the internal supply chain is a reduction of the external supply chain. For example, for a manufacturer, its purchasing department can be regarded as a supplier in the external supply chain. The difference lies in the fact that the external supply chain has a large scope, involves many enterprises, and the coordination among enterprises is more difficult. 2. Different according to stability: According to the stability of the supply chain, supply chain can be divided into stable and dynamic supply chain. The stability of the supply chain based on relatively stable and single market demand is strong, while the dynamics of the supply chain based on relatively frequent changes and complex demand is high. In the actual management operation, it is necessary to change the composition of the supply chain accordingly to the changing demand. 3. Different according to capacity and demand: According to the relationship between supply chain capacity and user demand can be divided into balanced supply chain and tilted supply chain. A supply chain has a certain and relatively stable equipment capacity and production capacity (a combination of the capacity of all node enterprises, including suppliers, manufacturers, transporters, distributors, retailers, etc.), but the user demand is in the process of constant change, when the supply chain capacity can meet the user demand, the supply chain is in a state of equilibrium, and when the market changes are intensified, resulting in an increase in the supply chain costs, increased inventories, wasted When market changes intensify, resulting in increased supply chain costs, inventory, waste and other phenomena, the enterprise is not operating in the optimal state, and the supply chain is in a tilted state. A balanced supply chain can achieve equilibrium between the main functions (procurement/low procurement costs, production/economies of scale, distribution/low transportation costs, market/product diversification, and finance/funds running fast). 4, according to the different functionality: according to the supply chain function mode (physical function, market intermediary function and customer demand function) can be divided into two kinds of supply chain: the effectiveness of the supply chain (EfficientSupplyChain) and responsive supply chain (ResponsiveSupplyChain). Efficient supply chain mainly reflects the physical function of the supply chain, i.e., the lowest cost of raw materials into parts, semi-finished products, products, and transportation in the supply chain, etc.; Responsive supply chain mainly reflects the market intermediary function of the supply chain, i.e., the distribution of the product to meet the user's needs of the market, and make a quick response to the unpredicted demand, etc.; Innovative supply chain mainly reflects the supply chain's customer demand function, i.e., according to the final consumer's preference, the supply chain is mainly used for the supply chain. The innovative supply chain mainly reflects the function of customer demand of the supply chain, i.e., according to the final consumer's preference or the guidance of fashion, and then adjust the content and form of the product to meet the market demand. (

The basic structure of the supply chain Generally speaking, the basic elements of the supply chain include:

1, suppliers

Suppliers refer to the enterprises that provide raw materials or parts and components to the manufacturers.

2, manufacturers

Manufacturers that is, product manufacturing. The most important part of product production, responsible for product production, development and after-sales service.

3, distribution companies

Distribution companies in order to realize the product to each corner of the geographical scope of operation and the establishment of the product distribution agency.

4, retail

Retailers sell products to consumers.

5, logistics companies

Logistics companies that specialize in providing logistics services outside of the above companies. Among them, wholesale, retail, logistics industry can also be collectively referred to as the distribution industry. The four processes of the supply chain The supply chain generally includes four processes: material circulation, business circulation, information circulation and capital circulation. The four processes have their own different functions as well as different circulation directions.

1, material circulation

This process is mainly the circulation of materials (goods), which is a program to send goods. The direction of this process is directed from the supplier to the consumer via the manufacturer, wholesale and logistics, and retailer. Since business theories have long centered around the physical product, the material process is now widely valued. Many logistics theories deal with how to get goods out of the material flow process in a short period of time and at a low cost.

2, commercial circulation

This process is mainly the circulation process of buying and selling, which is the commercial process of accepting orders, signing contracts and so on. The direction of the process is in the two-way flow between suppliers and consumers. At present, the form of commercial circulation tends to diversify: both the traditional store sales, door-to-door sales, mail order, and through the Internet and other emerging media for shopping e-commerce form.

3, the flow of information

This process is the flow of goods and transaction information. The direction of the process is also in the two-way flow between suppliers and consumers. In the past, people tend to focus on seeing the physical, and thus the flow of information has been neglected. Some people even think that the country's logistics backwardness and they put too much money into the material process and delay the grasp of information is not unrelated.

4, the circulation of funds

This process is the circulation of money, in order to protect the normal operation of the enterprise, must ensure that the timely recovery of funds, otherwise the enterprise will not be able to establish a sound business system. The direction of this process is directed from the consumer to the supplier through retailers, wholesale and logistics, and manufacturers. According to the concept of supply chain, it covers every business activity related to the formation and delivery of the final product or service, starting from the supplier of raw materials, through the development, processing, and production in the factory to the wholesale and retail processes, and finally to the user. Therefore, the content of supply chain also covers three major theories such as production theory, logistics theory and marketing theory. The main activities of supply chain include:

1. Commodity development and manufacturing

Commodity planning, design, commercialization;

Demand forecasting and production planning;

Commodity production and quality management.

2. Distribution of commodities

Ensuring the sales path;

Delivering on time;

Reducing logistics costs.

3. Merchandise sales and after-sales service

Sales;

Replenishment of merchandise with complete varieties and on time;

Management of sales data and sales, understanding of problems, and determining the course of activities. Supply Chain Management and Optimization Concept of Supply Chain Management: Supply chain management (SCM) is an integrated management idea and methodology that performs the functions of planning and controlling the logistics in the supply chain from the supplier to the end user. From the point of view of a single enterprise, it refers to the enterprise to improve the relationship between the upstream and downstream supply chain, integrate and optimize the information flow, logistics and capital flow in the supply chain, in order to obtain the competitive advantage of the enterprise.

Supply chain management is the effectiveness management of the enterprise, which shows the optimization of the whole operation process of the enterprise in strategy and tactics. It integrates and optimizes the business efficiency of suppliers, manufacturers, and retailers so that goods are produced and sold in the right quantity, with the right quality, in the right place, at the right time, and at the best cost.

1, the ultimate goal of supply chain optimization is to meet customer demand, reduce costs and achieve profits, as shown in the following:

(1), improve customer satisfaction. This is the ultimate goal of supply chain management and optimization, supply chain management and optimization of all ways and means, are towards this goal, this goal is also the fundamental survival of enterprises.

(2) Improvement of enterprise management level. Supply chain management and optimization of the important content is the process of re-engineering and design, which improves the level of enterprise management and management processes, has an indispensable role, at the same time, with the promotion and implementation of enterprise supply chain processes, application, systematization and standardization of enterprise management will be greatly improved, which will help to improve the level of enterprise management.

(3), saving transaction costs. Combined with e-commerce integration of the supply chain will greatly reduce the transaction costs of the links in the supply chain, shorten the transaction time.

(4), reduce the inventory level: through the expansion of the organization's boundaries, suppliers are able to grasp the inventory information at any time, to organize production, timely replenishment, so there is no longer a need to maintain a high level of inventory.

(5) Reduce purchasing costs and promote supplier management. Since suppliers can easily obtain inventory and procurement information, personnel applied to procurement management, etc. can be freed from this low-value labor and engaged in work of higher value.

(6) Reduction of cycle time. Through the automation of the supply chain, the accuracy of forecasting will increase dramatically, which will result in companies not only being able to produce the products they need, but also reducing the time it takes to produce them and improving customer satisfaction.

(7), Increased revenues and profits. By extending organizational boundaries, firms are able to fulfill their contracts, increase revenues and maintain and increase market share.

(8), Network expansion. The supply chain itself represents a network, and a company that establishes its own supply chain system has itself established a business network.

2, through the supply chain management and optimization, enterprises can achieve the following benefits:

(1), the total supply chain management costs (as a percentage of revenues) reduced by more than 10%;

(2), medium-sized enterprises to improve on-time delivery rate of 15%;

(3), the order to meet the lead time shortened by 25-35%;

(4), the supply chain management system is the most effective and efficient way to reduce the cost of supply chain management. p>(4), value-added productivity of medium-sized companies increased by more than 10%;

(5), asset operating performance of high-performing companies increased by 15 to 20%;

(6), inventory reduction of 3% in medium-sized companies and 15% in high-performing companies;

(7), high-performing companies maintain a 40-65 day advantage in cash flow turnover cycle over the average company .

Value Chain

The concept of value chain was first proposed by Michael E. Porter of Harvard Business School in 1985 in his book Competitive Advantage. According to him, "Every business is a collection of separate activities used to carry out the processes of design, production, marketing, delivery, and the ancillary effects on the product." [1] The value chain of any firm consists of a series of interconnected value-creating activities that are interlinked and interact with each other from the acquisition of raw materials from suppliers to the services provided at the point of consumption of the final product. On this basis, Porter put forward the value chain analysis method, that is, the decomposition of enterprise activities, through the examination of the activities themselves and the relationship between the activities to determine the competitive advantage of enterprises. At the same time, Porter pointed out that the enterprise value chain does not exist in isolation, but exists in the value chain system composed of supplier value chain, enterprise value chain, channel value chain and buyer value chain***. The value chain of an enterprise is also dynamic, reflecting the history of the enterprise, its strategy, and the way it implements its strategy. Since Porter put forward the concept of value chain, domestic and foreign scholars Shank (John Shank) and Govindarajan (V. Govindaraj an), Hines (Peter. Hines), Rayport (Jefferey F. Rayport) and Sviok la (John J. Sviok la), Chi Xiaoying and Xuan Guoliang, etc., further research on this theory, focusing on the value chain and buyer value chain. The theory has been further studied by Jefferey F. Rayport and John J. Sviok la, Chi Xiaoying and Xuan Guoliang, focusing on the impact of technological development on the value chain, in particular the impact of information technology, the Internet and e-commerce, and thus the concepts of the virtual value chain and the value network. However, no matter how the form of value chain develops and changes, its essence remains unchanged, i.e. the value chain is composed of a series of value creation activities that can satisfy customers' needs, and these value creation activities are linked together through information, logistics or capital flows. In addition, the analysis method of value chain has soon been widely applied in the enterprise world, and has formed a specialized idea of value chain management, and a lot of related literature has appeared both at home and abroad. As the division of labor within an industry continues to develop in depth, different types of value creation activities within the traditional industry have gradually been separated from one enterprise as the dominant one into the activities of multiple enterprises, which form upstream and downstream relationships with each other and **** create value together. A series of mutually based and interdependent upstream and downstream chain relationships involved in serving a particular demand or producing a particular product (and providing services) constitutes the industrial chain

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