Correspondent, a business school at Renmin University of China, says that logistics enterprises should do four things to do well in supply chain finance:

First, it is necessary to understand the industrial process of the third party customers that they are engaged in or serve;

Second, to the customer's value and customer pain points have a profound understanding;

Third, through information to accelerate and improve the supply chain efficiency and effectiveness to make contributions;

Finally, on the basis of speeding up the whole supply chain cash flow and improving the operation efficiency of supply chain, through the service, skill and know-how of the logistics company, we can help the industrial enterprises to build a more optimized platform and ecology.

Recently, as the State Council promulgated a 84th article, we are very concerned about supply chain finance, including many logistics companies also want to use the enterprise operations and assets to better carry out supply chain finance.

But logistics companies do supply chain finance really do well, it requires a lot of effort. Among them, the first aspect is to understand oneself engaged in or serve the third party customer's industrial process, because the supply chain finance actually is based on the supply chain this basic premise, if the logistics company cannot grasp the customer enterprise entire industry supply chain State, It is also difficult to directly rely on the logistics of assets or movable property to carry out logistics finance.

Understanding industrial processes through three "mismatches"

For example, Xiamen has a logistics company called Hong Token Stream, they directly serve a customer is Coca-Cola sugar. In fact, supply chain finance is one of the areas where there are three mismatch areas, that is, seasonal mismatch, regional mismatch and time mismatch, and sugar this business area is just the emergence of three mismatch in this state.

In our China, sugar is mainly produced in Guangxi, Guangxi sugar production accounted for more than 70% of the national sugar production, so the place to produce this product, but with sugar is in the country with sugar, so this industry it's a big feature is that we say the region appeared a mismatch. The second is timing mismatch. The annual sugar processing season is basically in the autumn and winter, but with sugar is perennial with sugar, so there will be a seasonal production and perennial demand of this state.

The third is the mismatch of factors, as an international company such as Coca-Cola, it is not possible to the sugar factory in advance after six months to pay, thus creating a mismatch of the state. So once we have a deep understanding of the nature of sugar in the business domain and the characteristics of the industry, we can know how as a third-party logistics to intervene in this process, I think the first is to the service industry to have a deep understanding.

Deep understanding of customer value and pain points

Second, to do supply chain finance, we must have a deep understanding of customer value and customer pain point. Just like in this example, on the one hand downstream enterprises can not be to upstream enterprises in time to pay, but the upstream sugar factory needs a lot of money, this time they have a transaction between the fracture, then this fracture performance can not be bridged, the upstream can better grasp the downstream strategic customers, and downstream customers how to achieve a stable supply, this is actually a pain point between the supply and demand sides.

Just speaking of the Hong letter, is based on this foundation on the launch of the supply chain finance business. They first tripartite form a strategic cooperation agreement, by the supplier and the demand side first to sign the trade contract peace talks price. Because the third party logistics is unable to enter the commodity sale process, if entered into this both sides of the sale process, whether the supplier or demand side, will be criticized by the third party, so the price is they (both buyers and sellers) to talk about the two sides to talk about all the terms and conditions told to Philip Letter, by the letter to the Fund for the pad.

But in the process of fund generation, he is not a simple finance, is actually using supply chain finance to help optimize upstream and supply of a process, then how to optimize it? This is the premise of the pad is to let all the sugar factory logistics outsourcing to Hong letter.

Because standing in the sugar factory position, if he really wants to supply the downstream sugar factory, he will inevitably involve two of times handling, short-distance transportation, long-distance transportation, and so on inventory management, which originally sugar factory will be outsourced to professional third party, and if the letter can solve his funds, And if the cost of providing a service is more favorable than that of a third party in the market, it is obvious that the sugar factory has an incentive to outsource.

In the process of outsourcing, to Coca-Cola, he also needs the third party logistics to take over the sugar factory logistics business. Actually, when the upstream sugar factory supplies the downstream Coca-Cola, generally downstream customers to do quality inspection, but in this industry, they have a saying is called "10th flocculation", is this (sugar) sent to Coca-Cola, they have to undergo 10 days of testing, once there is oxidized caking, to return, However, the return of the occurrence of both the supply-side and the demand side has produced a disadvantage.

So if he takes over, he took over not only transport, loading and unloading, but also the management of the finished product library can be taken over, he will be able to achieve the QC forward, is the quality inspection and management of the starting point extends to the initial supply, which is undoubtedly beneficial to stabilizing the supply of Coca-Cola. This is the 2nd logistics company to do supply chain finance is an important aspect.

Bring benefits through Informatization

Third, logistics companies have to solve a problem is how to help others through the information can bring better benefits, not only to understand his pain point, but also to accelerate their supply chain to improve the efficiency and effectiveness of their contribution.

As in this example, one of the most important aspects is that Coca-Cola took over the sugar factory inventory and made his inventory into what we call the CDC, the Central distribution center. To the sugar factory, it saved a lot of his own storage inventory management costs. Another aspect, because of Coca-Cola's business throughout the country, all his production operations throughout the country, generally speaking, he will be involved in the logistics of a problem is RDC, called the Regional distribution center.

But all downstream large enterprises are unwilling to heavy assets operation, then if the RDC to Hong letter, to the customer to achieve the light assets. But back, by taking over Coca-Cola RDC, Philip was able to help optimize and bring the benefits of Coca-Cola because they were docking the information systems of two companies, and the downstream customers were rolling the three-day sugar program, where he conducted the QC directly in the CDC and then bottled it, After bottling the sugar sent to an RDC inside, this will achieve RDC inventory greatly reduced.

We used to do a calculation, the original Coca-Cola Regional center his sugar inventory to 35 days to 40 days, but after the handover to the letter, the entire sugar inventory down to 3 days, to 1 million tons of sugar as an example, to help Coca-Cola directly reduce the cost can reduce more than 2.4 million, which is to bring value to downstream customers. So I think if the logistics company wants to penetrate into the supply chain finance further, you can not help the upstream and downstream enterprises to improve his benefit and efficiency, which is actually another important aspect of the logistics company doing supply chain finance.

The third aspect is to accelerate the whole supply chain cash flow and improve the efficiency of his supply chain operation on a broader basis, through the service of the logistics company, through the skill and know-how, help the industrial enterprise to build a more optimized platform and ecology.

In the words of Philip, 2015 years later, they made a big difference, they set up a sugar net, which means that he not only serves Coca-Cola, but also serves all the other beverages that need sugar. There are several types of services involved, including spot trading, that is, through the sugar network for the supply side that is, we say that the sugar factory to find orders for more customers to find his stable supply source, through the online spot transactions, at the same time by the Hong-shun logistics business support.

In addition, because the sugar is a public goods, the public goods must involve hedging, is what we say hedge, through the sugar net can better guarantee the price of sugar in a stable acceptable range. Of course, another is our imports, because today China's sugar is rich, but we will also enter a part of fructose, fructose on the procurement from overseas, as well as customs clearance, customs clearance, commodity inspection, settlement, tax refund, these are now in the commitment. This is what we say through his service to build a more extensive service platform and ecology, which is today our logistics companies really do supply chain finance needs to go under a basic skills.

So if this four points can be achieved, logistics companies can better development, rather than simply rely on the lowest level of our logistics services or our logistics services in the property to carry out the financial, so it is easy to have a lot of risks, it is difficult to make our supply chain finance sustainable.