Build The Whole Industry Chain &Nbsp, Reduce Enterprise Cost

Consumers' "lower" consumption "Demand change" for enterprises to implement low prices strategy And bring new challenges to cost reduction. So, Gou Jianquan Industrial chain What inspiration can the cost control mode bring to enterprises?

In 2010, China carried many consumer visions. However, the three factors that kept rising CPI, the imperfect distribution pattern and the need to improve the consumption environment were not optimistic. Nowadays, the phenomenon of "no money can be spent", "money is not willing to spend" or "money is not good to spend" phenomenon still exists. It can be seen that more and more consumers are facing a high level of CPI. They have a clear sense of response and actions. Consumers are showing a strong tendency to "lower consumption" than ever before. From the perspective of reducing costs, how should enterprises cope with this new consumption tendency?

Confused reason

Inflation expectations, compared to normal consumer demand, how to try to avoid losses caused by devaluation is obviously the first consideration for consumers. Group buying, off peak time buying vegetables, shopping malls, "return tickets" and other kinds of saving strategy are rapidly circulating. Usually, when consumers expect prices to rise, the "substitution effect" becomes obvious. For non life necessities and luxury goods, people will reduce this consumption expenditure; for normal consumer goods, when the real income remains unchanged, the relative price of goods will rise, and consumers will take the initiative to find other alternatives to reduce the cost of consumption.

With the continuous improvement of living standards, most residents have strong affordability for the current price changes. Many consumers are able to purchase goods rationally, and purchase on demand becomes the mainstream. At the same time, the consumption level has been obviously opened up and diversified. For ordinary people, inflation may mean that the level of their wealth has shrunk to some extent. Therefore, when inflation is coming or coming, people will change their investment and consumption behavior. They will be more cautious when buying goods, and pay more attention to the price performance of products. This also makes the low-end products and services more popular in the market. This behavior occupies an important part in the current consumer market, mainly composed of middle-income class. Such consumer groups have stable income, basic consumer demand has been met, consumer behavior is rational, and the consumption structure is being further upgraded. For high-end consumer goods such as housing and automobiles, they are concerned about prices. For basic necessities, economic and practical consumption is the mainstream. It can be seen that the demand potential of this stratum is huge, and in any market economy environment, it is the main force for the continuous expansion of total consumption.

In addition, the traditional concept of consumption still dominates the consumption behavior of many consumers. They advocate "balance of payments, a little surplus" and taboo "eat in their own grain". Therefore, spot income has become the limit of current consumption, and they seldom "consume" or "spend ahead". They advocate "frugal current and accumulation of wealth" and focus on long-term consumption. Once they have income balance, the first thing to think of is to accumulate their money for future housing, pension and medical treatment.

Building the whole industrial chain

Consumers' tendency to "lower consumption" presents new challenges for enterprises to reduce costs. From production cost to process cost, from selling cost to human capital, all enterprises are reminded to change at any time for consumers. However, if we only consider the cost control from only one link, I am afraid it will be biased.

Speaking of reducing costs, the first reaction of most enterprises is to think of production links. This is also the link that many managers can quickly put into action in the enterprise. But in fact, the eyes of top executives should not be only focused on the production process. If too much emphasis is placed on the compression of production costs, the consequent result may be a decline in the quality of products, thereby damaging the interests of corporate brands and consumers. Therefore, enterprises should not only analyze the cost from the aspects of internal procurement, production and sales, but also extend to the whole industrial chain, and carry out cost management from the perspective of the whole industry chain.

The whole industry chain is an open system. The cycle in the industrial chain can be a large cycle or a small cycle, and each cycle will have a stimulating effect on the whole. Therefore, the whole industry chain model is a new profit growth mode, which provides a new opportunity for enterprises to lower their costs under "low consumption". Take COFCO's "whole industry chain" strategy as an example. Considering that there are few brands that are directly related to consumers, it is urgent to seek new brands to expand terminal market exports. On the one hand, COFCO has achieved rapid extension through mergers and acquisitions, such as Mengniu and Wu Dao Dao. On the other hand, COFCO has been committed to independent innovation to achieve connotative growth and set up an industry chain that integrates upstream resources as the source. In terms of the distribution channels of COFCO, the proportion of supermarkets in the supermarket is increased from 1% to 2% to 3%. At present, the upper and lower reaches of COFCO are expanding indefinitely, and the middle channel is unimpeded. The whole industry chain mode is exerting power.

The whole industry chain mode is not only a management idea and idea, but also a strategy, a goal and a choice. It all depends on the reality of the enterprise itself. The whole industry chain has enhanced the ability of enterprises to control and control the existing resources and future resources. It enables resources to work towards common goals in interaction and stimulation, and at the same time, makes an enterprise more integrated. The layout of enterprise assets in different links of the industrial chain is more efficient, and the value of the enterprise is realized in different links of the industrial chain. In the process, resources will naturally be concentrated in the high value links.

The construction of the whole industry chain mode enables enterprises to be more competitive, and this core capability can not be duplicated by ordinary enterprises. Of course, the particularity of each industry determines that different industries have different industrial chains, and the emphasis is different. Enterprises do not necessarily have all the links, but they must control an important link. From another point of view, the business mode of the whole industry chain promotes the synergy relationship between the upstream and downstream businesses in the enterprise to the height of strategy and overall survival and development, which will eventually form a culture, requiring enterprises to improve their understanding of the role of the system in decision-making, and to systematically consider and rely on the system to win.

At the same time, only every chain of the chain is strong and can be stronger together, rather than protecting the weak through the industrial chain for a long time. It can be said that the whole industry chain is the chain of asset layout, the chain of operational synergy, and the chain of organizational structure and human resources. It requires people to find the right position in the organization, and also requires the whole team of enterprises to work together to achieve the goal of unification. Of course, the longer the industry chain, the higher the management difficulty. This is like a workshop with many processes, so the whole industry chain model will ultimately be tested by the market. After all, only the industrial chain that can better serve the market is a good industrial chain.

Cost control strategy of the whole industry chain

Faced with inflation pressure and consumer behavior of "low consumption", enterprises must first break through the scope of space and extend to the upstream and downstream enterprises in the industrial chain if they want to implement effective cost reduction, because they can find ways to reduce costs through the industrial chain, so that they can achieve the goal of improving the strategic position of enterprises at the same time. Specifically, there are the following aspects:

Improve the efficiency of both parties

Nowadays, reducing costs is not only a passive extension to enterprises, but also requires enterprises to actively cooperate and find ways to save costs. Specifically, by changing the behavior of suppliers, consumers or intermediary enterprises, the efficiency of both parties can be improved.

Changes in supplier behavior. Suppliers have many ways to change their behavior and save buyers' costs. If an enterprise adopts a zero inventory strategy, if the supplier delays delivery, the enterprise will suffer a great loss. At this point, the enterprise can analyze the purchase cost and convey to the supplier the information that "if the delivery is delayed, the cost will increase". After receiving such information, suppliers can implement new procedures to improve the timeliness of supply, while purchasing companies can inform suppliers of their experience in zero inventory management, so as to achieve mutual benefit. In addition, suppliers can improve their behavior by improving the quality of their supplies, providing smaller batch delivery and shortening the supply cycle.