Changing the inertia of the industry, while the scale expansion increases the inventory turnover rate, becoming a new challenge of Li Ning.
Every item is sold, you should prepare at least 2.5 items for stock turnover. This is a practice in the apparel industry, but Li Ning, who makes the spring breeze is very uncomfortable. This means that the company often implicit the operating efficiency while the company is expanding, and the inventory turnover is getting slower and slower.
After more than ten years of efforts and development, June 28, 2004, Li Ning was listed on the Hong Kong Stock Exchange, and the international capital market began a new reincarnation. In recent years, the high-speed growth has made Li Ning company constantly narrow the gap with internationally renowned brands in business scale. From the chairman to the grassroots employees, they are "Li Ning" to build a sense of global sports brands.
However, Chairman Li Ning and General Manager Zhang Zhiyong also felt a new crisis: Li Ning Company and the international competitor's true gap did not only be expressed in business scale, "demanding" international investors questioned focus on a new one. Problem - inventory turnover rate. After the public is listed, it becomes more transparent. In addition to operating income and profit index, other key indicators are also disclosed to investors. In their eyes, although it is difficult to compare with those multinational competitors in business income, it can clearly see the gap between the company operates with others from the inventory turnover rate.
Driving force from CFO
It is embarrassed that Nike, Rui Step and other internationally renowned brands have averaged 70 ~ 90 days, while Li Ning Company's 2004 interim results showing the average number of inventory turnometers in 124 days. Investors will suspect that there is such a big gap in inventory turnover, continue to expand business, is a good thing or bad? Because inventory turnover is directly reflected in the company's background operational capabilities, low inventory turnover means that there is more funds, but will not only affect cash flow, but also reduce capital returns.
The earliest recognition that the inventory turnover is severe, CFO Chen Weicheng. This stubborn and rigorous Malaysians have served in many multinational companies. Because Li Ning company is passionate, with dreams, it is easy to join in January 2003, and the ambition is committed to promoting "Li Ning" to the world.
For a long time, like most domestic brand vendors, Li Ning attaches great importance to reducing production and sales costs, and wants to find profits from these two links, and the potential "profit" in logistics is not enough. Perhaps because Chen Weicheng is more interacting with the capital market, it is particularly concerned about the indicator inventory turnover rate, he hopes to give these investors a good result. In a sense, there is such a big gap with multinational companies, and it is also a great improvement space in this indicator, so if this work is improved, he can prove he as a CFO.
But the gap between ideals and reality is soon to let Chen Weicheng feel the crisis: Li Ning company's large number of managers have done well in sales management, but rarely put energy in refined operation, management Relatively relatively extensive. In Chen Weicheng, the entire company's most lacking is the refinement of operation management.
In 2003, Li Ning's average number of inventories was 160 days. Chen Weicheng understood that although such operational efficiency is not lost in domestic counter, the gap between the international competitors is too large. What is more trouble is that this problem has not attracted the general concern of Li Ning's high-rise.
Therefore, Chen Weicheng, which is neither Chinese is not like a foreigner, climbed up every day, and flipped the date and quality of the stock product from time to time, did not receive the identity of Li Ning Company. After careful investigation statistics, Chen Weicheng firmly believes that Li Ning's inventory turnover can also be greatly shortened. So he issued a company document, requiring the subsidiaries to increase the inventory turnover rate in accordance with the budget indicators of the Group's finance department.
The resistance is inevitable. At the same time as the upside down, Chen Weicheng continues to explain the manager of each subsidiary "the inventory turnover is reduced one day, the company's liquidity will save tens of millions". He wants to let the subsidiaries understand that in order to achieve these financial indicators, it is worthwhile to pay for sales and profits. Chen Wei became real-time monitoring of each subsidiary to complete the inventory turnover indicator. He requested the subsidiary to improve the specific actions and the timetable of each step. If the data is not up to standard, he will give a reasonable explanation of the subsidiary. Under this aggressive situation, Li Ning's inventory turnover index has been greatly improved, and the average stock turnover has been shorten from 2003 to 124 days in 2004.
Although this data has a considerable distance compared with other competitors in other competitors, it has been unmissible, and the continuous improvement work has begun. On the other hand, Li Ning's inventory is very good, 80% of stocks is 1 year or less, and 18% of the reservoir is 1-2 years.
How is the turnover rate improved?
A very critical contradiction is: Financial indicators require the evaluation of work performance with departments, such as the sales department value sales performance, but will not focus on inventory. Therefore, when the inventory permutation is improved, it is very small in the power driver.
In the first half of 2004, Li Ning's sales scale increased by 44.6% over the same period in 2003, and inventory increased by 5%; but in July 2004, sales only increased by 4.6% from 2003, and inventory increased by 11%. This means that although the financial sector has strong demand to improve inventory turnover, the increase in inventory turnover rate is still a long way to increase the scale of the company. Li Ning must screw the moisture on the operational efficiency of the supply chain that has been "screwed". This involves a series of issues such as information flow, logistics, and capital flow, clearly far from the financial department driver.
Zhang Zhiyong, general manager of Li Ning, will improve the inventory turnover rate as one of the key works in the second half of 2004, and has established a working group consisting of sales, finance, production, products and other departments. He also re-adjusted KPI assessment indicators. , Strengthen the assessment of supply chain operations.
Now, Li Ning company sells and operates related departments, not only to pay attention to how many products they sell, but also care about whether the inventory turnover rate meets the requirements of the working group, because the number of days in the year can be increased from 2.43 in 2003 to 3 is One of the important indicators of the performance assessment in the second half of 2004, accounting for the proportion of performance assessments, no less than 20%.
At the end of August 2004, the inventory turnover rate team held the first meeting, while the project is announced, it clearly clears the inventory as the first phase of the group: 2 years of stock must be zero, more than 1 year The stock cleans more than 70%. Moreover, this work is directly promoted to the sales system, and the manager's office conference is supervised. The sales system must weigh the balance of cleanup inventory and business development.
The difficulty of the clear bank is to clean up the self-service channel. In order to better make a brand, Li Ning has always insisted on building a self-operated channel. In the channel system of Li Ning, 30% are self-operated channels. These self-operated channels are now improving the focus and difficulties of the inventory turnover rate.
Li Ning's specific practice is that the sales system is responsible for analyzing the retail terminal, proposing a promotion plan to ensure that the backlog in the channel is rapidly declining; the logistics department is proposed to the sales department for the actual situation of the overall inventory and combined with channel stock. In the second half of the company's clearance plan, focus on 2 years ago, payment and broken code inventory. At the same time, by shortening the pre-order period and inventory time, strengthening inventory analysis and early warning, determine reasonable order cycle and ordering batch to prevent new stock backup.
In the sales terminal, advancement is usually practicing. It is expected that the goods have been sold, which have been prepared for a large number of days ago, especially during the sales scale, often does not consider inventory costs. However, now, the inventory turnover rate team requires the sales terminal to accurately predict sales in the unit time, shorten the supply time to 7 days. The sales terminal can only get the goods needed within 7 days, and the rear-end supply chain system must be guaranteed within 7 days. Obviously, achieving this goal first must be more accurate. Salespersons not only have to consider how much goods can be sold, but also to consider how to sell how many goods can be sold, these indicators can only be as accurately predicted by the salesperson. For the sales department, this is not only a relatively high requirement, but also a new business philosophy, because it requires the entire company's supply chain response time must be shortened. The supply chain system must change the previous mass supply, carry out multiple batches of small batch supplies, and reach the precision of time. To this end, Li Ning has set up a Shanghai distribution center outside the two distribution centers of Guangdong and Beijing, and the product is directly sent to the distribution center according to the sales prediction of the layers, and the delivery and sales system will be connected to the distribution and sales system. In addition, in order to protect the delivery, Li Ning's logistics and transportation company in cooperation with the final elimination system, improve their operational efficiency to cooperate with the entire supply chain system.
"We now have all sectors to run in nervous, change the extensive management is not a chartering," Li Ning Company Operation Director Wang Ye said. The company specializes in supply chain, information support and monitoring throughout system operations, analyzes each link, and conducts scientific planning.
As one of the main leadership members of the inventory turnover, Wang Ye hopes to complete the transformation of the sub-government turnover rate as soon as possible, and after this work is completed, Li Ning's inventory turnover rate will have a significant increase. But Wang Yuxi also understands the industry benchmarks established by international brands such as Nike, Rui, and Li Ning Company have a big gap. Wang Yuxi said: "The supply chain is a continuous optimization process. I believe that in each annual report, you can see the changes that Li Ning in terms of supply chain management."
Turn: "IT Manager World"
