Chinese e-commerce giant Alibaba Group Holding Ltd. on Wednesday revealed its New Manufacturing model for the first time with the introduction of Xunxi Digital Factory (Xunxi).
The Hangzhou-based factory, powered by Alibaba’s cloud computing infrastructure and IoT, offers SMEs a digitalized end-to-end manufacturing supply chain that allows for fully-customized, demand-driven production.
New Manufacturing is a cloud-based and demand-driven model that connects manufacturing-related date and consumer insights with factory production. It aims to empower small and medium-sized enterprises to respond quickly to shifting trends and fulfill consumers’ growing demands for personalized goods. As the world’s production hub, China accounted for 28 per cent of global manufacturing output in 2018, according to data from the United Nations.
“When we start our digital factory initially, the whole driving force is about the consumption change,” said Daniel Zhang, chief executive officer of Alibaba Group.
“Digital factory will help them to manufacture their products in small scale, and even help them to test sample products on the platform to know whether it’s really popular to the customers. When we look at the digital factory operation , and we do believe that in the future , the large scale standard production will transform into a very flexible small scale production.”
Xunxi, which means fast rhino, gives smaller businesses and manufacturers the ability to benefit from the digitalization of China’s over 30 trillion yuan (over $4 trillion) manufacturing market, allowing them to respond better and quicker to customers’ changing needs, an Alibaba statement said.
Apparel, one of the largest categories on Alibaba’s online retail marketplaces in China, was identified as the starting point for Xunxi because the sector is troubled with lengthy production cycles and high inventory levels, according to the company.
Powered by new technologies such as real-time resourcing, process and cost planning, automated in-house logistics and Xunxi’s manufacturing operating system, the factory can produce small-batch orders with shorter delivery times, consequently increasing manufacturing efficiency from 25% to an average of 55%, according to the statement.
Mao Guanglie, director of Zhejiang Intelligent Manufacturing Expert Committee, said that from the perspective of smart manufacturing, the most valuable aspect of Xunxi is to digitize all the craftsmanship, technology, experience, and knowledge of the apparel industry, thus reducing or even zeroing its marginal costs.
“This can provide good services to all small and medium-sized enterprises in apparel manufacturing, making them affordable, accessible and useful.”
Zhang Xinhong, chief information officer at the National Information Center, said although the new smart manufacturing platform started from the apparel industry, the methods it used for general technical solutions, and digital thinking can also be used in other fields.
It remains to be seen how Xunxi can convince more SMEs to adopt its smart manufacturing system amid the ongoing pandemic in China and around the world.
Wang Qi, the owner of a medium-sized apparel factory based in Wuhan, said that he’s considering using Xunxi.
“But we need to adjust the production line,” Wang said. “For example, with our current production method, if less than 1,000 orders are issued in less than a day and a half, there will be a gap unless new orders don’t come.”
The Xunxi Digital Factory plan had been kept secret for three years.
Since its inception, the factory has collaborated with Taobao and Tmall merchants, livestreaming broadcasters and streetwear designers to explore and experiment with new possibilities of apparel manufacturing.
The World Economic Forum on Sept. 14 designated the Xunxi Digital Factory as a Lighthouse as part of its Global Lighthouse Network, a community of world-leading companies that have succeeded in adopting Fourth Industrial Revolution technologies at scale.
According to online enterprise search service company Tianyan data, Alibaba Xunxi (Hangzhou) Digital Technology Co., Ltd. was established on March 19, 2018. The shareholder Taobao China Holding Co., Ltd. holds 100% of the shares and the registered capital is $30 million.
In 2016, Alibaba’s founder Ma Yun introduced his “Five New” strategy, namely New Retail, New Finance, New Energy, New Technology and New Manufacturing. Ma said that all the five strategies will have an impact on all walks of life.