CEO Speaks on JD.com’s Decade of Logistics Development

JD.com logistics CEO Wang Zhen-hui said at 2017 NewGen Logistics World Summit on December 11 that due to consumption, industrial upgrades and technological advancements, the logistics industry is entering a new era defined by short chains, smartness and symbiosis. The role of logistics will be redefined, and JD.com logistics advocates coexistence with the customers, industry partners and the environment, he said.

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Logistics is a basic and strategic industry that supports national economic and social development. With new technologies, modes and formats, logistics is no longer a tool for connecting production and sales tools, but has gradually become a key link between manufacturers and terminal consumers, the virtual economy and real economy. The role of logistics in the social system has been escalating and is going through enormous changes.

He Liming, president of the China Federation of Logistics and Purchasing, said in recent years the driving forces of the logistics industry have changed faster than before. Technological innovations, represented by artificial intelligence, big data and cloud computing, are being rolled out in in a massive scale. The development of modern supply chains has become a new source of growth.

In the future, China’s logistics industry will enter a new stage of development with improved quality and benefits.

The retail industry has moved from the offline era to e-commerce. The “power center” of the supply chain is constantly shifting. In the information age, consumers are the new power centers and logistics will be designed in line with user experience and changes.

Minaki Kenji, CEO of Yamato Holdings, said Japanese consumers received packages at home, but many people are not willing to receive goods directly. They want couriers to deliver goods to boxes or convenience stores. Japanese consumers are not willing to wait for 30 minutes.

“For women coming back home after work at night, they don’t want to see others after taking off their makeup. They usually don’t want to take delivery at night,” Minaki said. As customer demands change, the logistics industry must keep up, and thus constantly needs to improves its ability to keep up with these changes.

Breakthroughs in technology and the application of scale in logistics industry make the terminal perceptive ability stronger and stronger, and more and more valuable data is collected. Based on this, the identification and management of logistics are possible. Information can be circulated, and the boundaries of industry, time, space and market are constantly broken down. Accurate predictions and planning become possible, as do independent analysis and autonomous decision making.

JD.com logistics and China Smart Logistics Institute proposed that the next generation of logistics will be based on short chain supply, aiming to build efficient, accurate and agile logistics services. The new system will create value for all partners and build a symbiotic logistics ecosystem.

Wang said the core of JD.com‘s former logistics design was to reduce the frequency with which goods moved. Using its self-built logistics infrastructure, JD.com extended its reach to all counties in China. JD.com set up a three-level logistics network and built its warehouse near the supply end. It initiated a model that integrated warehouse and delivery functions to reduce how much had to be transported.

He said that JD.com‘s logistics will be fully open to the society through its mature capabilities and proven business models that have been accumulated over the past decade. Through cooperation, it can provide standard service and transform logistics services into independent and reusable modules, as well as form stable and scalable product systems with logistics partners.

“We provide offline-to-online, all-channel and integrated supply chain services,” Wang said, “Through our storage system, businesses can share stock via multiple channels. At the same time, they could see and control the inventory status of all channels.” If the order permeability rate exceeds 50 percent, business sales will grow at 97 percent – far higher than the average growth rate of POP platforms. Besides, delivery efficiency will double.

Wang said JD.com shared its rich experience solving “the problem of the last kilometer” with Dada, including key details about system information and customer service, so as to help Dada to improve service quality. Under this premise, in the past Double 11 Festival, nearly 30 percent of the orders were delivered by Dada in last kilometer. In this way, goods can be delivered to consumers much faster than before.

At the summit, JD.com also announced it would spend 1 billion yuan to set up the JD.com Logistics Green Fund, which will be used to promote and advocate for environmental protection technology, innovation and development, and green consumer society. In the next three years, JD.com said it would replace hundreds of thousands of its cars with new energy vehicles. Through cooperation with partners, it planned to reduce the use of 10 billion one-time cartons in next three years.

“JD.com logistics is also moving in this direction, based on integration between innovative logistics and commercial flow, smart operation and integrated openness,” Wang said.

According to the data from JD.com, more than 90 percent of JD.com‘s operating goods can be delivered to customers within 24 hours. JD.com also launched Jingzhunda and various services. Jingzhunda can deliver goods within a 30-minute range of the scheduled delivery time.

During the Double 11 Festival, JD.com built the world’s first full-process unmanned warehouse. JD.com said its logistics service is developing unmanned warehouses, UAV and unmanned delivery. With normal application of these services. JD.com can create an unmanned smart logistics system covering warehousing, sorting, transporting, delivery and customer service.