Reply: understand the past and present life of the supply chain, and then understand the significance of made in China

The following article is from 36 krypton finance, by krypton Institute



Source /36 krypton Finance (id:krfinance)



Author / zhangshiyang



Editor / Fang Ting





With shipping, Australia's lithium resources can be transported to the Ningde era factory to make batteries after processing; With the road and railway network, the colorful lights in Yiwu can decorate the Christmas tree in Europe after a long journey; With the pipeline, Siberian oil can flow smoothly to Daqing in the northeast.





We often say that China has spent decades and hundreds of years in developed countries. And behind this amazing change, it is the result of the connection of supply chains all over the world.





In 2022, when the world pattern changes dramatically, the word "supply chain" has never been pushed in front of us. Will Apple be produced in China in the future? Can our manufacturing industry continue to maintain its advantages? What impact will supply chain transfer have on our economic life?





These problems that were not a problem in the past have become the suspense that many people are concerned about at present. In order to find the answer, we simply follow the steps and have a deep understanding of the past and present lives of the "supply chain".





From 1982 to now, there is no strict definition of the term supply chain. If you have to summarize, it refers to the network of enterprises and information involved in the process of product production and delivery.





For example, if you want to open a milk tea shop, you must know where to buy tea, where pearls are cheap, and which sealing machine is the most reliable. If you do it well, you will manage your milk tea supply chain.





In modern society, almost all commodities, without exception, involve the concept of supply chain, which is usually closely related to globalization.





UNIQLO on your body is likely to be made of materials from Shandong and ready-made clothes from Vietnam. The mobile phone you are holding to watch videos is likely to be assembled by Foxconn in Zhengzhou or Kunshan. The chips are packaged in riyueyue and manufactured by TSMC. The high-purity silicon used in the OEM comes from Japan, and the silica raw material may come from Brazil.





The supply chain connects all parts of the world in a real sense, and also makes business more profit-making. Where the cost is cheaper, go wherever you want. Such a complex supply chain, of course, was not built in a day.





The formation of modern supply chain has experienced several centuries of changes.




01




From the Silk Road to the factory




In the early supply chain, there was a familiar representative, the silk road.





Although this ancient trade also spans countries and continents, it is more about the transfer of goods, involving the trading process of finished products, which is simply "what you sell".





A major feature of the formation of modern supply chain is that starting from the demand side, from raw materials to finished products and then to consumers, the whole chain is closely related, influencing each other and causing each other, that is, "produce what you need".





To do this, factories must first appear.





As an important form of capitalist exploitation in history books, factories can be traced back to the Derby silk factory in England during the first industrial revolution.





The original purpose of the factory director longbegai is not to improve efficiency, but simply to hide people's eyes and ears.





Because his textile technology was stolen from Italy. The five story brick house uses a 7-meter-high waterwheel as the power source to drive the operation of textile machinery. Moreover, the workers in the factory are not adults, but a group of child workers. I don't know whether it is to prevent leakage of secrets.





In short, it is such a ridiculous story that has achieved the basic prototype of a modern factory - workers, machines and efficiency. Although Derby silk factory didn't make much money, it inspired the capitalists at that time, including the merchants doing cotton textile processing next door.





You should know that there is no cotton in Europe and it is not suitable to grow cotton. After the manual spinning wheel was suddenly upgraded to machine production, the cotton textile industry began to make great strides.





At the same time, with the European pursuit of cotton clothes, the demand gap for cotton is growing. What if the cotton imported from Asia is insufficient? The slave plantations in America took over this important task. In the 19th century, 9% of the cotton used in Britain came from black slaves.





While the cotton textile industry flourished, it also brought the organizational form of factories to all walks of life, such as steel, fruits and vegetables, animal husbandry and so on. These new factories have greatly improved the production efficiency of the whole society.





The most important thing is to stimulate a large demand for raw materials. The "supply" in the supply chain has been promoted to unprecedented importance.

This is the naked temptation of money for capitalists. Where there is raw material supply, the tentacles of capital go there, so the trade route from British ports to all parts of the world is becoming more and more perfect.

02




From sea to railway




Soon, after sea transportation, the railway connecting land also appeared, making up the other half of the second-generation supply chain, that is, from goods to markets.





This is crucial. If the cotton clothes produced by Manchester cotton factory cannot be quickly transported by rail to London, the world's most populous city at that time, the emergence of the factory is completely unnecessary.





The connection between sea transportation and railway not only means the shortening of freight transportation time, but also means the great reduction of transportation costs.





The goods produced by British factories have objectively become more high-quality and cheap. They can not only be quickly sold all over the country, but also exported to overseas colonies and other countries.





After making money in these places, they exchanged a large number of raw materials and shipped them back to China to continue production.





Therefore, before his death in 1865, British Prime Minister Palmerston said something not without pride: the plains of North America and Russia are our barns; Chicago and Odessa are our mining areas, silver from Peru, gold from South Africa, tea from India and China... As for our cotton plantations, they are expanding from the southern United States to all warm places on the earth.

In general, shipping, railways and factories together constitute the second generation supply chain.





Supply and demand, as well as the channels at both ends of the link, also have the shadow of a modern supply chain. However, the relationship between the Empire and the colonies is doomed to be plundered on one side and exploited on the other. The modern supply chain does not simply connect these factors together. It also needs the vertical integration of upstream and downstream in the production process.





So this time, it is not the United Kingdom where the factory originated, but the United States that makes a sample of the evolution of the supply chain. To be exact, it is the Ford Motor Company in Detroit, USA.




03




Highly integrated upstream and downstream




In 1928, the yanzhihe factory of Ford company was completed. This factory is completely different from the previous factory. It does not produce complete t-cars, but specially produces components including engines, tires, windows and so on for other factories. According to the current words, it is the supply chain enterprise of t-cars, or "Fu chain". There are separate coke oven factories, steel rolling mills, glass factories Rubber tire factory and a series of raw material processing plants.





In short, the original factories that turn raw materials into parts are all distributed in the location of raw materials, and each is in its own array. Now they are all integrated by Ford. Coupled with the classic conveyor belt assembly line, the ultimate efficiency is the characteristic of Ford's production.





The whole supply chain of automobile production converges here. The greatest advantage of this extreme vertical integration method is that it can further control materials, reduce costs and strengthen quality control. Does it sound like Tesla's super factory now? Yes, Ford's Rouge River factory is Musk's inspiration.





Later, compared with Ford in 1928, it further strengthened the control of upstream and downstream and strengthened the concept of supply chain. It was also an automobile company "Toyota".





After World War II, Japan was full of waste, and the later president of Toyota Motor, Ichiro Toyoda, had been suffering from the shortage of raw materials in Japan after he was later transformed from a textile company into an automobile factory.





Inspired by the timely replenishment of self-service supermarkets in the United States, it created another industrial miracle - the timely production system.





The essence of timely production is based on upstream orders, and purchase and production will not be carried out until the demand order arrives. Instead of the traditional way of promotion, we should sell as much as we produce and sell.





At the same time, in order to cooperate with this reverse production mode, Toyota has developed a kanban system. In short, in order to ensure quality, Toyota standardized every link of production, such as parts, production tools and even production actions, and then signed a long-term supply contract with the parts supplier.





Finally, while ensuring quality and efficiency, we achieved the ultimate goal of no overstock of raw materials, no pressure on goods, and zero inventory.





Later jobs was also a loyal fan of this concept. Cook was appointed as his successor by jobs because he was really experienced in supply chain management.





Specifically, jobs first reduced the product line to the famous apple product matrix.





Cook then worked to optimize the parts in these products, so that the parts in these products can be as common as possible, reduce the types of procurement and increase orders at the same time. After becoming a major customer, he can speak for himself at the supplier's side, and the cost is greatly reduced.





Suppliers, which have become deeply bound with apple, are proud to enter Apple's supply chain. If you invest in stocks, you must be familiar with these fruit chains (goer shares, Tencent precision, Jingyan technology, Lansi Technology) and special chain companies (Ningde times, Ganfeng lithium, Fuyao Glass, AVIC Optoelectronics).





On this side, the automobile industry and later the mobile phone industry, as the biggest demanders of transforming the supply chain, are trying to tie the interests of upstream and downstream together. On the other hand, the shipping circle is also planning a major event that can change the progress of the supply chain game.




04




Container -- the last piece of the modern supply chain puzzle




In 1968, after decades of discussion, the international organization for standardization and American shipping companies formally established the shipping standards including container size, and TEU (20 foot standard) has also become the unit to measure the carrying capacity.





And with the application of computer in cargo management, the potential of container ships began to highlight.





In fact, if many goods are sold internationally, the freight can account for a quarter of the cost. Even now, you can get a five cent brick by parcel post.





In 1960, if an American pharmaceutical company wanted to transport a truck of drugs from the west of the United States to the interior of Europe, the freight would be about $2400, which is about $23000 now.





In contrast, in early 2000 after the standardization of containers, renting a 20 foot container to transport from Asia to the United States cost about $1000. The 20 foot container can hold about 3500 shoe boxes, that is, a pair of shoes can be sold from Putian to the United States for tens of thousands of kilometers, and the freight is about 2.50 yuan.





This makes it possible for more low-value raw materials and commodities to be transported across borders. For example, for a Barbie doll, I wholesale the mold from the United States, buy the machine from Europe, sell nylon for hair in Japan cheaply, and use cotton fabrics for clothes directly from Xinjiang.





You can say that it is a simple toy or a commodity under the global supply chain system.





It can be said that the world can become flat, the tide of globalization can rise, and containers are a great contributor that cannot be ignored. At this point, the elements of the modern supply chain connecting the world are finally working together.





At the same time, an event that changes the world pattern is also quietly coming. At this time, capitalism is experiencing the largest financial crisis in history.





This crisis has also become a prelude to the arrival of the feature film in the era of modern supply chain. At this time, China, the protagonist of the story, first stepped on the stage of world trade.




Source /36 krypton Finance (id:krfinance)



Author / zhangshiyang



Editor / Fang Ting