Innovative digital flexible supply chain "SHEIN model" for digital transformation of traditional industries

With the development of Internet infrastructure and the continuous transformation and upgrading of industries , China's digital economy has developed rapidly . According to reports , the scale of China's digital economy will reach 50.2 trillion yuan in 2022 , ranking second in the world , accounting for 41.5 % of GDP. The digital economy has become an important engine for stabilizing growth and promoting transformation . As a cross-border e-commerce giant , SHEIN continues to help high-quality products and industries go overseas while also continuing to help traditional industries with digital transformation and upgrading . This "SHEIN model" is rooted in industrial development and continues to drive and promote the upgrading of traditional industries and the improvement of comprehensive capabilities through business . It also provides a useful reference for the transformation and upgrading of more traditional industries .

In the digital economy , the dominant position of industrial digitalization has been further consolidated , and its contribution to the economy and society has been continuously improved. According to the "White Paper on the Development of China's Digital Economy" released by the China Academy of Information and Communications Technology, the scale of industrial digitalization in China reached 31.7 trillion yuan in 2020, accounting for 31.2% of GDP. Among them, industrial digitalization accounted for 80.9% of the digital economy. It can be seen that industrial digitalization has provided important support for the development of the digital economy, and has also become an important source of new momentum for the development of the national economy, playing an important role in achieving high-quality economic development in China.

For a long time , how to truly and effectively promote the digital transformation and upgrading of traditional industries has actually been a major problem in the development of the digital economy , especially for industries with a relatively low degree of informatization . Take the clothing industry as an example . The traditional clothing industry tends to be labor-intensive . Most factories do not have the ability to be systematic and intelligent. Most of them rely on manual labor, Excel, email and other traditional methods to arrange production, which is very inefficient and does not have a competitive advantage in the industry.

SHEIN also encountered this problem when it first entered the industry . However, in the field of fashion and clothing brands , SHEIN has innovated a model that combines digitalization with a flexible supply chain , that is, in real-time analysis and tracking of fashion trends, all SKUs start with very small orders, and each SKU generally starts with 100-200 pieces. If the sales trend is good, the order will be returned immediately, but if the sales do not meet expectations, the production will be suspended , which ultimately improves competitiveness . Today, SHEIN continues to improve both its influence on clothing brands and its efficiency , and is hailed by the industry as the "evolved version of Zara" . The digital flexible supply chain is close to a series of upstream and downstream cooperative enterprises, including clothing manufacturing factories . The solution provided by SHEIN is to develop a set of digital system tools by itself . From the front end, by grasping fashion trends and consumer feedback in real time, SHEIN makes more accurate predictions to formulate subsequent product & product line styles, positioning and planning. After entering the production stage, the requirements and standards of each production and quality management link of each style will be synchronized to each supplier in real time through online digital tools. Suppliers use online digital management tools to schedule production, manage production, and find problems in time and make adjustments.

SHEIN not only provides this digital system to its partner companies for free , but also provides suppliers with daily and special training in all aspects , including business management , planning and development , production scheduling , operational stocking , quality management, etc. At the same time , it has invested 100 million yuan to provide financial and renovation support for the expansion and renovation of suppliers' factories . In addition to direct financial subsidies, SHEIN has empowered the entire process from early factory site selection planning to environmental layout and production processes, which will further improve the environment and supporting facilities of its suppliers' clothing manufacturing factories and improve production efficiency.

After cooperating with SHEIN, they have completely transformed into a digital factory with a full digital chain. Based on on-demand supply, the brand's inventory rate can be reduced to low single digits, less than one-tenth of the average level of unsold inventory of other brands in the industry , ultimately improving industry efficiency , reducing waste , and lowering product prices .

Huagao Clothing, founded in 2019, is one of the beneficiaries. When Huagao Clothing started cooperating with SHEIN, it coincided with the iteration of SHEIN's supplier digital management tools, and the company's head Zhang Sheng immediately signed up. From inventory management systems to production scheduling systems, Zhang Sheng was one of the first seed users. He maintained close communication with the R&D team of the SHEIN team, provided timely feedback, and implemented digital tool iterations in various business links. Zhang Sheng and the team will also regularly participate in SHEIN's training and exchanges, interpreting background information, analyzing fashion trends, and learning clothing quality management, so as to improve the accuracy of stocking, production efficiency, and product quality. At the beginning of the cooperation with SHEIN in 2020, the annual output value of Huagao Clothing Factory was about 20 million, and the output value increased fivefold in the second year to 100 million .

Today , SHEIN continues to deepen its platform strategy in addition to its own brands , forming a dual-engine development model . Today, this "SHEIN model" of industrial digitalization has been replicated from the clothing industry to more industries . In fact , SHEIN has also customized and launched a national 500-city industrial belt overseas expansion plan . While helping the upstream cross-border e-commerce in the industrial belt to go overseas, it can also help more industries upgrade through digital flexible supply chains, realize production and supply according to market and user needs, and thus help the industry develop in the long run and enhance market competitiveness.

Cheng Zesi, who started his home furnishings business in 2010, was one of the first beneficiaries. Initially, he mainly sold stainless steel knives and forks. Catching up with the wave of foreign trade made him earn his "first pot of gold". Later, when overseas orders were sharply reduced due to the epidemic, Cheng Zesi came into contact with SHEIN . "Although we have been supplying foreign customers, I didn't expect the overseas TOC market to be so prosperous." Cheng Zesi began to truly face the overseas market through SHEIN , and believed that SHEIN's flexible supply chain model brought unprecedented experience to his home furnishing business . " By quickly testing and putting on the shelves , we can quickly grasp and obtain consumption trends and popular elements in the overseas market, and take the initiative in opening the funds. " For example, before Black Friday this year, Cheng Zesi locked in the popular elements of Christmas overseas through close communication with SHEIN buyers, and developed Christmas dolls based on the original tableware for product combination, which was well received by overseas consumers who stocked up for the holiday.

Whether it is the transformation and upgrading of traditional industries or the rapid development of cross-border e-commerce , more and more companies and merchants have begun to join the SHEIN ecosystem , and in addition to performance growth, they have also improved their market competitiveness through learning about flexible supply chains . Even outside the SHEIN ecosystem , SHEIN's model, which is rooted in industrial development and continuously drives and promotes the upgrading of traditional industries and the improvement of comprehensive capabilities through business, is also being referenced and learned by more industries .

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