2022 China Supply Chain Digitalization Report

Source:iResearchJune 06,20225:50 PM Overview

The development of digital intelligence technology is the foundation of the maturity of enterprise management tools and enterprise management ideas. On the supply side, with the rapid growth of digitalization, the traditional supply chain is under much higher pressure. Enterprises at each node in the supply chain must rely on emerging technologies and empowerment of the supply chain platform to gradually achieve the informatization, digitalization, and visualization of the supply chain, so as to further promote the structural reform of the supply side to realize a digital economy with completely matching supply and demand. According to Metcalfe's Law, with the development and extension of the digital supply network, its value will increase exponentially, bringing huge benefits to enterprises and industries.

Horizontal extension of the same value chain and vertical interaction between different value chains are the core of supply chain digitalization

The activities in the supply chain can be reflected in information flow, logistics flow and capital flow activities. Based on this, the digitalization of the supply chain can be split by two dimensions. The first dimension is inside and outside companies. The second dimension is extensions in the same "flow" and interactions between different "flows". The core of carrying out supply chain digitization by all par lies in the horizontal extension of the same value chain and the vertical interaction between different value chains.

The market size of digital services for information flow, logistics, and capital flow reached 2.8 trillion yuan.

In 2021, the revenues of different types of participants in supply chain digital services totaled nearly 2.8 trillion yuan. Based on the digital transformation of information flow, logistics, and capital flow, supply chain digital services can be divided into three parts. In terms of structural proportion and growth, the digital services in the logistics flow supply chain account for the highest proportion, but the digital services of information flow and capital flow supply chains have strong growth potential.

The four types of main participants of the supply chain digital services rely on their own advantages to extend the links and break development bottlenecks to increase the link density.

The main participants of supply chain digital services are core enterprises, technology service providers, logistics service providers and financial/payment companies. With unique advantages, they extend the multi-dimensional value chain horizontally and increase the density of the value chain vertical.

Technology development trends: The digital supply chain will be the complete digital twin of the physical supply chain

At present, the mature application of digital intelligence technology in all aspects of the supply chain (including supply chain planning, procurement, manufacturing, operation, logistics, etc.) is still limited. The supply chain, which is now separated, blocking, lagging, discontinuous, and is not driven by real-time data, will develop towards overall collaborative, smooth, real-time, and will be based on digital twin analysis and prediction

Enterprise development trends: The future development of supply chain digitalization for large, medium, small and micro enterprises are very different

Large enterprises will develop from "big" to "strong", from digital "practitioners" to ”enablers"; Medium enterprises need to achieve informationization before digitalization. Service providers play a crucial role in digital awareness education for medium enterprises. Services for small and micro enterprises based on the industrial Internet. As to small and micro enterprises, services based on the industry Internet are in urgent need of breakthroughs, while public digital transformation infrastructure will be further improved to support small and micro-enterprises.

In China, only a few service companies are in the leading position. Excellent supply chain digital service providers usually need decades of experience. The exploration of the industry supply chain, the improvement of targeted products and the complete integration of systems are all long and difficult.

Digital Economy Drives Supply Chain Upgrades

The growth rate of China's digital economy has been high in recent years and reached 9.7% in 2020, despite the negative influence of the Covid-19 pandemic and the global economic downturn. "Industrial digitalization" is the focus of digital economy development in China. In 2020, its added value reached 31.7 trillion yuan, accounting for 80.9% of the digital economy and 31.2% of GDP. As a strong driver of the digital economy, industrial digitization refers to the comprehensive transformation and upgrading of various traditional industries in multiple dimensions and the whole chain using new digital technologies and gradually changes from single-point transformation to coordinated upgrading of industrial clusters. According to Digital Transformation Index released by Dell Technologies, the digital landscape of Chinese enterprises changed dramatically in 2016, 2018 and 2020. A lot of latecomers gradually became digital followers, evaluators and even practitioners. Meanwhile, the share of digital leaders has not changed much, indicating that high-level digitalization and supply chain digitalization still require a lot of effort and time.

Revenues from Supply Chain Digital Services

In 2021, the revenues of different types of participants in supply chain digital services totaled nearly 2.8 trillion yuan. Based on digital transformation of information flow, logistics flow and capital flow, supply chain digital services can be divided into three parts. Various software service providers and some core enterprises in the industry chain are the main digital service providers in the information flow supply chain. Revenue in this part is from software and technical service fees; digital services in the logistics flow supply chain usually rely on third-party logistics flow companies. Usually, digital transformation services and logistics flow services are integrated and provided to enterprises in need. In this part, the revenue is the logistics flow fee. The digital service revenue of the capital flow supply chain includes payment fees charged by payment institutions for providing payment links and interest fees for financial services provided by financial institutions. In terms of structural proportion and growth, the digital services in the logistics flow supply chain account for the highest proportion, but the digital services of information flow and capital flow supply chains have strong growth potential.

 

The Core of Supply Chain Digitalization

Horizontal extension of a single value chain and vertical interaction between different value chains

Industry Map

2022 Supply Chain Digital Service Industry in China

Supply Chain Digital Service Provider: Core Enterprises 

The complexity of the supply chain is the original driving force of core enterprises' digital transformation. Supported by a good information foundation and strong financial strength, core enterprises' supply chain management is supported by both subjective and objective factors and has a clear transformation path. MSMEs are usually involved in only one link of the supply chain, such as supply, foundry and distribution.Compared to large companies, they lack strong demand for digital transformation and their revenues can hardly support a complete digital transformation. Thus, the effective path for the digital upgrade of the supply chain of MSMEs is to solve their external ecological environment problems first, and then promote the upgrade from the outside to the inside. There are currently many excellent cases of vertical industry Internet platforms, which are led by core enterprises and use digital technology to integrate procurement information, transaction data, logistics supply, etc. of the entire supply chain. In addition to integrating the value of information flow, capital flow and logistics, core enterprises extend the digital supply chain to both ends as much as possible. The core value includes: ① Networked collaboration within industrial clusters can effectively improve supply chain efficiency and weaken procurement and distribution; ② Precipitate vertical industry big data, and strengthen brand marketing, demand response, customer retention, emergency response and other capabilities based on big data.

Technology Development Trends

Digital supply chain will be a complete digital twin of the physical supply chain

Technology Development Trends

Digital supply chain will be a complete digital twin of the physical supply chain

Enterprise Development Trends

Future development trends of large, medium, small and micro enterprises are very different

Table of Contents of the Full Report

Definition and Research Scope

Abstract


1 Background and Pain Points of Supply Chain Digital Upgrade
1.1 Analysis of the Macro Environment for Supply Chain Digital Upgrade
1.1.1 Evolution of Market Competition: Supply Chain is the Core
1.1.2 Industry 4.0 Also Means Supply Chain 4.0
1.1.3 China‘s rising position in the international production
1.2 Drivers of the Digital Upgrades of Supply Chain
1.2.1 Digital Economy Drives Supply Chain Upgrades
1.2.2 The Development of Technology and Management Tools Support Supply Chain Upgrades
1.3 Traditional Supply Chain Transform into Digital Supply Network
1.3.1 Rapid Digitalization on the Demand Side, More Pressure on the Traditional Supply Chain
1.3.2 A New Business Model Driven by Terminal Demand
1.3.3 The Network Value of the Digital Supply Chain Will Grow Exponentially


2 Analysis of Supply Chain Digital Upgrade Path
2.1 Core Issues of Supply Chain Digitalization and Overview of Participants
2.1.1 The Core of Supply Chain Digitalization
2.1.2 Participants in Supply Chain Digitalization
2.2 Market Size and Structure
2.2.1 Revenue of Supply Chain Digital Service
2.2.1.1 Scale of Supply Chain Digital Service Industry — Information Flow
2.2.1.2 Scale of Supply Chain Digital Service Upgrade — Logistics Flow
2.2.1.3 Scale of Supply Chain Digital Service Upgrade — Capital Flow



2.3 Perspectives and Paths of Different Types of Service Providers
2.3.1 Industry Map
2.3.2 Supply Chain Digital Service Providers — Core Companies
2.3.3 Supply Chain Digital Service Providers — Payment/ Financial Service Providers
2.3.4 Supply Chain Digital Service Providers — logistics flow Service Providers
2.3.5 Supply Chain Digital Service Providers — Technology Service Providers
2.3.6 Conclusion: Participants and Their Business Characteristics


3 Case Study of Supply Chain Digitalization
3.1 99Bill — Case Study
3.2 Midea Cloud — Case Study
3.3 JD Logistics Flow — Case Study


4 Trends in Supply Chain Digitalization and Suggestions for Enterprises
4.1 Development Trends of Supply Chain Digitalization Technology
4.2 Development Trends of Supply Chain Digitalization Companies
4.3 Development Trends of Supply Chain Digital Service Providers

Contents

The world has entered the era of supply chain competition. China's status in the international production pattern has risen.
The constantly changing global economic environment, trade pattern, and innovative industries contribute to the diversification of the supply chain and high-quality development. For enterprises, regions and countries, the construction and upgrade of the supply chain systems can help them effectively utilize more resources and continuously increase unit production capacity, thereby maintaining a leading position. China's industrial revolution process has intersected with the world's development trajectory. Its status in international production has been significantly improved, and it will face the challenge of informatization and intelligence in the future.

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