Case analysis of Suning Yunshang’s supply chain finance model

Case analysis of Suning Cloud Commerce’s supply chain finance model

For Suning Cloud Commerce, it is an enterprise that uses its own network platform to act as an agent for the sales of various brand products. It has developed mall-style B2C e-commerce supply chain finance, mainly providing accounts receivable financing services to suppliers stationed in the mall, and making full use of the customer resources, customer information and convenient customer service and experience accumulated in Internet retail. Form a Suning ecological chain and serve customers at the upstream and downstream ends of the supply chain through Suning Micro-credit. So, below is a case analysis of Suning Cloud Commerce’s supply chain finance model that I compiled for you. You are welcome to read and browse.

1. Comparison between the traditional supply chain finance model and the Internet supply chain finance model

Traditional supply chain finance refers to the analysis of business transactions between enterprises in the supply chain On the basis of providing credit support and other settlement, financial management and other financial services to small and medium-sized enterprises in the supply chain, risks in the service process are controlled through the relationship between the credit enterprise and the core enterprise and the inventory pledge of the logistics supervision enterprise. In the Internet era, the traditional financial industry seeks the path of transformation and upgrading by integrating with Internet technology. The traditional supply chain finance model should also conform to the general trend of Internet finance and realize the transformation of traditional supply chain finance by integrating the resource advantages of the Internet era. Transformation and upgrading. Their characteristics are different but related.

1. Characteristics of traditional supply chain finance:

1.1 Banks’ credit ratings of credit-granting enterprises (mainly small and medium-sized enterprises) mainly rely on the actual business volume of the enterprise and the core factors in the chain. Capital strength, rather than just emphasizing the company's financial status and guarantee methods.

1.2 Credit funds are strictly limited to purchase and sale transactions between credit-granting enterprises and core enterprises. Misappropriation of funds for other purposes is prohibited, which better reduces credit risks. At the same time, banks use the funds generated from purchase and sale activities in the supply chain to Movables or rights are guaranteed

2. Characteristics of Internet supply chain finance:

1.1 Fast transportation, fast transaction, fast payment, and financing in the supply chain Fast speed, fast logistics, and obvious informatization characteristics of the supply chain

1.2 The supply chain has fast transportation speed, fast transaction speed, fast payment speed, fast financing speed, and fast logistics speed. Moreover, the informatization characteristics of the supply chain are obvious

2. Analysis of the three major models of Internet and supply chain finance and the corresponding models of Suning Cloud Commerce

In summary, there are three major models of Internet and supply chain finance :

1. The online transformation of traditional offline supply chain finance of commercial banks

Most banks provide funds to small, medium and micro enterprises based on the transaction records between core enterprises and small, medium and micro enterprises. support. Through supply chain financial services, banks use bank credit to enhance commercial credit and promote the effective development of corporate financing and commercial transaction activities.

2. E-commerce supply chain finance model based on Internet platform

Third-party trading platforms usually attract industry chain participants with information service functions, and use information services as an entry point to transform e-commerce. When the transaction volume of the e-commerce platform increases and the entire closed loop of transactions is completed through logistics and warehousing services, the third-party trading platform essentially possesses the transaction, logistics, cash flow and other relevant data of the upstream and downstream of the industrial chain, and can connect capital sources , can also meet the risk assessment requirements of supply chain financing projects.

3. Combination of commercial bank supply chain finance and e-commerce platform

Under the core enterprise model, the core enterprise of a certain industrial chain has strong industrial chain control capabilities and high Bank credit line.

Under this premise, core enterprises master the detailed information flow, logistics, and capital flow of upstream suppliers and downstream dealers, and also understand the operating conditions of upstream and downstream enterprises through long-term business activities. Such core enterprises connect with commercial banks or P2P platforms, etc. With the source of funds, it can provide financing services to upstream and downstream enterprises with its own credit line as guarantee, and improve the operating efficiency of the entire industry chain.

For Suning Cloud Commerce, it is an enterprise that integrates intermediaries and uses its own network platform to sell various brand products. It uses mall-style B2C e-commerce supply chain finance, mainly for those who settle in the mall. Suppliers provide accounts receivable financing services and make full use of the customer resources, customer information and convenient customer services and experiences accumulated through Internet retailing to form a Suning ecological chain, and realize the upstream and downstream of the supply chain through Suning Micro Loans. End customer service.

3. Analysis of the development history and current situation of Suning’s supply chain finance

First, let’s look at the most basic data: in the past three years, Suning’s online business accounted for 13.2% in 2012 and 2.2% in 2013. 17.7, accounting for 17.7 in 2014. It can be found that from 2012 to 2013, Suning's online business developed rapidly, but from 2013 to 2014, the development was very slow. This is because Suning's supply chain finance model has been implemented since 2012 and has achieved good results, but the next step of progress was at the end of 2014, which was slightly delayed.

In February 2012, Suning launched Suning Small Loan. This is an e-commerce financial business launched for small, medium and micro enterprises. All Suning dealers and consignment suppliers can use the settlement statement accounts receivable operated by Suning.com as collateral for financing loans. The single financing amount of this business Up to 10 million. In July 2014, Suning crowdsourcing was long overdue. For enterprises participating in the crowdsourcing platform, Suning will use media resources and online and offline drainage resources to promote the platform. Suning's "Yifubao" and small loan companies will promote the platform. Enterprises are opening up, and the first batch of investment of 1 billion yuan is set up to establish platform credit funds. The special fund for supplier growth was proposed in September 2014 to help solve the financing difficulties of small, medium and micro enterprises. When suppliers seek financing from Suning, Suning will also use special funds to repay the suppliers in the form of interest subsidies. The maximum subsidy is 20% of Suning's credit interest.

Recently, that is, in May 2015, the promotion of Xueyi Pay allows users to use Xueyi Pay to make direct payments when shopping, and enjoy a limit increase, 30-day interest-free (fee) during the promotion period, and ultra-low procedures. Installment services and other services. This means that Suning's supply chain finance fund insurance consumer credit's entire industry chain financial layout has been initially formed

Generally speaking, regarding the current status of Suning's supply chain finance development, we can summarize it into the following points:

1. Suning has an offline trading network and the top three online trading platforms that have been cultivated for more than 20 years, and has a large number of small, medium and micro enterprise customer resources.

2. Business flow, capital flow, information flow and logistics form an effective closed loop within Suning’s financial ecosystem.

3. Suning’s supply chain financing has maintained a record of zero bad debt rate.

4. Suning supply chain financing does not require mortgages and guarantees, but applies for credit lines based on the supplier’s past trade creditworthiness.

5. Suning Financial’s supply chain financing platform and Suning The backend information system is fully integrated, and Suning's efficient internal risk control and data approval flow mechanism greatly shortens the approval process and loan cycle.

IV. Suning’s supply chain financing operation process

1. Membership qualification application: Suppliers log in to the SCF platform to become qualified members of Suning Financing Club

2. Express financing intentions: Suppliers express financing intentions to marketing and settlement, and choose personalized financing products and cooperative banks.

3. Suning review and recommendation: marketing and settlement recommended suppliers to the capital management department to discuss financing products, cooperative banks and other related matters

4. Bank financing: the bank will provide financing according to the supplier Qualifications determine the loan amount and issue the loan

5. Suning pays on maturity: Suning pays the supplier's financing account according to the settlement list amount when it is due. The bank deducts the supplier's financing amount and settles the balance with the supplier.

5. Comparison between Suning supply chain financing and other financing

1. Comparison with JD.com

JD.com’s financing process:

1.1 Approved quota: When the supplier confirms the supply chain finance business, the supply chain finance business specialist will send an email to the supplier to inform the supplier of the maximum financing quota. The total financing amount must be less than or equal to the maximum financing quota.

1.2 Bank account opening: After obtaining the maximum financing amount, the supplier can open a special bank financing account at JD.com’s designated business acceptance bank.

1.3 Submit financing application: After the supplier completes the account opening, it can handle the financing business. Each time it is financing, it should apply to the purchasing and sales colleagues to confirm the purchase order for financing and other matters.

1.4. Check the settlement amount: After the supplier selects the purchase order, the settlement amount should be checked at the same time as the purchase and sale.

1.5 Submit a settlement application form: The person in charge of procurement and sales submits a settlement application form in the JD system. First, check the supply chain financial settlement, and then select the payment settlement application.

1.6 Settlement document approval: Submission of financing information is based on the completion of approval of the settlement document in the system. The approval progress affects the loan progress and requires communication between the supplier and the person in charge of procurement and sales.

1.7 Preparation of financing documents: After the settlement document is submitted, the supply chain finance specialist prepares financing documents, and the financing content is mainly based on the settlement document information.

1.8 Approval and submission of information: After the settlement form is approved, the supply chain finance specialist will submit the prepared financing information to the bank and follow up on the loan progress.

1.9 Bank loan and JD repayment: After the bank reviews the financing information and it is correct, it will lend money to the supplier. On the maturity date, JD.com repays the money to the bank for the supplier. Credit extension refers to the act of a bank directly providing financial support to a customer or guaranteeing the customer's credit in relevant economic activities to a third party.

It can be seen that through strategies such as differentiated positioning and self-built logistics systems, and through years of accumulation and precipitation, JD.com has formed a set of JD.com supply chain systems driven by big data to provide upstream suppliers with Provide loan and financial services, and provide credit sales and installment services to downstream consumers. Although JD.com's magnificent logistics system seems to have solved the passive situation of B2C e-commerce companies relying on third-party logistics, JD.com's almost unlimited capital investment has seriously hindered JD.com's development; as a traditional industry, Suning has intervened , relying on thousands of offline chain stores, 100 logistics centers, 3,000 after-sales service outlets, complete chain stores and logistics system construction will become one of Suning's biggest advantages, which JD.com cannot compare with. Moreover, Suning has a dedicated supply chain financing platform (SCF) for suppliers, which seamlessly connects with multiple banking systems to ensure that suppliers can obtain financing easily and quickly. Small and medium-sized enterprises can quickly obtain financing without guarantees or mortgages. Banks obtain liquidity. This is something that JD.com does not possess.

2. Comparison with bank credit:

2.1 In Suning’s supply chain financing, suppliers pledge or transfer their accounts receivable to banks without mortgage or guarantee. , obtain financing quickly, and small and medium-sized enterprises can quickly obtain working capital from banks without guarantees or mortgages; in traditional bank credit, no matter whether the supplier is large or small, they need to provide collateral (such as real estate, etc.) Or looking for guarantees, the process is complicated and the loan speed is slow. If there is no collateral or guarantee, the bank will not lend to the supplier. This is the biggest shortcoming of traditional bank credit;

2.2 Supply chain financing in Suning Among them, electronic operations meet the short-term, frequent, fast and urgent financing needs of suppliers; traditional bank credit requires a lot of manual operations and cannot meet the short-term, frequent, urgent and fast financing needs of small and medium-sized enterprises and cannot keep up with the current situation. Electronic demand;

2.3 In comparison, Suning supply chain financing has a variety of financing methods, including multiple orders and multiple financings. Suppliers have strong operability and flexibility. You can choose the appropriate financing method according to your own needs, while the traditional bank credit financing method is single and inflexible. Suppliers have no choice but to follow the bank's requirements;

2.4 Suning's online business It is not restricted by the location of suppliers and can serve more enterprises. However, traditional bank credit is limited by the localization of bank loans. Suppliers can only go to local banks for loans. It is too limited to the region and cannot effectively improve efficiency

6. Risks and suggestions faced by Suning in developing supply chain finance

1. Risks faced by Suning supply chain finance

Suning.com stated that it will target Upstream economic and agency suppliers across the country mainly promote supply chain financing business. Suning's supply chain finance business is a new upgrade of Suning's supplier financing business based on the original credit, bank factoring and financing business. Suning's newly launched "Suning Small Loan" financial business in 2012 will also be fully open. Among them, "Suning Small Loan" is an e-commerce financial business launched by Suning Enterprises for small, medium and micro enterprises. All Suning dealers and consignment suppliers can cooperate with The settlement statement accounts receivable operated by Suning.com are used as collateral for financing loans. The maximum single financing amount of this business can reach 10 million. Suning announced that it will fully develop its e-commerce financial business and fully open Suning's supply chain financial business to small, medium and micro enterprises.

Suning’s launch of financial business is the first time that a domestic traditional retail company has set foot in e-commerce financial business. It is of great significance to both the company itself and China’s traditional retail industry. However, due to its traditional retail background, developing supply chain finance through Suning.com will face special risks.

1.1 The risk of funds being occupied in offline business

Suning put forward the slogan of "technological innovation, smart service", and increased investment in technology and services through a series of operations. The company has always Adhering to the business strategy of "front office driving the back office and back office driving the front office", and constantly improving the construction of logistics platforms and information systems, in the long run, it will be beneficial to the stability of the company's operations, but in the short term, with the purchase of stores, self-built stores, and logistics systems, The increase in asset investment has affected turnover efficiency and the demand for capital is also increasing. At the same time, in order to keep up with the development trend of the retail industry, Suning vigorously develops e-commerce supply chain finance, which further increases its demand for capital. If it cannot maintain good capital turnover, it will pose risks to the development of the company's offline retail industry and restrict the company's offline business layout.

1.2 The risk of online business being restricted by banks

Suning has been strengthening cooperation with banks to carry out supply chain financial activities. With the further development of the online platform, it can reduce the occupation of its own funds. It brings liquidity risks, but at the same time it also creates risks that are easily restricted by banks, because most of the service targets of e-commerce supply chain finance are small and medium-sized enterprises, and it is necessary to ensure that funds flow from banks to these enterprises that cannot meet bank credit standards. Suning's credit will increase its own risks, which will have a significant impact on the company in an economic downturn. At the same time, if the company's offline business becomes unstable, banks will reduce credit to Suning, thereby restricting The development of supply chain finance.

2. Suning’s suggestions for developing supply chain finance to avoid risks

2.1 Strictly control the credit process and strengthen the management of credit personnel

The credit process mainly refers to loan approval, In aspects such as loan issuance and post-loan management, e-commerce companies should strictly control the risks in each link and establish a complete risk firewall, that is, a risk early warning program. At the same time, always monitor the capital flow and business conditions of credit-granting enterprises, establish non-performing asset disposal procedures and risk response measures, and prevent risks from an institutional perspective; supply chain finance credit personnel should strictly implement the credit business process and strictly follow the pre-loan, loan and loan process procedures. A multi-level risk warning and management system has been developed to prevent credit risks from a personnel perspective. Strengthen relevant business training and improve the quality of business personnel. The development of supply chain finance must be based on the improvement of personnel quality. The quality of business personnel should be improved from various human resource modules such as recruitment and selection, training, and incentives.

2.2 Strengthen offline financial control

Although Suning.com currently ranks third in the domestic e-commerce market share, it is far lower than Taobao’s market share of more than 52% , the company's development is not healthy enough and cannot be separated from the support of offline business funds and manpower. However, the development of Suning.com has just started and has huge potential. Therefore, the demand for financial support will continue to increase in the short term, which requires the company Pay more attention to financial security, ensure that capital investment is gradual, and cannot hinder the development of offline business, otherwise, financial risks will occur.

2.3 Credit asset securitization

Credit asset securitization refers to packaging credit assets of various risk levels and packaging them for listing or selling them to investors in the market . On the one hand, it can increase the liquidity of assets, and on the other hand, it can transfer credit risks. This approach can improve asset quality, relieve capital pressure, expand funding sources, and improve financial security.

2.4 Use various risk control tools to distinguish risk categories and identify potential losses

The ERP system is based on information technology and uses systematic management ideas to provide corporate decision-making and a management platform that provides employees with decision-making and operational means. It is a new generation of integrated management information system developed from MRP (Material Requirements Planning). It expands the functions of MRP and its core idea is supply chain management. It jumps out of traditional enterprise boundaries and optimizes enterprise resources from the scope of the supply chain. Electronic data interchange, also known as EDI (Electric Data Interchange), is a new method of using computers for business processing. It uses an internationally recognized standard format to transfer information from trade, transportation, insurance, banking, customs and other industries through Computer communication network enables data exchange and processing between relevant departments, companies and enterprises, and completes all business processes centered on trade. Relying on Internet technology, through the ERP system platform, and using information processing technologies such as EDI to establish an information network with a high degree of sharing of material and capital data, risks can be effectively avoided.

2.5 Establish an emergency response mechanism

Supply chain finance involves many business entities and has a wide scope. With this, there are many uncertainties in each link, and some are prone to occur. In emergencies, e-commerce companies should establish a complete emergency response mechanism.

This emergency mechanism should be able to solve two problems. One is the prevention of emergencies. It monitors the business status of credit companies through some evaluation indicators and promptly detects and makes adjustments when problems arise. The other is the response to emergencies. Handle, formulate timely and complete handling measures, and handle emergencies in a timely manner when they occur. This can avoid more serious risks caused by untimely handling.

7. Suning Cloud Commerce Supply Chain Finance Development Trend Forecast

1. Supply chain digitization

Each information node is gradually becoming digitized and transparent. The order status, transaction history, transaction entities and other information in the transaction chain of each link of the supply chain will gradually be deposited on the platform. The platform can sort out this data and provide it to the bank, which will provide funds. The platform provides guarantee for the authenticity of the data.

2. Financial Internetization

Use the Internet to integrate logistics, capital flow, information flow, and business flow to improve efficiency and reduce risks. Supply chain financial business processing can be faster, more accurate and more stable, and the trade and financing links can also be more low-carbon, smooth and convenient.

3. Business integration

Integrated services of e-commerce, logistics and finance. E-commerce is the most innovative front-end field of business models under the new situation; logistics enterprises are a solid support for the transportation and circulation of physical goods in the supply chain; commercial banks are the largest and most comprehensive providers of capital and financial services in society.

4. Personalized services

According to the different businesses of different enterprises, tailor-made financial services are provided to realize personalized customization of supply chain financing products, so that supply chain financial products and Service model innovation becomes possible.

References

1. Yang Dong, Wen Chenggong. Internet Finance = Crowdfunding Finance [M]. People's Publishing House, 2015.

2. Zha Hongwei. Discussion on Supply Chain Finance of E-commerce[M]. Shanghai Jiao Tong University, 2014

3. Xie Huobao, Zhang Qian. Construction of enterprise ERP system and its relationship with accounting information in the era of big data System integration? Taking Suning Cloud Commerce as an example [J]. Finance and Accounting, 2014

4. Liang Zhong. Research on the risks of developing supply chain finance in an e-commerce environment - taking Suning.com as an example [D]: [Master's Thesis].2013

5. Du Juan. Suning Cloud Business: Supply Chain Financial Services for Small and Medium-sized Suppliers [J]. WTO Economic Tribune. 2013;