This week, Supply chain network design, planning and analytics technology provider Llamasoft’s announced a strategic partnership with JD Logistics, which is the logistics business arm of China’s online retail platform JD.com. Supply Chain Matters views this as a significant partnership as well as indicator of growing interest in advanced analytics technologies applied to B2C focused business processes.
According to the announcement, JD Logistics will exclusively deliver and integrate LLamasoft’s software applications as part of its existing service and technology offerings to select manufacturers, retailers and logistics providers in China using the JD Logistics network.
This Editor had the opportunity to speak with Toby Brzoznowski, Chief Strategy Officer at Llamasoft who helped in negotiating this agreement. We confirmed that this a multi-year deal where the applications being provided will include essentially most elements of Llamasoft Supply Chain Guru Applications Suite including many of its supply chain analytics, supply chain network design optimization, planning, operations and management. Llamasoft will continue to support existing China clients and will broaden its go-to-market coverage with a segmented model that will now include JD Logistics acting as a reseller of bundled software applications and some managed services among its associated customer base.
The announcement was made at the conclusion of Llamasoft’s regional LLamacon customer conference held in Shanghai last Friday, which drew what was reported as more than 500 supply chain professionals from nearly 300 companies across the region.
Our last Supply Chain Matters perspective on Llamasoft was our attendance at the annual US Llamacon customer conference held in Chicago in late June. This Editor’s observation culled from the various product strategy sessions was that advanced analytics, either prescriptive, prescriptive or artificial intelligence and machine learning based, are indeed capturing the attention and leveraged use from multi-industry supply chain management teams. With this latest strategic partnership announcement, we can now include B2C and omni-channel customer fulfillment logistics as a growing interest in these capabilities.
Background Reference Points
Supply Chain Matters has featured a number of ongoing commentaries relative to JD.com’s online customer fulfillment capabilities across China.
Noted as China’s number two online retailer to that of Alibaba, whose business model incorporates holding no inventory and owning no warehouses, JD.com differentiates itself, not by being a virtual online marketplace, but by managing the inventory and physical supply chain resources for the company’s lineup of merchants. Alibaba utilizes its owned logistics arm Cainiao and other domestic logistics providers to manage customer fulfillment and parcel delivery across China.
JD Logistics became a standalone business in April of last year with the consummation of a $2.5 billion equivalent investment offering, of which parent JD.com remaining as majority shareholder. In a commentary published last October, we highlighted the online retailer’s expanded domestic parcel delivery capabilities manifested by JD Logistics.
This week, JD.com reported higher revenues and customer growth for the recent quarter ending June 30. Second quarter revenues increased by 23 percent to approximately $21.2 billion while reported active customer accounts increased 3.5 percent to just over 300 million. That is the equivalent of an $84 billion annual revenue run rate.
The Chinese online retailer had more than 220,000 listed online merchants and was operating a reported 600 warehouses, equivalent to more than 15 million square meters across China as of the end of June. Such a network exceeds that of many U.S. based online providers and a vast majority of other global providers as-well. Cainiao manages over 10 million square meters of warehouse capacity.
The parent company has further taken on previous baseline efforts to provide reference modeling of its supply chain business processes.
In August of 2017, the APICS organization (now renamed Association for Supply Chain Management (ASCM)) announced a broadened strategic relationship with JD.com to develop nationwide standards for the omni-channel supply chain capability within China and to assess the end-to-end performance of the E-commerce industry. That effort included the leveraging of the well-established Supply Chain Operations Reference (SCOR) model that would provide major suppliers with performance metric comparisons as to their competitors and the context of their respective industries at both regional and global levels. Plans had called for further development of best practices for global E-commerce supply chains.
Supply Chain Matters speculates that this effort represented an initial step in assessing overall supply chain business process and eventual advanced technology needs, similar to other multi-industry supply chain management approaches to business growth needs.
We view the Llamasoft announcement as yet another positive indication that China’s online providers intend to leverage advanced supply chain applications and analytics technology in managing and supporting continuing industry growth in the B2C industry segment. That includes reaching out to both enterprise ERP and best-of-breed supply chain management technology providers to leverage such capabilities.
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