Supply chain networks describes the flow and movement of materials & information, by linking organizations together to serve the end-customer.  When designing a supply chain network, a company need to decide what's the locations of its suppliers, warehouses, retailers and factories, and decide how to transport its products across these locations.
Supply chain network design is important mainly for two reasons:
- The network design is usually considered as a long-term strategy. The companies should be cautious about their decisions on where to put their factories, warehouse, or even retail store since all of them require considerable investment, and difficult to change.
- According to one of this week's reading, the network decides almost 80% of the logistic cost, just like the product design decides almost 80% of the product. It means that no matter how efficient is your day-to-day logistic operation, a company could at most reduce 20% of the cost, after the network design is done.
In 2013, Suning restructured the organization, and announced that they would implement an Online-To-Office (O2O) strategy. In the old structure, the e-commerce and retail store are two parallels department, and they are doing the same things - try to sell things to the customers. After the company's reform, these two departments become two components along the same value chain. Like IKEA, they are changing the retail store into an experience center. People could touch, try and test the products in the store, and they could either purchase at the store and online. The company also make the price of the products at stores the same as those online. In this case, the price no longer is a factor that determine where the customers will purchase the products. For those customers who like to touch the real things, they will go to the store, and for those who don't like to go outside could simply make some click on their computer.
Suning repositions itself as a service provider, both to the customers and the suppliers. Suning is trying to establish an opening platform, and they are actively looking for strategic partner to join. For example, one of the electronic applicant manufacturer want to sell its products online, but doesn't want to invest tons of money in it. Then it could put their products on Suning's website. Suning plan to provide technical support, and even customers service for their partners' product. In addition, if a manufacturer want to open experience store for its products, it will requires lots of investment, and high risk. The strategic partner can choose some stores from Suning's 1500 stores, and display the product in the way they want it. They could also use this way to promote its product.
Since Suning just started this new strategic recently, we are not sure how successfully it will be. After the announcement of the new strategy, the stock price of Sunning went up nearly 100%. It seems that the majority hold optimistic attitude towards the change. Criticism think that Suning may fail because its information system is not sophisticated enough to support all these complicated operation.