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Basic knowledge of logistics and circulation

by:VIPUTRANS     2020-09-04
Circulation is the link between production and consumption. Therefore, as an economic form, the circulation is produced and developed along with the history of commodity production and exchange. As one of the three components of e-commerce, capital flow is an indispensable means to realize e-commerce transaction activities.
  Circulation is the link between production and consumption. Therefore, as an economic form, circulation is produced and developed along with the history of commodity production and exchange. In the early stage of the commodity economy, due to the small number and types of products, the exchange relationship between production and consumption was carried out in a direct manner, and circulation was in the primary form. With the all-round development of society, the diversification of production methods, the specialization of division of labor, and the scale of production, especially the development of modern economic globalization, have greatly increased the types and quantities of products. Production locations and consumption locations have gradually separated, and circulation has become more advanced. More complicated stage.

   1. The four pillars of circulation

In general, the traditional circulation process has to solve two problems: one is the transformation of finished products from producer-owned to user-owned, that is, the activity of object ownership transfer, which is to solve the problem of ownership change, which we call business flow; The second is to realize the circulation process of objects, that is, to solve the problem of transferring objects from the place of production to the place of use in order to realize their use value, which we call logistics. Business flow and logistics together constitute the entire content of traditional circulation activities.

However, with the progress of the times and the development of the commodity economy, the circulation field is also expanding. As a result of this expansion, people realize that the current circulation field can no longer simply be summarized by 'business flow + logistics'. It should be said that the modern circulation field already contains four pillar flows, namely business flow, logistics, information flow, and capital flow.

   1. Logistics

  The logistics in the modern circulation field contains two meanings of 'logistics' and 'logistics'. It is a modern 'large logistics' that is different from traditional logistics

   2. Business flow

  Business flow: refers to the flow of social entities of materials when materials are transferred from suppliers to demanders, which is mainly manifested in the exchange movement of materials and their equivalents and the transfer movement of material ownership. The specific business flow activities include trading activities and business information activities. Business activities can create the utility of ownership of materials.

  The mechanism that produces the commodity flow: 

(1) Complementarity. That is, the complementarity of trade demand and supply mode between the two regions. There are three possibilities. One is potential complementarity, which reflects differences in natural resources, cultural landscapes and political systems in different regions, and may lead to regional specialization and exchange according to the law of comparative interest; the other is potential complementarity, that is, the production capacity is in one place. Surplus in the region and scarcity in another region; the third is actual complementarity, where surplus products appear in one region through specialized production to supply the needs of another region;

   (2) Transmissibility. Contains the value of the product itself, which determines whether it can afford the cost of long-distance transportation; the characteristics of the product itself, such as perishability, danger, and fragility; characteristics related to the surface, such as natural environment (topography, climate, etc.) and man-made Environment (transportation facilities);

   (3) Intervention opportunity. Drawing on the concepts used by Stoff when he studied immigration in 1940, Ullman considered the influence of distance more. Commodity flow research also includes the quantity, type, value, flow direction and distance of commodity flow. In particular, it is necessary to study the mechanisms and conditions for the international or interregional flow of commodities such as grain, industrial raw materials, coal, petroleum, important mineral resources, and major industrial products that have an important influence in the current international and domestic economies. A series of mathematical analysis methods have been successfully used in the study of commodity flow, including linear programming, inter-regional input-output analysis, the concept of maximum entropy, and Markov chains.

Features of    business flow:

(1) Circulation is highlighted, that is, business flow is regarded as a part of circulation.

   (2) highlights the accompanying relationship with logistics activities.

  (3) highlights the function of business flow-'ownership utility'.

  商流’s activities:

(1) Collect commodity information and conduct market research before trading.

   (2) According to the results of the market survey, adjust the production plan, quantity, quality, sales channels and other factors of the product.

   (3) The buyer and seller negotiate a deal.

   (4) The fulfillment process of the transaction.

  The connection and difference between logistics and business flow:

1. The link between logistics and business flow

   (1) They all belong to the field of circulation, which are two different forms of commodity circulation, which complement each other in function. Usually, the business flow occurs first and then the logistics occurs, and then the logistics occurs after the business flow is completed.

   (2) They are all flows from supplier to demander, with the same starting point and destination.

2. The difference between logistics and business flow

   (1) The flowing entities are different. Logistics is the flow of material entities, and business flow is the flow of social entities of materials.

   (2) The function is different. Logistics creates space utility, time utility, and physical utility of materials, while business flow creates the utility of ownership of materials.

  3. The sequence and path of occurrence are different from each other. In special circumstances, both business flow without logistics and logistics without business flow are possible.

   In short, there is business flow first, then logistics. Commercial flow is the upstream of logistics. Without upstream, there will be no downstream. Therefore, it is necessary to rely on commercial flow to bring animal flow. However, if there is no logistics, business flow cannot be realized. The more prosperous the business flow, the more developed the logistics. On the contrary, if the logistics service lags behind, it will also affect the development of business flow. Therefore, the two complement and promote each other.

  3. Information Flow

Information flow: The broad definition of information flow means that people use various methods to exchange information, from direct face-to-face conversation to the use of various modern delivery media, including information collection, transmission, processing, storage, retrieval, analysis and other channels And process.

   The narrow definition of information flow is from the perspective of modern information technology research, development, and application. It refers to the flow of information in computer systems and communication networks during information processing.

An easy way to evaluate the success of an enterprise is to look at the 'three streams' of its logistics, workflow and information flow. The quality, speed and coverage of the information flow can especially 'reflect' the production, management and decision-making of the enterprise Wait for the 'fineness' of all aspects. Because logistics and workflow in the 'life activities' of enterprises are ultimately displayed in the 'advanced form' of information flow, just as all activities of the organism are based on bioelectric signals transmitted by the nervous system. Therefore, a deep understanding of 'information flow' will open up a new perspective of enterprise development.

   The relationship between information flow and logistics:

   (1) The connection between the two:

  In the logistics system, information flow is used to identify the specific location of various needs in the logistics system. The relationship between the two is extremely close, and they are the basis for mutual existence.

   (2) The difference between the two:

   From the perspective of the content of transmission, the flow of information is a non-materialized transmission method, while the material transferred by the logistics is materialized material.

   4. Capital flow

   Marketing: Fund flow refers to the flow of funds exchanges between members of marketing channels along with the transfer of physical goods and their ownership.

  In terms of logistics: the flow of funds refers to the process in which users transfer their funds to the merchant's account after confirming the purchase of goods. As the most special one of the three streams of e-commerce, the flow of funds plays an important role. In e-commerce, customers purchase goods or services by browsing the web, and post online payment after the purchase is completed. Whether the money paid by customers can reach the merchant safely, promptly and conveniently is related to the final success or failure of the transaction. Therefore, online payment is of great significance for both customers and merchants. The key to online payment is the construction of a capital flow platform.

  As one of the three components of e-commerce, the flow of funds is an indispensable means to realize e-commerce transaction activities.

   As the link connecting production enterprises, commercial enterprises and consumers in e-commerce, whether banks can effectively realize electronic payment has become the key to the success of e-commerce. In a common B2C transaction, the cardholder sends a shopping request to the merchant, and the merchant sends the cardholder’s payment instruction to the bank’s electronic payment system through the payment gateway; the bank then obtains approval from the issuing bank through the bank card network and confirms The information is then returned to the merchant from the payment gateway; after the merchant obtains the payment confirmation, it sends a shopping completion message to the cardholder. The remaining work is the allocation of funds within the banking system and inter-bank settlement.

   From the above process, it is not difficult to see that the capital flow of any online transaction can be divided into two parts: transaction link and payment settlement link. The payment and settlement link is completed by a dedicated financial network including payment gateways, banks and card issuing banks. Therefore, banks can be said to be the core institution of any e-commerce capital flow.

   The integration of second and third streams

   First of all, any e-commerce transaction must include these 'three streams'. They are always there, causing each other. Like polyphonic music, the three main melodies are entwined and chasing each other, and they become a little after the climax. Any trader must have finished dealing with this 'third-rate' before completing a transaction. Secondly, the continuous progress of information technology and the continuous improvement of logistics system efficiency have created conditions for the integration of this 'three streams'. The effective interaction between the three in this general environment constitutes a complete e-commerce model: information flow is the body of the model and the basis of capital flow and logistics; capital flow and logistics are the blood of the model and the result of information flow.

   For example, e-commerce logistics platform can be divided into two parts: logistics entity network and logistics information network. The former refers to a network formed by the rational layout of logistics companies, logistics facilities, transportation tools, and transportation hubs on geographic groups; the latter refers to the physical logistics system connected by logistics companies, manufacturing companies and commercial companies through modern communication methods such as the Internet It becomes a shared information network, and uses this information network to realize the efficient deployment and arrangement of transportation vehicles and routes. Among them, logistics resources have been integrated in the form of information resources, which has improved utilization and operating efficiency.

   Therefore, in addition to the information flow platform itself contains valuable information, its greater value lies in the good operation of the logistics platform and capital flow platform. Among the three platforms, the information flow platform plays a fundamental and guiding role.

   The three platforms and their interrelationships together constitute an integrated structure for e-commerce operations. For example, A company and B company negotiated and reached a supply agreement, which determined the price, quantity, supply time and location of the product and other relevant terms. Next, company B sends goods to company A through the logistics platform, which includes packaging, loading and unloading, warehousing and transportation and other links and activities. Next, company A will pay for the goods to company B through the capital flow platform, which includes the transfer and settlement process between the two corporate agent banks. A company, B company, A company’s bank, and B company’s bank interact with each other in the information flow from start to finish until the transaction between the two companies is completed: A company gets the purchased goods, and B company receives the sales payment. Obviously, while logistics and capital flow are operating, information flow is also actively playing a role. Otherwise, logistics and capital flow will not be discussed.

   Therefore, in e-commerce live transactions, capital flow is the condition, information flow is the means, and logistics is the process. All this is formed for the enterprise and the enterprise chain to meet the needs of end customers.
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