SONGMICS HOME: Building a competitive moat for cross-border home furnishing e-commerce by maximizing supply chain efficiency
A revolution in cross-border supply chain agility
Global-leading online home furnishing brand SONGMICS HOME faced up to intensified overseas e-commerce competition and surging costs by deploying SAP Integrated Business Planning (SAP IBP) solutions to accelerate global supply chain responsiveness and operational efficiency. This strategy provides a digital foundation to support its global brand expansion.
| Industry | Region | Company Size |
| Retail | Zhengzhou, China | >1,500 employees |
order fulfillment rate.
reduction in planning execution cycle.
decrease in inventory turnover days.
COO, SONGMICS HOME
Struggling to ensure stock availability in cross-border e-commerce
SONGMICS HOME, founded in 2010, is a cross-border home furnishing e-commerce enterprise. With a brand philosophy of “stylish yet affordable,” the company combines independent research and design, eco-partnerships, and a global supply chain. Delivering products to over 60 countries, including across Europe, the United States, and Japan, SONGMICS HOME’s branded home furnishing products are sold through platforms including Amazon and eBay. In 2023, SONGMICS HOME went public on the Shenzhen Stock Exchange’s ChiNext Board.
Unlike other export commodities, cross-border home furnishing involves large household products and secondary materials that typically rely on sea freight. The long transportation cycle, often exceeding 60 days, makes it difficult to quickly meet the real-time demands of e-commerce platforms. Additionally, fluctuating shipping costs that are significantly influenced by international oil prices and market supply and demand make transportation costs hard to control.
In the warehousing sector, high storage costs and slow inventory turnover have always been challenges in the home furnishing business. To ensure continuous stock, companies usually need to prepare two to three months of inventory in advance, further increasing inventory pressure. SONGMICS HOME urgently needed a digital system to visualize inventory information that was isolated in spreadsheets and accelerate inventory turnover through inventory sharing and transfers.
Demand forecasting at SONGMICS HOME’s global sites relied on manual entries by sales staff and manual spreadsheet-based processes, which were not only inefficient but also prone to errors, further slowing the supply chain response cycle. Given the volatile global market and complex supply chain environment, this inefficient management model was inadequate for company’s global operations, compelling it to enhance the flexibility and responsiveness of its supply chain through digital transformation.
Standardizing supply planning for end-to-end visibility on a unified base
SONGMICS HOME partnered with SAP to systematically advance its supply chain digitalization by implementing SAP IBP solutions in three phrases. This encompassed the SAP IBP application for sales and operations as well as the SAP IBP application for demand and the SAP IBP application for response and supply to enable overseas demand reporting and demand management.
Integrating SAP IBP solutions with supplier relationship management, warehouse management, order management, transportation management, sales and finance, and product lifecycle management systems created an end-to-end supply chain. This means that once the forecast is approved, the system automatically generates purchase orders and places them with suppliers through SAP IBP. From forecasting and purchasing to supply planning and shipping schedules, everything is coordinated in a unified space.
To improve forecasting accuracy to account for fluctuating overseas market demand while minimizing use of a single prediction model that was based on historical data, SONGMICS HOME adopted intelligent forecasting algorithm models in SAP IBP. Before implementing the solution, SONGMICS HOME’s forecast accuracy was below 60%, with the in-stock rate below 90%. By combining historical demand data, time series, and regression factors such as seasonal fluctuations, Black Friday promotions, and e-commerce platform traffic competition, SAP IBP enables more-accurate demand forecasting.
SAP IBP shares and visualizes demand forecasts, inventory information, and logistics cycle data. Using this information, SAP Services and Support offerings were employed to further optimize scheduling decisions for complex supply chain scenarios such as container consolidation plans and logistics route optimization. And to meet customer demand for inventory sharing and transfers across multiple global sales sites, SAP IBP enables intelligent sharing and transfer recommendations within regions. By visualizing real-time inventory levels and demand changes, the system can automatically identify areas of inventory redundancy or shortages and provide optimal transfer solutions to maximize inventory utilization efficiency.
Increasing the order fulfillment rate to 96% with an optimized supply chain
The deployment of SAP IBP also served as a crucial opportunity for SONGMICS HOME to streamline its supply chain processes and achieve data standardization. With the launch of SAP IBP, SONGMICS HOME successfully integrated previously fragmented supply chain processes into a unified digital space. And the manual and labor-intensive order reporting process of the past has now been automated. The response speed across the value chain has significantly improved, with IT operations completing integrated tasks within seven hours, and the planning execution cycle reduced from seven days to two days. With real-time, accurate, and transparent order information transmission, SONGMICS HOME can respond more swiftly to market demand changes, adjust supply plans and logistics arrangements promptly, and gain a competitive edge in the intense overseas market.
Leveraging the intelligent forecasting algorithms of SAP IBP, SONGMICS HOME can optimize supply plans more scientifically. Combined with inventory sharing and transfer recommendations, logistics scheduling has been optimized, accelerating inventory turnover. Currently, SONGMICS HOME’s inventory turnover days have been reduced from 130 days to 83 days, while warehousing costs have significantly decreased. Supporting the highest in-stock rate with minimal inventory has rapidly increased the order fulfillment rate from 87.3% to 96%.
Under SONGMICS HOME’s brand strategy of “stylish yet affordable,” the supply chain plays a vital role. SAP IBP has become the unified digital tool for the company across more than 60 countries and regions, over 400 suppliers, and more than 200 sales channels. By deeply collaborating and rapidly coordinating with suppliers and logistics partners, SONGMICS HOME can accelerate its globalization, showcasing the innovation and competitiveness of Chinese brands on the global e-commerce stage.