Tech startup: I really do make mobile phones!

Chapter 87 Supply Management
The Orange 1 saw 6000 units shipped on its first day (including pre-orders) within a week of its launch, which jumped to 20,000 units on the second day and 55,000 units on the third day.
As of June 13, the company had received 500,000 orders within a week, with a total shipment of 330,000 units.

Sales revenue (1.64 million) + deposit (0.25 million) = revenue (1.89 million)
Receipts (1.89 million) - Supply chain costs (1.55 million) = Cash flow on hand (0.34 million)
Orange shipments increased by 223% the following day, a week-on-week increase of 330%, and a shipment rate of 66%.

The original profit margin for oranges was projected at 13%. (For every 1 units sold, the profit would be NT$96.8)

However, due to Chen Mo's insufficient control over the supply chain, he used a "piecemeal" approach, which resulted in a significant waste of time and other costs.

The profit margin of Orange 1 has now dropped to 12.2% (1 yuan in profit for every 90.8 units sold).

Judging solely from the growth rate after the product's launch, Orange 1 even surpassed Pingguo 4.

Of course, its sales volume is far less than that.

This is not surprising, as Orange takes the "cost-effective" route and starts from a very low point, so it is easy to boost the growth rate of Orange 1.

Chen Mo lacked experience in manufacturing blockbuster mobile phones, which led to an estimated insufficient production capacity.

With 50 orders versus only 33 actually shipped, there was a mismatch between production capacity and market demand, which unintentionally created a "hunger marketing" situation for Orange 1.

While Lei Jun is still discussing the geek spirit with CEO Zhang, Chen Mo has already started using scarcity marketing.

Look at Xiaoyu, even after visiting Huabeiqiang's stall three times, she still couldn't get an orange. You can see the power of this scarcity marketing in Shenzhen.

Previously, seeing the wholesalers at the stalls buying so frantically, Chen Mo worried that the OEM factory might not be able to keep up with the daily sales of 3 units.

So Gong Yun stayed home, and Chen Mo and Zhao Tiezhu quickly split up. One went to sort out the supply chain, and the other went to contact new contract manufacturers, managing to increase the contract manufacturing capacity to a surplus of 10 units per day.

Then the battery inventory manufactured by Ningde was completely wiped out ahead of schedule.

If Zhao Tiezhu hadn't negotiated with those two coal bosses yesterday to have them manufacture under his brand, thus selling off the abandoned "X" designation of Orange 1 and making use of the idle production capacity...

The battery shortage just one day caused the contract manufacturer's 7-unit production line to be idle. Based on the 3% contract manufacturing fee, Orange Technology would have to pay 105 million yuan in breach of contract fees every day.

Without this coal mine owner's OEM manufacturing to take over the idle production capacity of Orange 1, the OEM factory would lose 100 million every day waiting for batteries.

Fortunately, most of the accessories for the Orange 1 and "x" are interchangeable, so cleaning the cables only requires cleaning the screen assembly section.

As for the battery being installed incorrectly.
Orange herself doesn't even have any spare batteries, so how could she possibly accidentally put the "x" on it!
Lu Laowu, the coal mine owner who commissioned Orange Technology to manufacture his products under their brand, is a real lifesaver!
Once things settle down, Chen Mo plans to set up a table to thank the coal mine owner.

Of course, it's not just about expressing gratitude verbally.

Out of gratitude for the other party taking over the idle production capacity, Chen Mo helped the other party adapt the Orange OS 1.0 system, which did not have the orange logo, to their "x" phone free of charge.

They also covered the licensing fee of 0.5 yuan per device for TouchPal Input Method.

There's no way around it; if you want to run Orange OS 1.0 on the OEM-manufactured "x" phones, you have to share revenue with the legitimate software.

If there are any commercial activities that infringe on genuine software, the black technology phone's R&D system will be unbound.

This is all thanks to this coal mine owner who came from afar!
Otherwise, even with Chen Mo's stable mindset from two lifetimes, he would find it hard to bear losing a million yuan in breach of contract fees every day.

Now, Chen Mo can probably understand the true value of Cook's integrated supply chain and Lei Jun's expertise.

By controlling inventory and integrating and optimizing the supply chain, there is no stockpiling or idle capacity at any stage.

This can minimize costs and maximize profits.

Not everyone has the ability to integrate a mature supply chain to reap the benefits.

Pingguo's parts inventory cycle is only 5 days, using a "Just-in-Time" model, and the contract manufacturer's capacity utilization rate averaged 92.7%, earning Cook a reputation as a master of supply chain management. However, when Pingguo's production line was moved to India, the contract manufacturer's peak capacity utilization rate was only 60%.

Now everyone realized that the one who was really powerful wasn't Cook at all!

It is clearly our mature domestic industrial chain and our hardworking and capable workers that gave Cooke's "Just-in-Time" model the opportunity to take off.

In comparison, Lei Jun's ability to integrate the supply chain is much stronger than that of Cook.

The supply chain adopts a JIT strategy (72-hour inventory cycle) and uses a "hunger marketing + pre-sale data to drive production" model.

Even in Indian wheat processing plants, peak capacity utilization can reach over 90%.

"are you ok?"

This is one of the reasons why Lei Jun was able to get Wheat's car sorted out in later years, but couldn't get it sorted out with Apple Cook.

Of course, even someone as skilled as Lei Jun in integrating the supply chain as he was ultimately taken aback by the Indian market.

When Chen Mo expanded mobile phone production capacity for the first time, he had no experience whatsoever. While he could be said to have no experience in supply chain management, he only focused on suppliers and terminal assembly.

Suddenly, the battery production capacity in Ningde couldn't keep up, and the contract manufacturers' production capacity was idle, which was inevitable.

Some people say, "You can have the contract manufacturer produce other companies' phones first!"
It's not that simple.

Not to mention that your other spare parts are already in the warehouse of the other party's factory, just the fact that the production line is clearing and replacing them will actually waste more time.

Paying the OEM a cheaper 100 million yuan penalty is still more worthwhile than paying 300 million yuan in penalties for delayed delivery of the order.

Fortunately, Zhao Tiezhu had secured OEM manufacturing agreements with coal mine owners, which allowed him to take over the excess capacity of the contract manufacturers in a timely manner.

At least, Chen Mo no longer has to worry about waking up every day and having to pay the OEM factory 100 million yuan in breach of contract fees.

Chen Mo had thought that Orange 1 would be popular, but he never imagined it would be this popular!
Looking back at the small production line that Chen Mo entrusted Ningde to produce 3 gaseous lithium batteries per day, he thought that if he could achieve full production and sales every day, he would be laughing in his dreams.

With 3 units sold per day, that's almost 90 units sold per month, generating sales of 4.5 million yuan and profits of 8600 million yuan.

Even if Chen Mo is optimistic, he can't say that a production line with a daily output of 3 batteries is not enough and that Ning should add more.

Who would have thought that reality is more magical than dreams? In just one week, Orange Technology has sold 30 Orange 1 units, with total sales of 1.4 million yuan and profits approaching 2800 million yuan.

Nowadays, the two safes in the small workshop are filled to the brim with cash orders from stall vendors every day.

Now, as Chen Mo casually rummages through a few bundles of banknotes, he can almost hear the sound of himself becoming rich overnight.

Fortunately, the composure he had cultivated over decades of hard work in his previous life remained, preventing him from becoming arrogant and recklessly spending money as soon as he had it.

Orange Technology has already made a name for itself in the North China market, and its technological expertise in gaseous lithium batteries is well-known in the Shenzhen battery industry.

Otherwise, Lei Jun might have accidentally discovered the trial-produced gaseous lithium battery after visiting Ningde's mobile phone battery production line.

That's why they condescended to change their plans and come to North China to have a chat with Chen Mo.

Chen Mo simply didn't want Orange to be usurped, so he naturally rejected the other party's request for a 30% stake for 1 million.

In other words, the other party values ​​the gaseous lithium battery at more than 100 million.

(End of this chapter)