Xiomi's applied very basic supply chain concepts which makes it's business model competitive in highly competitive mobile handset market. PPT explains how xiaomi able to diminish its operating cost and sell products just above margins.

1. Application of guru mantra of
supply chain by Xiaomi Inc.
Prepared By
Ninad Nigam
PGPWE2014

2. Introduction of Xiaomi
• Xiaomi was co-founded by eight partners on
June 6, 2010
• Privately owned Chinese electronics company
headquartered in Beijing.
• The company has over 3,000 employees,
mainly in mainland China, Malaysia,
Singapore, and is expanding to other
countries such as India, and Indonesia.
• It designs, develops, and sells smart phones,
mobile apps, and consumer electronics
• Key people Lei Jun (CEO) Lin Bin
(President) Hugo Barra (Vice President)

3. Product details
• Mobile phones
• MiPad
• MIUI (operating System)
• MIWIFI(Network router)
• Mi TV( Smart tv line)
• MiBox(set top box)
• Micloud (cloud storage device)
• Mitalk(massaging service)
• Mi power bank (external battery)
• Mi band(fitness monitor &sleep tracker)

4. Evolution of Xiaomi
• Aug 16 2010 launched
android based firmware
MIUI.
• Aug 2011 first
Smartphone Mi1
launched
• Aug 2012 high end smart
phone Mi2 launched
• Sept 2013 smart 3D tv
launched and 1st retail
store in bejing
• March 2014 Redmi note
launched

5. Customer
Supplier
Supplier
Supplier
Supplier
Supplier
E-
commerce
platform
Demand
Information flow
On line Registration
for xiaomi mobile
Based on registration
Xiaomi forecast
demand & send order
to suppliers for
components
Demand Information Flow
Avoiding Bullwhip Effect
Produce less
against
registration
Through On line registration
prior to selling mobile
Information flow
from websites to
Xiamoi
headquarter

6. Supplier
Supplier
Supplier
Supplier
Supplier
Foundry
Ware House

7. Business model of xiaomi
• Xiaomi employs a strategy that is very
unlike other smart phone makers such as
Samsung and Apple
• The company prices the phone almost at
bill-of-material prices
• Xiaomi does not own a single physical
store and instead sells exclusively from its
own online store
• Away with traditional advertising
• The Xiaomi products are manufactured by
Foxconn and Inventec.( outsourcing the
electronic component production)
• Use of social networking services as well
as its own customers to help advertise its
products
• Focus on hardware,software,Network
services and online sales

8. • Xiaomi has maintained close cooperation with
Taiwan-based manufacturers
• Xiaomi has relied heavily on Taiwanese
suppliers including Inventec and Hon Hai for
assembly, Wintek and TPK for screen
technology, and Unimicron for PCB (printed
circuit boards), as well as Taiwan
Semiconductor Manufacturing Corp (TSMC)
for processors.
• Other electronic component are imported
from countries nearby such as MOS &battery
from Thailand, screen from sharp, camera
from Sony, flash light from Philips

9. • Excellent forecasting technique, by open an
online registration window on e commerce
websites,
• Based on registration estimates the actual
demand of mobile sets
• Always produce less against demand its hunger
marketing strategy,
• After demand forecasting place order to
suppliers for component
• Components shipped to Shenzhen port near to
hongkong and assembled in local foundry.
• There is no surplus raw material to be managed.

10. • As every phone has its owner so they use cross docking at ware house
one team receive delivery and double check and second team pack the
phones with accessories and attaché the order to the package and
deliver it to the user. it saves 80% inventory cost in warehouse
• Outsource phone manufacturing and assembly process to foundry.
• Assembled phones are delivered to warehouses across china with FTL
• Cross Docking

11. • Reduce cost of shipping by establish its warehouse
near to ecommerce companies warehouse
• Establish cooperation with e commerce companies in
warehouse management and shipping,
• By cooperation take advantage of e commerce
companies delivery system and ensure the product
can reach to the user faster.

12. Value creation through Guru mantras
• Savings by use guru mantras of
supply chain
• By eliminating distributer & retailer
saves around 60%
• 80% saving in warehouse
management;20% cost incurred on
battery accessories &packaging
materials
• 4 to 5% saving in advertising cost,
spend only 1% of revenue on
advertising
• zero inventory carrying cost for raw
materials
• Significant savings by outsourcing
the manufacturing and assembling

13. References
• http://www.ft.com/intl/cms/s/0/6a675fe2-a9c6-11e3-
adab-
00144feab7de.html?siteedition=uk#axzz3IHeqC3tQ
• http://en.wikipedia.org/wiki/Xiaomi
• http://yourstory.com/2014/09/xiaomi-pricing-strategy-
hugo-barra/
• https://www.linkedin.com/today/post/article/20140805
193030-253576490-understanding-xiaomi-s-marketing-
strategy
• http://www.cio.com/article/2376222/mobile/why-are-
xiaomi-phones-so-cheap-.tml