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Case Study: Alibaba claims dramatic efficiency savings from Xunxi manufacturing technology

Michael Sullivan, Analyst
November 30, 2021

To further its cloud services growth, Alibaba decided to apply its cloud technology and its own IoT platform to the apparel industry. To do so, it created the Xunxi Digital Factory in Hangzhou, China, with the goal of providing an end-to-end digital infrastructure – from product design to sourcing, production, and packaging. To do this, Alibaba has the advantage of leveraging the data available from its e-commerce platforms (Taobao, Tmall, and Alibaba.com), which host hundreds of millions of users, merchants, and businesses. The goal is to use aggregated consumer data from these sites to feed manufacturing planning systems in real-time, enabling a "build to demand" rather than a "build to stock" approach to production planning.

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Xunxi is based on a number of platforms, including a trend and sales forecast model that aggregates sales data from the Alibaba e-commerce platforms to set production volumes. In addition, Alibaba's own IoT platform provides device management running on the Alibaba Cloud that enables two-way communication between end devices (sensors, control elements, and embedded devices) using data channels. The Xunxi workflow planning platform provides alerts to staff and operators to address bottlenecks and align workflows with production requirements. For example, the system schedules items made from the same materials to be processed together. Workers input workflow status through touch screens, which transmit the data to the planning platform.

#LUXTAKE

While Alibaba claims 70% shorter production lead times and 43% reduced overhead costs, there is no independent verification of the validity of these claims, or of the claim that Alibaba has achieved end-to-end flexibility on a scale that enables dramatic efficiencies. For example, personalization at small lot sizes is not unusual. The real test for Alibaba will be mass customization – producing a high volume of nonstandard goods. It does appear that Alibaba has many of the building blocks, such as cloud infrastructure, IoT platforms, and automated processes, necessary to address these goals. Clients should monitor Alibaba's progress as a greenfield approach to manufacturing innovation.

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