Haier Group: The Zero Inventory Home Appliance Company

Since its founding in 1984, Haier Group has devoted itself to innovate and create a brand that has become so popular worldwide for the last three decades. Haier was on the verge of bankruptcy and was threatened to close down. But now, it provides work to over 70,000 employees and reported a turnover of ¥135.7 billion in 2010. Aside from being the consumer appliances brand in the world, Haier was listed by the USA Newsweek website as one of the 10 most innovative companies in the world.

One of Haier’s highest goals is to create a brand that would become famous worldwide in the age of the worldwide web. The brand should promote consumer satisfaction at the quickest possible time. Such a goal is not seen to require massive production but a large-scale product customization.

Haier used the internet to address the challenge. The Group bravely explored and implemented the “Win-Win Mode of Individual-Goal Combination”. Using the “inverted triangle” organizational structure and the “End-to-End” ZZJYT construction, Haier slowly evolved from selling their products to selling their services. This fostered Haier’s competitive advantage.

Presently, Haier has piled up over 10,000 patent applications to become China’s leading home appliance company with the most patent applications. Haier is leading the breakthroughs for international standards. For instance, Haier helped to draft 61 international standards of which 27 are already implemented.

Haier has developed a huge marketing network throughout China. Using the internet, the company has edged other players because it responds to consumer demands very quickly. Haier implements the “zero distance virtual and practical network combination” to realize this. Through the help of the internet, Haier has developed a virtual network in online communities. Haier also managed to enter the world market through their overseas channels.

At Haier, it is not impossible to maintain zero inventory with the implementation of “on demand manufacturing and delivery”. Haier is able to convert its working capital in less than 10 days. Zero inventory means zero accounts receivable.