"SOIL" 101st Forum: In-depth Analysis by Zhu Jingxi, Vice President of ZTO Express, on ZTO's Success from the Perspective of Technology

On October 13, 2021, the China Leaders for Global Operation (CLGO) Program of Antai College of Economics and Management (ACEM), Shanghai Jiao Tong University (SJTU) invited Mr. Zhu Jingxi, Vice President, and Ms. Xu Xia, Director of Human Resources, ZTO Express (ZTO), to share their observations with students. Mr. Zhu Jingxi is currently Vice President of ZTO, in charge of the design and R&D of ZTO's core business system. His long-term and in-depth exploration of the development of large-scale express logistics systems and the digital transformation of enterprises provides stable and efficient technical support for ZTO's growth and also offers an important driver to lead the transformation and innovation of the industry. Ms. Xu Xia is currently HR Head, Party Secretary of CPC Committee and Secretary of the Youth League Branch of ZTO. "During the 19 years of work at ZTO, she has always been adhering to her original aspiration to bring forth new ideas while keeping on hard work, and has grown from an employee to the helm of the Group's human resources, presenting the responsibility of a CPC member in an ordinary position and portraying a bright backdrop for a young life with hard work." The two outstanding guests elaborated the logistics industry in the past, at present and in the future for us from multiple dimensions.

Looking back on the past of ZTO

ZTO was formally established in May 2002, when three dominant players in the logistics market were already in operation. ZTO entered the future red sea with a registered capital of only RMB 500,000. At that time, ZTO must develop its business in a down-to-earth manner, as any decision is the key to a new market or a fatal pawn. In 2005, ZTO launched its provincial fleet for the first time, which looked like an insignificant business decision for today, but as we mentioned earlier, for ZTO at that time, it was either a hit or a retreat. And that's when ZTO started the expansion of its main business and market share, unfolding its future officially.

ZTO's present

Now the business volume of ZTO ranks the first in the world, with about 20 billion items in a year. Compared with other express companies, ZTO has adopted the franchise model since its establishment. Such a cooperation model not only mitigates the cash flow risk of ZTO, but also brings more flexibility. However, ZTO is also aware that there will be some development disadvantages in the franchise model, and several patching schemes are carried out to continue this cooperation model in a more constructive and advantageous direction. ZTO's attempt on electronic express sheet not only reduces its costs, but also provides more data and information for its future digital transformation. Moreover, the great success in the application of the electronic express sheet has significantly reinforced ZTO's determination and confidence in its reform, which is an important milestone in the history of ZTO and has opened up a new dimension.

Science and technology shape the future of ZTO

Modern society is the era of science and technology with intelligence and digitalization as its core. This has also been the direction of ZTO's efforts by promoting automation with informatization. In 2003, IT department of ZTO was set up formally, and the official website was developed in the following year. In the following 10 years, ZTO has been committed to promoting its informatization. The electronic express sheet system was launched in 2014. The first set of automatic sorting equipment was introduced in 2015 and the full-link intelligence was realized in 2018. Since then, ZTO has transformed from a business partner to a business leader. The technical support to logistics makes the continuous operation of 30000+ outlets possible, and the coverage rate of ZTO outlets is expanded to 99%, which enables the full-link operation of receiving, dispatch, transit and delivery as well as the ongoing collection and transmission of data in the system for improvement. At present, AI has played an active role in ZTO's business operation. One example is the intelligent routing program. The program uses machine learning algorithm to continuously predict and update the daily volume to adapt to its rapid fluctuation. By solving the large-scale space-time network optimization model, it gives intelligent dynamic scheduling suggestions, such as goods routing and vehicle departure based on the predicted volume. The program can address such operation problems as fluctuations in business volume due to weather and other factors, and situations that are impossible to be responded manually and in time due to the empirical estimate of business volume in the past. For ZTO, intelligent routing is only the tip of the iceberg and there are more intelligent programs in full swing. Let's look forward to more in the future.

The two-hour informative sharing and Q& A session delivered a lot of whole new knowledge and unforgettable experience. Industry development cannot be separated from self-denial and self-innovation, and ZTO is one of the real cases. To stand firm in the industry, we must be bold to be the pioneer of the industry and strive to lead the industry to step forward higher and further. Through this workshop, we not only make more aspiring people know an excellent company, but also deepen the cooperation between ACEM SJTU and ZTO.

CLGO aims to cultivate leaders who are proficient in technology, management, global vision and have a deep understanding of China's market environment for China and even global operations. It is hoped that more students interested in global operation can participate in the SOIL forum and other activities, so that CLGO program can be supported and recognized by all parties in the industries, so as to promote all parties to benefit from the interaction between industries, academic studies and research.