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Market competition is intensifying, and the entire FMCG industry has entered a true era of thin profits. However, the costs of downstream distribution, personnel, warehousing, and other expenses are growing faster than the official GDP growth. For FMCG distributors, 2014 was another unlucky year! Market capacity declined, operating costs continued to rise, and manufacturers, in order to enhance their competitiveness, left us with increasingly "reasonable" profit margins. Under the combined influence of internal and external factors, distributors seem to have fallen into a desperate situation. Many once-thriving distributors have started to wind down or switch industries. But in the current market economy, are there still untouched cheeses waiting for you? Moreover, entering a new industry requires more effort. So the best choice is to stay in the familiar industry and find good methods to adapt to the current competitive environment.

The ability to turn crises into opportunities reflects the vision and management level of modern distributor bosses. If you want to control costs and cut expenses, first you must truly analyze where your costs are and what your main expenditures are.

The three big stones pressing on you: inventory, wages, and fuel costs.

1. How to cut inventory?

A market with monthly sales of 500,000 yuan typically maintains inventory of around 250,000 yuan. This means you have 250,000 yuan tied up in the warehouse every day, generating no value. If you could control inventory to 100,000 yuan, you would have 150,000 yuan of liquid capital to invest. But how can you control reasonable inventory without affecting normal sales? First, we must understand what is reasonable inventory. Some clients say to keep it within 40%, and at most not exceed 60%. These are judgments based on experience. But experts tell us: Safety stock = (daily maximum sales - daily minimum sales) × order cycle. If your market has monthly sales of 600,000 yuan, with maximum daily sales of 40,000 yuan and minimum of 15,000 yuan, then your inventory should be (40,000 - 15,000) × 3 days (company order cycle) = 75,000 yuan. If you don't believe this and think it will cause stockouts, I can responsibly tell you that our company basically achieves this. If you extrapolate based on your experience, a company with sales of 60 million yuan would keep inventory of 30 million yuan, but in reality, our company's maximum inventory is only 6 million yuan. How does the company do it? Very simple: arrange production according to your orders, and the products produced are already sold. But how can distributors achieve this? You need to predict your sales demand for the next three days. To do this, you need to fully understand the sales status of your business customers, establish channel sales tracking, and estimate future three-day sales based on tracking—that is, online management. If you can't do this, your inventory will never come down, and if it does, you'll face stockouts.

2. How to control fuel costs?

Many distributor bosses manage fuel costs by comparing sales or other vehicles, without specific evaluation metrics. Vehicle A sells 7,000 yuan with fuel cost of 110 yuan; Vehicle B sells 4,000 yuan with fuel cost of 40 yuan. Which vehicle performs better? Some say A, some say B, but neither is reasonable because without standards, you cannot evaluate value creation. I've communicated with many distributor friends. Generally, a vehicle running to townships spends 60-80 yuan on fuel per day, with sales between 4,500-7,000 yuan, visiting 30 customers, closing 12-15 deals, with a closing rate around 50%. How to control fuel costs? Actually, it's simple: don't visit customers who won't order. This saves time and avoids the fuel loss from stopping and starting and wasted time. How to make effective visits? Also simple: divide areas and build routes, classify outlets. Some stores are visited every three days, some every six days, some every half month. Vehicles strictly follow routes and visit according to outlet classification, putting limited time on the most valuable customers. If some townships are truly remote, and a vehicle spends 3 hours (round trip) on the road, how do you operate effectively? Also simple: find a special agent in that township to operate.

3. How to optimize personnel and resource allocation?

Many distributors allocate resources based on past experience rather than the current number of channel outlets or their forms. Since many distributors don't even have basic channel data, how can they talk about channel management? If you don't know your channel status, how do you know how many people to assign and what salary to offer? Some channels may have over 90% distribution coverage and need maintenance; you can assign a worker with a salary of 2,000 yuan to complete replenishment. Some routes have many blank outlets and need salespeople with strong development skills; you may need to recruit sales staff with higher capabilities at around 5,000 yuan. Some routes have many special outlets, so you need to arrange people with strong negotiation skills. Your vehicle allocation should also be based on the number of outlets and sales forecasts, avoiding the situation where some customers get on the vehicle but don't bring back sales, and the vehicle is idle half the month.

If you divide areas, build routes, and classify outlets, you can standardize visits and reduce fuel costs. If you implement online management, you can minimize inventory and cut inventory costs. Only when you truly understand your channel status can you reasonably allocate vehicles and personnel, and control or eliminate unnecessary waste and blind resource increases. Only with complete outlet data can you know how to respond specifically in terms of distribution rate, product items, and flavors, thereby increasing sales and profits.

Money is earned, not saved—that was true in the early days of the market economy. As times evolve, you not only need to know how to earn money, but also need to improve your process management to cut unnecessary cost waste and increase overall profits. If you want to cut costs and increase profits, you must replace the traditional habit of relying on feelings or memory with the modern marketing system that Coca-Cola, Pepsi, and even Master Kong have long been using: inventory outlets, classify outlets, online management, and standardized visits.

Distributor friends, are you ready to standardize visits, cut costs, and increase profits to welcome the spring? If you believe the above viewpoints, it means your profits have already started to increase.

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