FMCG Distributor Professional Consulting Management: kxpjxszyzxgl ------------------------ What is the core resource of a retail chain? What is its profit center? Of course, it's the suppliers! Retail chains achieve growth in performance and profit through management of suppliers, inventory, services, and products, with the source of performance and profit mainly coming from the support and cooperation of suppliers. Therefore, it's no exaggeration to say that supplier management is the most important part of retail chain management. Similarly, for suppliers, becoming a valued supplier to retail chains is a dream, as it means more resources and business opportunities. How do retail chains manage suppliers? Certainly with principles and strategies. Understanding how to respond to these management policies is the prerequisite for becoming a valued supplier. Only by understanding the key elements of supplier management can suppliers develop their strengths and avoid weaknesses, and potentially become valued suppliers. Let's look at the strategies retail chains use to manage suppliers. Basic Basis for Retail Chains' Supplier Management Policies Retail chains typically classify suppliers using a performance-margin classification method. Performance is denoted as A, B, C, corresponding to contribution ranges of over 10%, 5%-10%, and below 5%; gross margin is denoted as a, b, c, with assumed ranges of over 15%, 5%-15%, and below 5%. If a supplier's performance contribution is 15% and gross margin is 10%, then its total profit contribution is 15%×10%=1.5%. Using this formula, all suppliers are ranked, and elimination starts from the bottom. Retail chains naturally prefer Aa-level suppliers (since their performance and margin are best), followed by Ab and Ac. The first to be eliminated are Cc-level suppliers, though some chains may retain them temporarily due to fee contributions, but they will be eliminated once their overall contribution drops. This supplier review is conducted monthly, but the assessment mechanism is typically done every 3-6 months, using this bottom-out elimination system to maintain supplier vitality. Product Characteristics of Valued Suppliers A valued supplier must have special strengths in certain areas (e.g., P&G). If a retail chain lacks P&G products in the washing and care category, its performance would be significantly impacted. Therefore, chains treat P&G as a key supplier. This is mainly due to its strong brand and market leadership, which drive sales and profits. Here, we analyze from a product perspective to see what characteristics a valued supplier's products have:

  1. Broad category structure. From shampoo to facial care to laundry powder, to toothpaste and toothbrushes, and even baby diapers, P&G covers almost all washing and care categories, with hundreds of SKUs.
  2. Multi-brand operation. It owns over a dozen brands including Olay, Pantene, Head & Shoulders, Rejoice, Vidal Sassoon, Tide, Whisper, Pampers, Crest, Safeguard, etc., most of which are mainstream brands in their categories with high customer loyalty.
  3. Reasonable price control. As a daily consumer goods company, P&G balances brand and price, positioning products with good value for money, giving customers a sense of quality without high cost.
  4. Memorable brand advertising. You may not know La Mer, HR, or Bobbi Brown, but you definitely know Olay, Tide, Rejoice, and Head & Shoulders. Thus, retail chains must stock Olay and Head & Shoulders; market demand forces them to prioritize customer needs. Of course, there is only one P&G, and not all manufacturers can be like it. But the key point is: what aspects of P&G successfully attract retail chains? How can you learn from its example based on your own situation? After all, successful people have shining points worth appreciating. How Retail Chains Support Valued Suppliers Generally, retail chains do not disclose key internal management information to suppliers, but everything internal manifests externally. Chains adopt different management policies for different supplier categories, so it's not hard to observe from visible signs. For important suppliers, the policy tilt is mainly shown in:
  5. New product submissions. Key suppliers never worry about rejection when submitting new products; they get a green light. Non-key suppliers often struggle and may pay more than A-level suppliers without good results.
  6. Payment policies. Most chains do not delay payments without reason, but special situations arise. In such cases, chains prioritize key suppliers because they are the main contributors to performance and profit.
  7. Display support. When arranging products by category, chains also consider brand and bestseller placement. Key suppliers' products are often displayed prominently, such as P&G and Master Kong shelf displays. Other suppliers rarely get this treatment.
  8. Promotion arrangements. Chains have promotion areas, typically about one-tenth of the store area, but they can generate over 30% of sales. Therefore, promotion display space is fiercely contested beyond regular shelves. Chains plan to give the best positions to products that generate the most sales, which are usually from key suppliers. From these details, suppliers can judge which products and suppliers are important in the chain, and assess their own status and gaps compared to key suppliers. How to Respond to Retail Chains' Supplier Management Measures First, improve product structure. Use first-tier brands or flagship products as negotiation leverage, and enhance the distinctiveness of second- and third-tier brands and SKUs. Although first-tier brands may tie up capital with relatively low profit returns, second- and third-tier brands can compensate for profit shortfalls. Even with a single product line, it's advisable not to have too few SKUs; diversify in specifications, scents, functions, and packaging. A fuller SKU range makes terminal display easier and spreads sales pressure. Suppliers can build their position in chains through a good product mix and achieve better profit returns. Product mix is a complex and worthy subject for deep research. Second, change market strategy. For suppliers with relatively weaker strength, instead of letting market share slowly erode in all chains, concentrate efforts on high-return chains. If you can't be a key supplier in all chains, become a key supplier in a few. As you grow stronger, you can develop other chains with more bargaining power. Finally, enhance service awareness of personnel. Buyers face many suppliers daily; those who leave an impression are the ones who stand out. Timely follow-up, professional product knowledge, skilled marketing techniques, and mature interpersonal skills displayed by sales staff greatly influence buyers' personal feelings. After all, who wouldn't want to cooperate with a supplier that makes them comfortable? To some extent, if the person in charge is good, even if the supplier's hardware is slightly lacking, they can still enjoy valued supplier treatment because people can compensate for product shortcomings. So, success depends on human effort! Although only three aspects are mentioned above, each can be broken down into countless specific tasks that require thought and proactive action. --------------------------------------

Like this article? Feel free to share it on your Moments by clicking the top-right corner; About us: WeChat Name: FMCG Distributor Professional Consulting Management Account Intro: With 20 years of internal management experience in FMCG distribution, we specialize in distributor internal enterprise database establishment, financial sorting, organizational system construction, marketing team training, company management planning, and performance evaluation system setup. Senior marketing teachers help your business grow. Learning and Exchange QQ Group: 344257092 -----------------------------------------