---
title: "Clearing Bad Inventory: A Table and Ten Steps to Manage New Product Distribution!"
description: "In the daily operations of distributors, attention to the market front line often outweighs attention to the warehouse, leading to neglect of warehouse management. The author observes that inventory problems often surface suddenly, and once bad inventory appears, it directly drags down the profitability of trading companies. When distributors carefully count remaining stock and calculate its value at a price that can be digested, they find that the profit originally designed to be earned is exactly the value of the inventory. Therefore, any mishandling of inventory makes losses inevitable. How should we prevent inefficient management or even eliminate bad inventory to improve profitability? The author believes that instead of organizing large-scale promotions after the fact or negotiating returns with manufacturers, it is better to solve inventory management from the source, starting with distribution management."
author: "于秀伟"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-11-13"
language: "en"
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# Clearing Bad Inventory: A Table and Ten Steps to Manage New Product Distribution!

> In the daily operations of distributors, attention to the market front line often outweighs attention to the warehouse, leading to neglect of warehouse management. The author observes that inventory problems often surface suddenly, and once bad inventory appears, it directly drags down the profitability of trading companies. When distributors carefully count remaining stock and calculate its value at a price that can be digested, they find that the profit originally designed to be earned is exactly the value of the inventory. Therefore, any mishandling of inventory makes losses inevitable. How should we prevent inefficient management or even eliminate bad inventory to improve profitability? The author believes that instead of organizing large-scale promotions after the fact or negotiating returns with manufacturers, it is better to solve inventory management from the source, starting with distribution management.

In the daily operations of distributors, attention to the market front line often outweighs attention to the warehouse, leading to neglect of warehouse management. Through observation, the author found that inventory management problems often surface suddenly, and once bad inventory appears, it will directly drag down the profitability of trading companies. When distributors carefully count the remaining inventory and calculate it at a price that can be digested, they find that the profit originally designed to be earned is exactly the value of the inventory. Therefore, if inventory is not handled properly, losses are inevitable.
How should we prevent inefficient management or even eliminate bad inventory to improve the profitability of trading companies? The author believes that rather than being "wise after the event" by organizing large-scale promotions or negotiating returns with manufacturers, it is better to solve inventory management problems from the source. The first priority is distribution management, because inventory problems are the result of poor execution of distribution plans; distribution problems are the source of inventory problems. Only by starting from the source can distributors fundamentally solve inventory management issues. Some distributors may be puzzled: What is so difficult about distribution? Isn't it just sending salespeople to walk the streets and visit door-to-door? The author believes that distribution is a basic skill for distributors, but in practice, due to neglect of detail management, lack of sufficient understanding of the product, process control, and follow-up tracking, distribution efforts often yield half the results with twice the effort. Below, we introduce the "Baozhu Distribution Ten-Step Method" summarized by Tangshan Baozhu Food Co., Ltd. (hereinafter referred to as "Baozhu Food") in its operations.
**Step 1: Analysis of own product and main competitors.** Understanding your own product is as important as understanding your competitors' products. The degree of understanding determines whether you can fully leverage your product's advantages and strike a powerful blow against competitors. The analysis includes product full name, specifications, shelf life, flavors, weight, selling point extraction, product abbreviation, price system, etc.
**Step 2: Competitive environment research.** The performance of a product in the market is not only affected by the brand and the product itself, but also by the distributor's operational methods, which play a decisive role in the product's expressiveness and vitality. Therefore, before distribution, it is necessary for distributors to figure out who the competitors are and who the real opponents are. Only by knowing yourself and your enemy can you win every battle.
The author believes that distributors can understand competitors from the following four aspects:
First, whether the distribution model is direct or distributive;
Second, what the competitor's product portfolio is;
Third, what the competitor's main brands are;
Fourth, what the competitor's terminal reputation is.
The more detailed the understanding, the more conducive it is to formulating more practical and targeted plans. For example, if it is found that the competitor's reputation is average, and the reason is that terminal customers cannot return or exchange goods, distributors can formulate a policy of allowing terminal returns and exchanges, quickly gaining recognition from terminal customers.
In the author's view, the first two tasks are the most important but are often overlooked. It is recommended that both tasks be personally executed or promoted by the sales supervisor or the distributor boss to increase the company's overall attention.
**Step 3: Product knowledge training.** After completing the first and second steps, distributors need to share the analysis and research results with the sales personnel who will carry out the distribution work, so that they have full confidence in their products, let it ferment internally, and genuinely accept and recognize their products. In addition, sales personnel should be made to "despise" competitors, clearly understand their shortcomings and weaknesses, and dare to "draw their swords." It should be reminded that after training, distributors should conduct exams to ensure that product knowledge training is not just a formality.
**Step 4: Determine the first round of distribution outlets and the first round of distribution volume.** Whether this step is implemented effectively determines the smoothness of later product operations and the team's confidence, and directly determines the size of later inventory problems. The basis for determining distribution outlets is threefold:
First, terminal customers with a high concentration of the product's target audience (to ensure sales);
Second, choose terminal outlets with good customer relationships to quickly complete distribution (to ensure speed);
Third, display positions that can be highlighted (to ensure vividness).
The first round of distribution volume is determined by the number of distribution outlets and the corresponding quantity per outlet. This work needs to be formulated with the participation of frontline sales personnel. During execution, corresponding display methods and notification plans can be developed based on the product's display needs to ensure that consumers can easily see and obtain the product. And based on the terminal visit cycle, clarify the time for the first round of distribution work.
**Step 5: Formulate distribution policies.** Based on terminal customers' requirements for profit margins in this product category and display policy requirements, combined with resources provided by the manufacturer, formulate distribution policies suitable for terminals. It is recommended that distribution policies consider whether they are easy for sales personnel to execute and supervise, ensuring efficient completion.
**Step 6: Determine incentive measures.** Terminal distribution actions require sales personnel to execute properly. The quality of execution determines the distribution results. Therefore, mobilizing the enthusiasm of sales personnel is very important. Sales personnel should be transformed from "able to do" to "willing to do," from "trying to do" to "must do," from "pushed to do" to "rushing to do." Especially during the first round of new product distribution, distributors should not overly consider how much profit the company makes, but rather how to create "momentum." Because the market performance of terminals comes from the morale of the sales team, and whether morale is high largely depends on whether the incentives are sufficiently attractive.
**Step 7: Hold a distribution kickoff meeting.** It is a kickoff meeting and more of a mobilization meeting. Distributors formally announce the distribution plan, clarify the distribution goals, volume targets, methods, policies, and incentive measures to all staff, so that sales personnel "set off fully charged."
From step three to here, it is the key for the trading company to unify understanding, thinking, and practices internally. To open up the market, team members must first reach consensus.
**Step 8: Execution tracking.** Any plan will encounter new problems in actual market operations, especially in the first three days of the plan. The author suggests that distributors implement intensive tracking, hold summary meetings every evening, set benchmarks, and share successful experiences. Provide answers to individual problems encountered, unify response methods, and enhance team confidence.
**Step 9: Process assistance.** No marketing plan can be simply implemented through a few meetings. Managers must go to the front line, go to the team, and invest sufficient attention until the distribution work is on track before focusing on other work. For example, provide individual assistance to sales personnel who are progressing slowly; for difficult and key terminals, managers should directly follow up; by solving practical problems, help sales personnel increase performance, improve management capabilities, thereby enhancing their operational confidence, and ultimately achieve progress.
**Step 10: Summary and commendation meeting.** Distributors should summarize the new product launch distribution work, summarizing the achievement of distribution points (key summary), display situation, notification situation, followed by sales achievement (the first round of sales is not the most important; the first three items are), and finally incentive summary. The incentive summary must fulfill the original incentive promises, let the team believe that the incentives are real, and let the outstanding personnel who won awards share their distribution experiences to encourage everyone to follow up.
Based on the author's years of experience, the above ten steps are interlocking, mutually supportive, and form a whole, indispensable. Some distributors may have relevant experience, but in execution, they often only pay attention to a few items and miss some steps. The author suggests that distributor bosses follow the process in actual operation, clarify responsible persons, and implement the ten steps and even more details in place, so that new products create profits and value for the company's operations, rather than becoming inventory and a burden to the company.
**Note: The author of this article is Yu Xiuwei, General Manager of Tangshan Baozhu Food Co., Ltd.
**Source: Food Business**


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