A few days ago, I visited a client and happened to catch the dealer organizing the warehouse. A scrap collector was also helping. Bundles of posters and display boxes for products that had been sold but were no longer in production were being loaded onto the scrap truck. As far as I knew, the dealer had bought these display boxes from the company at 3.5 yuan each. Now, clean and unopened, they were being sold as scrap at 0.4 yuan per jin. While the dealer watched them clean up, I stood in the yard chatting with him. Then a dramatic and puzzling scene unfolded: the warehouse keeper ran over and said, "Mr. Chang, we found 30 cases of milk in the small warehouse... they're expired!"
The dealer's office and warehouse were originally a factory. The main warehouse was the old workshop, and the office remained the same. Because the warehouse was insufficient, several former factory dormitories had been converted into small storerooms, mainly for promotional items. During seasonal stocking, when the main warehouse was under pressure, they were also used for products. The 30 cases of expired products were found in one of these small storerooms that held promotional items. It sounds like a joke: how could they not know products had expired? And wouldn't they also not know if items were moved out and sold? This incomprehensible situation happened right before my eyes.
Given this situation, the dealer asked me to help rectify and improve warehouse management. I agreed and began to understand some of the warehouse management practices. What I learned shocked me.
First, the warehouse keeper had been with the dealer for four years, so he should have been experienced. But in reality, he knew nothing about warehouse management; his work was limited to issuing inbound and outbound documents. It was hard to imagine how a dealer with annual sales of over 20 million yuan had managed. Because the warehouse keeper was from out of town and shipping times were irregular, he lived and ate at the company. He often had breakfast in the warehouse, and it was common for him to consume products stored there. Second, there was no shipping management system; no three-party signatures were required. During busy times, drivers could load trucks themselves without supervision, relying entirely on personal integrity. Third, the dealer had multiple warehouses, but there were only overall inbound records, no per-warehouse records, which seriously led to products expiring in small storerooms.
It could be said that this dealer's warehouse management was still in a primitive stage. While this situation is not common among dealers of a certain scale, many dealers can see a bit of themselves in it.
Later, I learned that the dealer had been aware of these problems for a long time and had attempted reforms, but they had fizzled out. Previously, discrepancies between accounts and physical inventory were largely ignored because the large sales base meant small losses didn't matter. Now, however, the problem of expired inventory had emerged.
Let's set that aside and look at another real case:
Early last year, my company launched a new product. Because it was completely different from other products, the company decided to develop new dealers. Through a friend, I contacted a relatively large dealer. This dealer represented several well-known national brands and had annual sales of over 10 million yuan. In a county-level market, that was quite impressive. I scheduled a meeting and arrived on time. Entering the office, I was told the boss was in the warehouse. I walked in and found him, a very down-to-earth man, standing there directing drivers as they loaded trucks. I greeted him, and he started discussing the agency with me. Because it was noisy, I said, "Shall we go back to the office to talk?" The client said, "Wait a moment, it'll be done soon." After a while, the drivers finished loading, and the boss and I returned to the office. We began negotiating. Before we said much, a loader came in and said, "Boss, loading time." The boss grunted and said to me, "Sorry, wait a bit." Then he went out. I followed him out, puzzled. Did the boss have to supervise every loading?
Later, due to work pressure, I took my leave. Afterwards, I learned the real situation through other channels. It turned out that the boss represented many products, and warehouse management was chaotic. Drivers would load high-value milk powder into instant noodle boxes and take them out of the warehouse for private sale. Although several drivers and salespeople had been fired, such incidents still occurred. Unable to find a good solution, the boss had to supervise loading himself. Hearing this, I was at a loss whether to laugh or cry. Because during our interactions, the boss always had an arrogant demeanor, and changing this management situation would take time, I said goodbye and made an excuse not to cooperate. I went to find other clients.
It should be said that these two cases are just examples. In actual marketing activities, there are many loopholes in warehouse management among small and medium-sized dealers. However, even dealers who started from scratch have the idea and urgent need to strengthen warehouse management. They want to know how to start. Those with more resources use computer systems. Those with less resources have their wives keep watch. The clever ones read books and attend expert lectures, trying to solve the problem, but in practice, they often feel it doesn't apply. It's not that the experts are wrong. The same illness requires different dosages depending on the patient's constitution. But this point is often overlooked by those eager to learn.
Among the dealer companies I've dealt with, when discussing warehouse management, some clients confidently say, "I use the most advanced management software. I can open my computer and know exactly how many products are in the warehouse." But the ultimate subject of management is people. For a dealer of specific products, you can see how many products are in stock on the computer, but do you know how many posters are left? Accurately? How many promotional items? Accurately? How much warehouse damage? How many near-expiry returns? I believe the market is dynamic, and related management is dynamic. True warehouse management is not limited to managing products in the warehouse; it complements sales activities, assists sales, and is a tool to maximize profits.
A dealer company I know well links warehouse management with sales, forming a management chain with mutual checks and balances. I'll share a document that this company posts in every department. Of course, because of the specificity of the products they represent, their model may not suit all dealer companies, but I hope you can see some insights and gain inspiration.
****Company Workflow Standards
Internal Affairs: Based on orders from various locations, organize large orders and place orders with the company within the specified time. Then, divide the orders from each sales point into north/south areas and large orders, and hand them to the warehouse for preparation. If the internal affairs staff fails to deliver the large and small orders to the warehouse within 6 hours of ordering, causing delays in vehicle arrangement, the warehouse can directly issue a penalty (fine standard: 50-100 yuan).
Operations Department (Warehouse):
- Organize shipments based on the small orders submitted by internal affairs. If goods arrive before 12 noon, shipping must be completed within 4 hours. If goods arrive after 12 noon, shipping must be completed by 12 noon the next day.
- For orders uniformly submitted by sales staff, deliver within 24 hours. For county areas, deliver within 48 hours. If sales staff find during store visits that goods have not been delivered, they can directly issue a penalty (for other products).
- Closely monitor product shelf life. Before the shelf life is half over, issue a notice to the sales department, requiring them to propose a handling plan within 48 hours, signed by the general manager, and provide a copy to the warehouse. If the sales department fails to propose a plan within the specified time, the warehouse must issue a penalty; otherwise, the company will penalize the operations department. The first penalty is 10% of the goods' value, the second 20%, and so on.
- If the operations department fails to pay enough attention to product dates and does not transmit near-expiry information to the sales department in time, the resulting losses are borne by the operations department. The first penalty is 10% of the goods' value, the second 20%, and so on.
Sales Department:
- City business staff must consolidate orders at the evening report and hand them to the warehouse for delivery arrangement. If there are temporary additional orders, the operations department can arrange delivery, but may issue a penalty based on the actual situation. Exceptions are for orders from areas not visited the previous day and additional orders before departure.
- County customer orders are placed by county supervisors, ensuring the dealer's account has sufficient funds.
- Upon receiving the near-expiry product handling notice from the operations department, the sales department must promptly formulate and execute a handling plan. Otherwise, product losses incurred in the warehouse will be borne by the sales department.
Finance: Manage dealer expenses and funds. Ensure the dealer's account has sufficient funds before signing orders and transferring them to the operations department for shipping.
Operations Department (Warehouse): For goods returned to the warehouse, only accept them with the "Near-Expiry Product Handling Activity Closure" signed by the sales supervisor. Special cases require the general manager's signature. Returned near-expiry products must be cleared daily, and the sales department must propose a handling plan within 24 hours. If the sales department fails to do so, the operations department must issue a penalty (standard: 20% of the goods' value); otherwise, the company will penalize the operations department.
The above standards are trial. Currently, work processes are based on these regulations. Specific details will be supplemented and strengthened during work. Everyone is expected to comply and contribute to the company's development. For detailed work systems of each department, refer to the department's job system management standards.
****Trading Co., Ltd.
The above standards may not be rigorous, but I believe they have incorporated warehouse management into the sales process, representing a qualitative leap in understanding.
It should be said that many experts have proposed reasonable suggestions and standardized management methods for warehouse management. Dazzling management software, rigorous inventory management systems, etc., have been accepted and implemented by many dealer companies.
But all management methods are born from needs. The purpose of this article is not to recommend a specific management system, but to tell readers that what is effective is reasonable. Combine mature management methods to solve specific problems, forming a management chain around sales. For a sales company, focus on sales. Want to be a qualified boss? Then reasonably allocate your losses to others. Of course, when implementing systems, they must be carried out consistently, not impulsively or with fleeting enthusiasm.
This brings us to the level of "effortless management"—making management a habit!
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