In the past, New Distribution has written many articles on distributor business management, such as how billion-yuan distributors operate, what their business models are, what their organizational structures are, and what their business management entails. Frankly speaking, although these can provide distributors with some inspiration and thought, we believe they are not enough. Many distributors also encounter many trivial matters in their daily operational management, beyond business strategy. For example, handling near-expiry products, retaining good employees, employees taking leave during peak seasons, drivers not delivering in snowy weather, and so on. Such small matters are truly headache-inducing. In response to these small problems and difficulties, distributors have also introduced reward and punishment measures and institutional norms in a timely manner, but most are emergency measures, patching things up, and cannot fundamentally solve these problems. To this end, New Distribution, in collaboration with Hongye Hengda Trading, a representative benchmark distributor nationwide, will launch the series "Hongye Hengda on Business Management," based on Hongye Hengda's practical experience, to provide distributors with methods, cases, and steps to solve problems. This content is the first installment of the series, with the core topic: How to handle a mountain of near-expiry/expired goods in the warehouse?
-01- First Find the Problem, Then Find a Solution When facing the problem of near-expiry or expired goods in the warehouse, many distributors probably first think of three situations: either the upstream manufacturer is forcing too much stock, or the downstream sales are not effective, or warehouse management is improper. Indeed, overall, it comes down to these. But if we only categorize into these three types, can we solve the problem? Obviously not. We need to further break it down, identify the specific details of the work and the people responsible for that work. For example, before goods enter the warehouse, the procurement specialist may not have communicated with the manufacturer in advance to specify date standards, so the goods are not the freshest; during warehousing, rough handling by loaders causes damage; due to poor sales, the clerk reports in advance but it is not handled in time, sales is unaware, and no one manages it, ultimately leading to near-expiry. Based on the flow of goods, Hongye Hengda listed the key items and key personnel that may cause goods to become near-expiry:
1. Purchase → Arrival at warehouse → In warehouse → Store 2. Purchase → Arrival at warehouse → In warehouse → Store → Return to warehouse → Store
1. Purchase & Key Personnel: Procurement Specialist Key Items: 1) Purchase Quantity 2) Purchase Quality Purchase Quantity: When purchasing, the procurement personnel should try to purchase a reasonable quantity. Of course, in most cases, the decision-maker here is the distributor boss himself, but sometimes the boss is also helpless when the manufacturer forces unreasonable stock. Although there are some strategies and ideas for the distributor boss to solve this, it is not the focus of this article. We can consider it an objective market factor. If sales go smoothly, there will be no near-expiry; if not, the distributor should increase incentives for near-expiry products, as detailed below. Purchase Quality: Mainly the freshest production date.
2. Arrival at Warehouse & Key Personnel: Driver/Loader/Warehouse Keeper Key Items: 1) During Transportation 2) During Loading/Unloading 3) During Warehousing During Transportation: During transportation, due to rain, moisture, or other reasons, goods cannot be sold normally; During Loading/Unloading: During loading and unloading, rough handling causes damage; During Warehousing: During warehousing, because warehouse locations are not planned in advance and designated positions are not assigned by batch, new goods are shipped out first, and old goods are left behind.
3. In Warehouse & Key Personnel: Warehouse Keeper/Clerk Key Items: 1) Batch Management 2) Operations Management Batch Management: Because batch management is not strictly followed, and goods are shipped out arbitrarily, leading to near-expiry; Operations Management: The operations specialist does not check the status of goods weekly based on system batch numbers and does not report to the sales manager in a timely manner.
4. Store & Key Personnel: Driver/Sales Manager Key Items: 1) During Transportation 2) During Delivery During Transportation: During transportation, due to rain, moisture, loading/unloading damage, etc., goods cannot be sold normally; During Delivery: There are two situations. First, the sales manager responsible for the store did not communicate well or communicated incorrectly, causing delivery failure and return to warehouse; second, due to the driver's personal attitude, or issues with date, packaging, etc., the store is unwilling to accept the goods.
5. Return to Warehouse & Key Personnel: Objective Factors/Sales Manager Key Items: 1) Malicious Stock Pressure 2) Secondary Sales Malicious Stock Pressure: The sales manager, in order to get commission and meet targets, maliciously pressures stock; or fails to follow the eight steps of visitation during visits, causing goods not to sell normally and return to warehouse. Secondary Sales: If the above steps are executed, the problem of near-expiry goods can be effectively prevented. But if the goods truly move too slowly, causing slow sales or even near-expiry, that is an objective factor. However, the key person who can solve this problem is only the sales manager. The above are the key items and key personnel that cause goods to become near-expiry. First, identify the links where problems may occur as much as possible, define the problems clearly, and then establish systems and norms for each key item and key personnel.
-02- The Idea to Completely Solve Near-Expiry What are systems and norms? They are not simply "you did right, you did wrong, reward or punish." Rather, they are quantifiable standards for what is right and what is wrong!
Example 1: When procurement personnel purchase goods, the production date must be within 2 months. In special cases, with the approval of the general manager, purchase is allowed. If there is no approval and the date exceeds 2 months, the procurement personnel bears responsibility. The quantifiable standard for responsibility: a fine of 500 yuan per occurrence.
Example 2: In the store delivery process, if the store is unwilling to accept goods, is the responsibility on the salesperson or the driver? When there is no product issue or attitude issue, the driver immediately calls the responsible sales manager to confirm the reason; If it is the sales manager's problem, after the driver returns to the warehouse, the financial specialist confirms the responsibility is the sales manager's. The financial personnel directly allocates the logistics cost of the returned goods to the sales manager, deducting it from the next month's salary.
Example 3: If malicious stock pressure causes goods to become near-expiry, this is the sales manager's responsibility. The corresponding standards are: First, bear the logistics cost of the return; Second, for secondary discounted sales, bear the portion below the cost price; if secondary sales are not possible, bear the cost of the goods at cost price.
Therefore, after clarifying the key items and key personnel, the next step is to establish systems, assign tasks to people, and have people bear responsibility with clear standards. Each category may have different specific rules, but without a system with quantifiable evaluation standards, the result will be mutual blame and wrangling. In the end, the boss pays. Similarly, establishing such a system cannot be perfect at once, considering all possible factors and corresponding measures and norms. But first, a framework system must be established, similar to the complete framework of purchase → arrival at warehouse → in warehouse, listing key items and key people. When a specific problem arises during actual execution, design a solution for that problem, continuously improve, and fill gaps.
-03- Objective Market Factors and Incentive System for Near-Expiry Finally, let me focus on some categories, such as milk, where due to objective market factors, sales move slowly, causing goods to become near-expiry. The core solution here is: Establish steps for handling near-expiry products and corresponding incentive systems.
Step 1: Allocate near-expiry goods as mandatory tasks to departments or teams based on their historical sales share. The company provides the cost price and the sales cost price, and the price difference space is given to the department. The department manager is responsible for handling the near-expiry goods.
Step 2: Clarify handling methods and detailed rules:
- Off-site activities;
- In-store promotions;
- Designated handling, such as a closed channel.
Step 3: KPI reward norms. The company assists the department manager in establishing a clear sales reward system.
The above is the summary of Hongye Hengda's practical experience on how to handle a mountain of near-expiry/expired goods in the warehouse. As a distributor boss, to completely eliminate the problem of near-expiry goods, you must establish systems, trace responsibility to individuals, and hold individuals accountable. Moreover, during continuous implementation and operation, continuously improve details, check for gaps, reduce near-expiry goods, and improve operational efficiency.
Scan the QR code below to contact Hongye Hengda, and you can obtain templates for warehouse returns and exchanges and other systems from Hongye Hengda Trading.
Tips will be paid 400-2000 yuan once adopted.