Zhang Wei has been feeling particularly frustrated lately. Since leaving his former company to start his own distribution business, he has struggled for over four years, growing annual sales from two to three million yuan to nearly ten million. However, as sales increased, management problems have grown and recently seem to have surfaced all at once: the old subordinates he brought from his previous company now consider themselves heroes of the company, do little work but take credit for others' efforts, making staff management increasingly difficult; in recent months, over a dozen cases of beer have gone missing from the warehouse, and the culprit remains unidentified; reported breakage in the warehouse is mysteriously increasing; with more products in his portfolio, some products are overstocked while others are constantly out of stock; previously, when he only did wholesale, old customers could just call, but now dealing with supermarkets involves endless negotiations and puts him on the back foot... In short, these issues are troubling, and he doesn't know how to resolve them. Zhang Wei is a long-time friend, and he poured out his grievances to me over the phone. This is actually a common management problem that emerges as many small distribution enterprises gradually grow. They often have years of impressive market experience, and when the time is ripe, they leverage their existing business relationships to start small and boldly launch their own ventures. But as the company grows, the "old revolutionaries" encounter all new problems, and these management challenges trap them, making them flail about, sometimes even hitting themselves! Zhang Wei didn't lose heart; the "old hand" was willing to become a "primary school student" at a critical moment. He thought of gathering many of his good friends to help him brainstorm solutions. After several on-site investigations and discussions, they basically formed a set of targeted solutions. Product Line Issues Zhang Wei began his business journey with mid-to-high-end beer, having years of experience with these products, which made operations smooth and profitable. Seeing old customers happily buying from him and goods turning over quickly, he was encouraged. So, he deliberately sought out manufacturers of similar products and borrowed some funds to gradually enrich his product line. Initially, being cautious and believing in "stick to what you know," he only chose beers from other manufacturers that could fill out his price points. But later, seeing other distributors making fat profits from other products, he ventured into candy, baijiu (Chinese liquor), red wine, beverages, and even slippers! Some products were not as guaranteed to make money as the manufacturers claimed during recruitment, and some even incurred heavy losses. By this point, he was somewhat stunned, fully experiencing the pain of aimless product line extension: baijiu brands have a "three-year cycle," and some once-famous brands were already hard to sell by the time he took them on; when he wanted to give up distribution, the manufacturers withheld his deposits and delayed refunds, pushing him to continue stocking; a beverage manufacturer, after heavy rain flooding, sent him drinks with rusted packaging, and the promised subsidies never materialized after six months; as for red wine, despite heavy advertising, sales showed no response, and his friends in the red wine business said it was no longer selling well and couldn't help... After a few months, Zhang Wei was not only stunned but also anxious! He had worked hard to become the regional general agent for several products, but in the end, the product policies changed, and regardless of sales performance, the manufacturers' representatives procrastinated or avoided responsibility. His capital was tied up in these slow-moving products, and he couldn't stock his original leading beer products due to cash flow issues, leaving him scrambling to raise funds. His plan to replace the house he'd lived in for over a decade fell through! This is the most common problem small distributors face when seeking product agencies: they don't know how to design their product line. With so many best-selling products and new ones constantly emerging, they don't know which products are most reasonable and suitable for them. A company launching a new product goes through extensive research and analysis, but small distribution enterprises don't study this seriously. The most fatal issue is that it's easy to add a product but not so easy to drop it! The flexibility of small distributors is not about arbitrarily adding products, but unfortunately, that's what they believe! This is the biggest misconception among small distributors! Reality proves that this arbitrary addition of new products drags many small distributors down, unable to get back up! This problem can basically be solved with careful consideration and analysis. First, what products do consumers currently like? Are consumers just trying these products or do they genuinely like them? Many distributors jump on a product because of flashy advertising, without understanding what consumers in their region truly want to buy. Yes, consumers see ads, but the era when ads determined purchasing behavior is over; they are increasingly rational. Zhang Wei's customer base includes secondary wholesalers and supermarkets, but apart from close communication with secondary wholesalers, he knows nothing about people's buying habits in supermarkets. So, it's important for him to visit supermarkets more often, rather than getting excited about a product just because a wholesaler says it's selling well and wanting to add it. What should the structure of the product line be? Generally, there are strong brand products, high-profit products, and high-coverage products. Currently, he only has one brand product, and its brand advantage is slowly eroding, but he hasn't found a replacement in time. Although he has many high-profit products, none are recognized by consumers, meaning he effectively lacks high-profit products. As for coverage products, he has none; his customers now go elsewhere for common products, causing him to lose his original advantage with old customers. Furthermore, although the newly added products are ones his downstream customers are already selling, his aim was to enhance distribution capability, but all existing products are from outside brands with limited shelf life, and shipments are made by full truckload, causing turnover difficulties. Additionally, due to pressure from baijiu and red wine manufacturers, his inventory of these is large. He has transformed from a beer-focused distributor to one without a strong leading product, becoming indistinguishable from other distributors and losing his competitive edge. In this situation, he also failed to see the sales potential of chocolate products and cultivate them in the supermarket system. Here, we find that the biggest mistake small distributors make in selecting product lines is: immediately adding high-profit products without considering whether they fit their product mix. We can use this table to illustrate what products he should carry: Channel | Products Supermarket | Strong brand products + High-profit products Foodservice | High-coverage products + High-profit products Wholesale | High-coverage products + Strong brand products From the table above, small distributors should rely more on strong brand and high-coverage products to gain long-term distribution status, and only through these can they drive sales of high-profit products. Due to their own brand disadvantages, they should stand behind these products and leverage their service advantages to sell more high-profit products, increasing their chances of success. Specifically for Zhang Wei, we designed the following product-channel line for sales: Channel | Products | Remarks Supermarket | Beer + Chocolate + Red wine | Minimize costs, maximize profits Foodservice | Beer + Beverages + Baijiu (or red wine) | Table economy. Maintain relationships and profits Wholesale | Beer + Beverages | Relationship maintenance, status among peers Through this proportional sales approach, Zhang Wei's previously chaotic product structure becomes organized. He dropped four of his six beer brands, keeping one first-tier and one second-tier brand, and strengthened support for the second-tier brand to gradually replace the first-tier. He completely stopped selling slippers and cleared that inventory. For beverages, he selected a fruit juice drink, a carbonated drink, and a catering milk. For baijiu, he introduced a local favorite brand and cleared out all miscellaneous brands, ceasing cooperation with those manufacturers. Personnel Management "These old employees helped me build the business, but now they're hindering my development!" Zhang Wei sighed. Indeed, this issue left him in a dilemma. Saying something is awkward, not saying is also bad; firing them is not an option, but keeping them causes problems. They don't ask for high salaries, don't do much work, but always claim half the credit for new employees' achievements. Admittedly, Zhang Wei indeed finds this hard to handle. So what to do? One method we suggested is: if you can't manage them face-to-face, let a "third party" manage them! Use kanban boards, charts, and systems. He bought two whiteboards: one for numbers, one for charts. During morning meetings, he doesn't say who did well or poorly; instead, everyone takes turns to read out the sensitive numbers, showing sales changes. On the chart, if someone's sales are poor that day, a thick red line is drawn, which is a warning! The latter part of the meeting is mainly for everyone to discuss how to improve. This shifts from monthly, subjective, and leader-based assessments to daily, objective, self-assessments and incentives. Before long, those old salespeople who have to explain their poor performance to the whole company every day will be "tortured" by this method until they can't hold their heads up and will dutifully do their jobs! Although this is fair, a few old employees still slack off, relying on Zhang Wei's inability to do anything about them and living off old business relationships. At this point, we gave Zhang Wei another tip: incorporate these few into teams, leverage their strengths, eliminate their selfish habits, and optimize team composition to form project groups! Make these old employees team leaders, responsible for sales in a certain area. This puts them in leadership positions; if they do well, everyone supports them, and they earn more bonuses, so they'll work hard to lead the team. If they do poorly, they lose face and won't be so arrogant in front of new employees. Finally, another tip: these old employees helped Zhang Wei build the business under the traditional model and don't understand supermarket operations. So, Zhang Wei separated them by department: old employees handle wholesale, while new employees handle supermarkets and foodservice. Of course, as a small business owner, Zhang Wei wants a stable team; he can't recruit widely like larger companies. If he loses a key salesperson, finding a replacement is hard. But these salespeople, though not highly educated, also want stability and hope for a boss like Zhang Wei who takes care of them, providing a job to support their families. Considering this, we also suggested Zhang Wei buy commercial health insurance for outstanding employees to motivate them and encourage them to work more diligently and securely. Inventory Management Zhang Wei is a diligent young man studying law through self-study and has wanted a computer for learning and to access information online. This time, we helped him realize this wish, encouraging him to buy a computer and install software to maximize its utility. So, management software like "Guanjiapo" (Housekeeper), suitable for small distribution enterprises, was installed. During the day, the clerk enters each transaction into the computer, and every evening, Zhang Wei can see the day's purchasing, sales, and inventory status, promptly identifying inventory issues. By analyzing transaction data over time, he can understand recent sales trends and necessary inventory adjustments. He discovered that some expired products from years ago, neglected due to oversight, amounted to nearly 2,000 yuan—about the price of a computer! With the computer system, he can not only check production dates at any time and manage "first-in, first-out" (otherwise not releasing from warehouse), but also set "warning lines" for products that might expire if not sold soon, prompting salespeople to push those products. Another important finding: Zhang Wei identified patterns in manufacturers' promotional activities, so he no longer uses all his funds to stock up during promotions; he buys moderately, maximizing promotional products while still having funds for non-promotional items. Distribution Channel Division Zhang Wei is now very familiar with wholesale distribution; in supermarket channel development, after years of effort, he's made some progress; later, learning that foodservice channels have higher gross margins, he hired several salespeople to sell to restaurants, though it's still in its infancy. Due to the small size of the company, he's afraid to invest too much and hasn't hired professional managers to handle this business. However, managing all these channels himself is challenging: wholesale is manageable with old relationships and old salespeople, but he doesn't trust salespeople with supermarkets due to their lack of negotiation skills, and the nighttime consumption habits of restaurants exhaust him, causing problems like delayed payments and fears of restaurants defaulting. So, he realized that multi-channel operations in a chaotic state would be dangerous. Thus, planning the multi-channel approach and focusing on one or two channels became urgent. We suggested he spin off the wholesale business, contracting it to three old salespeople. This doesn't require his management effort, just monitoring. These old salespeople, familiar with the business, are motivated to work as both employees and "bosses." For beer and beverages, they get a one-yuan-per-case fee; for baijiu and red wine, they get ten yuan and five yuan per case respectively, provided monthly sales targets are met, and prices must follow company-set prices—no unauthorized increases or decreases, with fines of 500 to 1,000 yuan or even dismissal. Delivery trucks must refuel at a designated gas station near the company unless prior approval is given... Through these constraints and incentives, Zhang Wei can confidently delegate business, saving effort and earning good returns. For the supermarket channel, we still recommend hiring professional salespeople from foreign companies. First, these salespeople have good relationships with supermarket buyers, saving costs like entry fees, anniversary fees, display fees, etc., and can secure prime positions for better display and visibility. Second, they have professional negotiation and business experience, avoiding pitfalls from unfamiliarity with supermarket contract terms like delivery and product exchange requirements. They also understand supermarket promotions better, enabling adaptive promotional activities to improve sales performance. With proper arrangements for wholesale and supermarket channels, he can then focus on foodservice sales! We suggested he classify restaurants by sales capability into A, B, C levels, create customer profile cards, first integrate the newly defined product line to build a comprehensive "table economy," reducing costs, facilitating one-stop purchasing for restaurants, and leaving no room for other distributors to enter. Additionally, through exclusive store agreements (not selling competing brands of the same tier), squeeze out other brands; through table displays to increase consumer impression; through point collection cards to give store owners more rewards; through bottle cap recycling to encourage waitstaff to promote... Through these adjustments, Zhang Wei finally breathed a sigh of relief. In just two months, performance showed noticeable growth, and most importantly, we believe Zhang Wei has truly grasped his development direction for the next few years, and his management level will greatly improve. All these measures not only solved immediate business, management, and talent issues but also left other struggling distributors far behind, truly establishing his competitive advantage and gaining lasting competitiveness. 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