---
title: "Fewer Handoffs, Lower Costs: How Supply-Chain Innovation Supports Growth"
description: "In a mature FMCG market, unified inventory and shorter fulfillment chains can reduce logistics cost, improve distributor capability, and create new growth for both brands and channel partners."
author: "New Distribution"
publisher: "New Distribution"
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published: "2024-03-18"
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# Fewer Handoffs, Lower Costs: How Supply-Chain Innovation Supports Growth

> In a mature FMCG market, unified inventory and shorter fulfillment chains can reduce logistics cost, improve distributor capability, and create new growth for both brands and channel partners.

How can an FMCG company grow when the market is approaching contraction?

That question shaped a presentation by Liang Pengfei, president of Annto Supply Chain Technology, at the ninth China FMCG Innovation Conference in March 2024.

His central argument was direct: companies need supply-chain innovation to rebuild the commercial value chain and create a new basis for growth.

## The Old Answers No Longer Work

Liang cited Stefan Zweig's *The World of Yesterday* to describe the break between the present business cycle and the past.

Companies must give up the assumption that familiar answers will continue working and prepare for structural change.

Channel diversification, fragmented orders, cross-territory selling, and unstable pricing are reconstructing the traditional commercial value chain.

The new value chain and its operating rules have not yet fully formed. That gap is one reason many companies struggle to find growth.

Growth remains a permanent enterprise objective, but recovering it requires a different foundation.

Only a successful supply-chain transformation can support a more efficient value chain and a new commercial order.

## Fewer Handoffs Create Economic Value

Every major commercial innovation depends on logistics and supply-chain concepts.

Logistics can be both a cost center and a mechanism for enterprise change. Commercial innovation and supply-chain innovation should reinforce each other.

From 2019 through 2023, Annto promoted a unified-inventory model designed to remove one handoff from the route to market. It applied the model with FMCG brands including Tsingtao Brewery, Jiannanchun, and Uni-President.

Under this approach, products move through a national warehousing and delivery network directly to retail terminals.

The route can be shortened to factory, integrated distribution warehouse, and consumer.

The conventional model may instead pass through a factory, distributor, sub-distributor, store, and consumer. That creates three or four handoffs before an order is completed.

Removing a handoff means more than eliminating one physical movement. It can remove a vehicle loading and unloading cycle, a warehouse receipt and dispatch cycle, and the associated labor, space, time, and damage risk.

The article estimated that the saving could be at least RMB 1 per unit. For many FMCG products worth less than RMB 50, that can represent at least two percentage points of net profit.

The result is not only a lower logistics bill. It is an improvement in operating efficiency and profitability across the value chain.

## Growth for Both Brands and Channels

Cost reduction is only one part of unified inventory.

Its greater potential is to create growth for brands and channel partners in a mature market.

Brands and distributors are mutually dependent. When the channel ecosystem weakens, the brand cannot remain healthy on its own. Shared development creates a larger market for both sides.

The presentation described a strong brand through four capabilities:

- product strength;
- brand strength;
- channel strength;
- supply-chain strength.

Brands can build the first two largely by themselves. Channel and supply-chain strength are more suitable for joint construction.

A strong distributor also needs four capabilities:

- professional specialization;
- broader category and service coverage;
- digitalization;
- platform operations.

The distributor develops specialization and breadth internally. Digital and platform capabilities can be built with a supply-chain partner.

Every brand has weaker territories and channels. A supply-chain network can connect those gaps with suitable distributors and retail outlets, helping the brand reach new channels while helping distributors become more professional, integrated, digital, and platform-oriented.

## Five Examples of Supply-Chain-Led Growth

Liang used five cases to show how brands and channels can find incremental growth through transformation and supply-chain innovation.

### Wanquan Network

Fujian-based Wanquan Network was described as a B2B platform with RMB 3 billion in scale and coverage of 90,000 retail outlets.

Its founder said that after working with Annto, total logistics fulfillment cost fell from a peak of seven percentage points to two, while the platform's supply-chain professionalism improved.

### Shandong Huachuang

Shandong Huachuang Industry and Trade was described as a regional distributor of household and personal-care products with annual business of roughly RMB 700 million.

Its founder said that digital tools for platform operations helped reduce logistics and delivery cost by 18 percent.

### Guizhou Zhongyi Trading

Guizhou Zhongyi Trading was described as a regional distributor selling more than 30,000 metric tons of beer annually.

With supply-chain support, it developed a second growth path by creating a professional regional logistics company. It also gained distribution business involving brands such as Wanglaoji, Baixiang, and Hsu Fu Chi.

### Dehui Joint Procurement

Dehui Joint Procurement operates condiments in Fujian's food-service channel.

Its founder said the supply-chain partnership introduced additional brand business and created a basis for extending the operating model into other regions.

### Hsu Fu Chi

Hsu Fu Chi's western China operation reported improvements in warehouse count, warehouse area, inventory levels, turnover days, and delivery cost.

The partnership also connected the brand with additional channel partners, helping fill geographic gaps in national distribution.

These examples are company-reported cases, but together they illustrate the same operating logic: a supply-chain platform can create value by reducing logistics friction and by connecting brands with channels they could not efficiently reach alone.

## From Internal Competition to Joint Value Creation

The traditional relationship between brands and distributors contains both cooperation and bargaining.

In a mature market, that model can consume energy without creating incremental value. One party's gain may simply become another party's loss.

A more integrated supply-chain model changes the structure of the problem.

It can free distributors that are not strong in logistics from operating it themselves. It can help logistics-capable distributors build professional regional services. It can connect good products with suitable distributors and create three forms of shared value: unified inventory, new growth, and integration.

The objective is not to remove distributors. It is to allocate capabilities more effectively across the network.

## Turn Logistics into a Value Center

Liang compared the relationship between commercial flow and logistics to the lion dance associated with Foshan.

The brand and distributor form the visible head of the lion. The supply chain forms the waist and legs that support the performance.

That metaphor captures the role of integrated supply-chain services.

Warehousing and transportation should not be managed only as necessary expense. When combined with inventory visibility, order allocation, digital platforms, channel connections, and regional operating capability, logistics can help create a new business model.

In a mature FMCG market, sustainable growth must also be profitable.

Fewer handoffs, unified inventory, and closer coordination can turn logistics from a cost center into a value center—and give both brands and distributors a stronger basis for high-quality growth.


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