---
title: "Frontline Teams Resist, Distributors Don't Take It Seriously—How to Actually Pull Off Digital Transformation?"
description: "The tide of digitalization in the FMCG industry has reached the doorsteps of terminal stores, with the wreckage of companies that can't swim floating around, and boats full of system vendors. Distributor bosses are anxious, asking where to start and how to do it, having installed multiple terminal systems without success. This article offers advice for manufacturers and distributors on digital transformation, emphasizing the importance of data collection, distributor engagement, and a phased, people-first approach."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-03-20"
language: "en"
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# Frontline Teams Resist, Distributors Don't Take It Seriously—How to Actually Pull Off Digital Transformation?

> The tide of digitalization in the FMCG industry has reached the doorsteps of terminal stores, with the wreckage of companies that can't swim floating around, and boats full of system vendors. Distributor bosses are anxious, asking where to start and how to do it, having installed multiple terminal systems without success. This article offers advice for manufacturers and distributors on digital transformation, emphasizing the importance of data collection, distributor engagement, and a phased, people-first approach.

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The tide of digitalization in the FMCG industry has reached the doorsteps of terminal stores, with the wreckage of companies that can't swim floating around, and boats full of people selling systems.
Distributor bosses are anxious and shouting: "We know we need to go digital, but where do we start? How? In our desperation, we've installed N terminal systems, and our employees are anxious too, saying the systems are hard to use and a waste of time, not as good as the old manual methods."
Bosses who can't push it forward also start complaining: "The system is at fault; digital transformation is too hard." I believe everyone is familiar with the concept of digital transformation, but in practice, you often hear the above complaints. Today, I'd like to offer a few suggestions to manufacturers and distributors on digital transformation.
**-01-**
**If the team hasn't fallen in love with the terminal system, pause the digital transformation**
In the process of digital transformation, many experts focus on how to use data to study sales processes, sales trends, and formulate strategies and tactics, but they overlook the most important point: data collection.
If there are problems with data collection, the results of studying the data are undoubtedly disastrous, even worse than following intuition. The common problems with data collection are mainly in the following four areas.
**1\. Partiality**
Data collection is partial, or comprehensive only in key markets, with non-key markets not collected, etc. The direction derived from such data is undoubtedly very unfavorable for markets in the introduction and growth stages.
**2\. Falsification**
Under company supervision and pressure, salespeople are forced to report false information and show only their good side. They go to great lengths to make the data look good. Such data is very deceptive; leaders like to see it, but as a market reference, it can definitely lead the company into a ditch.
**3\. Human intervention**
A certain market is given special attention by a certain leader, with heavy investment in manpower and resources within their control (such as discretionary expenses that don't need to be reported to headquarters), resulting in good market feedback. The data is quickly captured by headquarters and used as a model for research, with predictable results.
**4\. Missing data**
As the saying goes, "Know yourself and know your enemy, and you will never be defeated." If data collection only focuses on your own products and ignores key competitors, the value for next-step decisions will not be high.
So, if these common problems are not solved, don't push for digital transformation for manufacturers and distributors. The common digital collection tool we know is the terminal system, which should now be more accurately called an AI intelligent digital collection tool.
Many companies use this tool as a means to supervise the daily work of employees, defining the terminal system merely as a supervision tool for business operations. The data collected is only: arrival time at the first store, number of visits, time in store, off-duty time, transaction amount, etc. Where there is constraint, there is resistance, and falsification is inevitable.
The correct logic is: based on the principles that human nature cannot be violated and laws cannot be reversed, provide incentives and guidance, unleash the value of employees' subjective initiative, make employees feel the system helps them make money, and on this basis, complete data collection as a byproduct.
**-02-**
**The primary task of enterprise digitalization is to make the closest partner—distributors—take it seriously**
Brand owners are the engine of digital transformation, but if the closest partners, distributors, don't perform, the brand owner will quickly stall. Conversely, for the digital transformation of manufacturers and distributors to succeed, distributor digitalization is a key step. The prerequisite for distributor digitalization is to let them enjoy the dividends of digitalization.
**1\. Digitalization drives distributor profitability**
Distributor profitability generally includes the following three aspects:
**a. Digitalization adjusts the business structure:**
Mainly by calculating the best plan for channel structure and product structure to maximize sales and profits.
**b. Digitalization stabilizes product price system:**
Mainly by calculating the optimal solution for channel policies, balancing the relationship between sales volume and profit, and also providing early warnings for channel cross-dumping.
**c. Digitalization calculates rebates:**
Mainly by calculating to ensure that situations like not getting rebates for unmet targets, or not getting full rebates for unmet SKU targets, do not occur.
**2\. Digitalization enhances distributor cost-effectiveness**
Generally includes two aspects:
**a. Spend money where it counts.**
Including optimization of coverage costs, sales costs, fixed costs, and financial costs, etc.
**b. Minimize operating capital.**
Including rapid verification of market advance expenses, efficient management of channel debts and accounts receivable, and adjustment of inventory structure. Here, I want to emphasize two concepts: **1. Monthly inventory turnover rate = monthly sales amount / average monthly inventory amount. The faster the turnover, the lower the cost-effectiveness ratio; 2. Monthly inventory turnover days = 30 / monthly inventory turnover rate. The lower the days, the lower the warehouse cost allocation.**
These two points should be calculated as precisely as possible to ensure maximum utilization of operating capital.
**3\. Digitalization enhances distributor personnel efficiency**
Generally includes three aspects:
**a. Digitalization of allocation mechanisms.**
**Basic salary: Quantification of attendance is not just clocking in and out; Performance salary: Grassroots focus on process indicators, management focuses on result indicators; Team incentives, e.g., scores for market action breakdown, quantified indicators; Welfare subsidies: Linked to years of service, attendance, etc.**
**b. Digitalization of team cohesion. 360-degree assessment, comparing scores; scores for acquisition, contribution, belonging, and development.**
**c. Digitalization of organizational performance. 1. Performance assessment, 2. Team development, 3. Organizational cost-effectiveness, 4. Staffing, 5. Work planning, 6. Business operations.**
**-03-**
**Three suggestions for enterprise digital transformation**
**1\. The fundamental of digital transformation is to solve business problems**
Many companies put digital transformation, integrating enterprise management and internal digital tools and systems, first, but they quickly find that this path is simply not viable, because whether it's distributors or terminal outlets, the first thing they need to solve is the problem of survival.
So they care more about where customers are, not what to do when customers come. Therefore, no matter what tools or methods, if they can't help distributors and terminal outlets solve the ultimate problem of making money, they won't use any tools or methods, which directly leads to the failure of transformation.
Digitalization is more about a change in operational thinking. The enterprise leads, distributors follow. In actual operation, the biggest resistance is the change in distributors' thinking, especially for old distributors. First, let distributors feel the dividends of change through digitalization, and then push forward quickly. Otherwise, your digitalization will always be like a chicken talking to a duck.
The foundation of digital transformation, in the final analysis, is the unity of cognition among everyone. Data tools or systems may be built in a very short time, but solving the coordination of cognition inside and outside the company, up and down, is a lasting process. So fundamentally, the success of digital transformation depends on whether everyone can reach a consensus in understanding.
Don't force transformation. For example, in digital operations, you can set up tiered incentive systems like a leaderboard to create star distributor digitalization, subtly influencing other distributors. So in the early stage of digital operations, don't demand completeness and speed. Start with partial actions, gradually expand, encourage embracing the era's technology for digital transformation, but avoid campaign-style blind rushing. First, let some distributors get incentives, thereby uniting all distributors' confidence and consensus on digitalization.
**2\. The process of digital transformation should prioritize**
Where is digitalization best applied today, tomorrow, and the day after? For example: If the company has successfully created a model market, and the current urgent task is to replicate it nationwide, the key role of digitalization at this time is to establish a digital model market model, including market population, disposable income, sell-through of different SKUs in different channel attributes, and digital profiles of target consumers (age, income, etc.).
Aim at the essence of business operation, and advance process goals in stages. For example: If the current main task is to attract distributors, the steps for digital transformation are:
> **a. Establish a digital model for target distributors (products, channels, business scale, market sales capacity, and profit capacity, etc.).**
> **b. Digitalize demand (channel attributes, first order products into stores, SKUs in stores, etc.).**
> **c. Digitalize the target consumer model.**
> **d. Digitalize consumer communication.**
> **e. Digitalize unavoidable situations in normal operations (large inventory age, production-sales coordination, etc.).**
Which key areas can help improve business quality? Which key angles can help increase organizational efficiency? Key areas that can help improve business quality and organizational efficiency should be prioritized for digital transformation. Others that are currently neither painful nor urgent should be put aside. Human energy is limited; don't start too many digital transformation tasks too quickly. Grabbing everything at once is bound to fail.
Once everything is ready, have a phased process map. Everyone agrees on the goals, with the end point in the process as the target, and advance steadily, step by step.
**3\. Digital transformation should first focus on people, then on tasks**
Talent competition has always been the core competition for enterprises, and digital transformation is no exception. So manufacturers and distributors should also focus on people first, then on tasks. I offer the following five suggestions:
> **a. Digital transformation must be a "top leader project."**
> **b. It's easy to set up a few IT systems, but hard for the team to reshape business using digitalization.**
> **c. Qualified digital talent is scarce; internal training and external recruitment should go hand in hand.**
> **d. Digital marketing practitioners have high turnover, and knowledge assets cannot be accumulated, so professional talent needs both "spiritual" and "material" care.**
> **e. The sooner you remove forces that hinder digital transformation, the better.**
**In conclusion:**
The logic of digital transformation for manufacturers and distributors is to first do data collection well, ensuring that the data guiding the company's direction is true and comprehensive. If it's not true and comprehensive, the result of digitalization is disastrous—**having data is more frightening than having no data;**
Second, enterprise digitalization should first drive distributors. **With distributors' recognition and cooperation, you can achieve twice the result with half the effort. The premise of driving distributors is to let them feel the dividends of digitalization;**
Finally, enterprise digitalization should **focus on people first, then on tasks.** Pay high attention to digital talent, and also do a good job of helping, mentoring, and leading related work.


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