---
title: "How Distributors Can Build Capabilities into Their Organizations"
description: "When discussing this topic, many people's first reaction is what HR needs to do. For a typical trading company with annual sales of tens of millions, they won't set up a separate HR team; these tasks fall on the heads of the using departments, but their main business is not HR, so how should they handle it? Talent never belongs to the enterprise; it belongs to the labor market. If you leverage your professional advantages to empower employees, perhaps in the short term their overall capabilities will improve, but when employees leave, what remains? A business supported by excellent employees is individual heroism; when the \"hero\" leaves, the business pressure immediately multiplies."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-03-11"
language: "en"
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# How Distributors Can Build Capabilities into Their Organizations

> When discussing this topic, many people's first reaction is what HR needs to do. For a typical trading company with annual sales of tens of millions, they won't set up a separate HR team; these tasks fall on the heads of the using departments, but their main business is not HR, so how should they handle it? Talent never belongs to the enterprise; it belongs to the labor market. If you leverage your professional advantages to empower employees, perhaps in the short term their overall capabilities will improve, but when employees leave, what remains? A business supported by excellent employees is individual heroism; when the "hero" leaves, the business pressure immediately multiplies.

When discussing this topic, many people's first reaction is what HR needs to do. For a typical trading company with annual sales of tens of millions, they won't set up a separate HR team; these tasks fall on the heads of the using departments, but their main business is not HR, so how should they handle it?
**Talent never belongs to the enterprise; it belongs to the labor market.** If you leverage your professional advantages to empower employees, perhaps in the short term their overall capabilities will improve, but when employees leave, what remains? A business supported by excellent employees is individual heroism; when the "hero" leaves, the business pressure immediately multiplies. This is not what distributors want, nor what brand owners want.
Let's think about why workers on the assembly line have high turnover, yet the quality and quantity of products remain unchanged and controllable at all times. This is the issue we want to discuss today: capabilities must be built into the organization.
**Two Basic Capabilities of Distributors**
I attribute the two basic capabilities of distributors to basic sales capabilities and basic market capabilities.
**I. Basic Sales Capabilities**
Without sales, there is no profit. Basic sales capability is the foundation of a distributor's survival. No matter how the market changes, this must always be placed first. I once proposed two formulas:
> **A. Execution = Knowledge × Attitude × Skills × Tracking and Inspection**
> **B. Performance Capability = Coverage × Face Time × Customer Relations × Activity**
These are the prerequisites for basic sales capabilities. Only when the grassroots business team has sufficient product knowledge, social etiquette knowledge, etc., correct work attitude, and honed work skills, coupled with management's tracking and inspection, can they effectively improve basic sales capabilities and thereby enhance distributor performance. What are the basic sales tasks for distributors? Let me briefly list a few:
> 1. What is the total number of terminal customers in the circulation business? How many are in special channels and KA? Delete duplicate customers to improve horizontal growth space; this is also an important indicator for staffing.
> 2. How many visits per day should sales reps make? How many for special channels?
> 3. What is the minimum daily sales volume in pieces? How much is completed?
> 4. How many order sheets (number of transactions)? What is the visit success rate?
> 5. How many SKUs per order (how many single items per store)?
> 6. Eliminate the phenomenon of 1 SKU per terminal store to improve vertical growth space.
> 7. What is the monthly sales target? How much has been completed cumulatively? How to rectify next?
> 8. How many exclusive stores have been created? How many key accounts does the business have?
> 9. What are the work priorities for the month? Which have been completed?
> 10. Without tracking the process, there will be no results. Do daily tasks daily, and clear daily tasks daily to improve daily.
Many people might feel that these are outdated things from a bygone era, and we all know them, but what I want to say is: how many distributors can implement these simple tasks day after day, year after year?
On the wall posters of the excellent distributors I visited, these things are still there, and the morning meetings are still taken seriously. These are still important indicators for distributor bosses to evaluate excellent employees. Essentially, the simpler and more effective, the more important they are as part of the basic foundation, and the more attention they should receive.
**II. Basic Market Capabilities**
**Without basic market work, products will not sell through.** When it comes to product sell-through, many distributors immediately think of terms like product power and brand power, sales and consumption scenarios, communication channels, consumer cognition and experience, needs and pain points—these are very active words, and it seems anyone can say a few sentences.
Then the question arises: do distributors know how to implement them? Do distributors understand how to turn these words into normal indicators for sales reps' daily work? Some things cannot be achieved by a few surprise attacks or concentrated activities. The focus of basic market work is vivid display or competitive display, but this is also the hardest part for distributors to control. Let me list a few points to see if you resonate.
> 1. For 80% of terminal small shop owners, the display fee is almost the same whether they sell more or less, wasting resources;
> 2. As long as the display meets the standard, it doesn't matter how much is displayed after that; they don't strive for more;
> 3. The display fee is the same for important traffic locations and remote locations, with poor flexibility;
> 4. The display fee is the same next to the cash register and in the corner, with poor responsibility;
> 5. Display maintenance is the sales rep's job; when other manufacturers move the display, the small shop owner ignores it;
> 6. Display is not maintained consistently, and there is no effective combination between peak and off-peak seasons;
> 7. Sales reps emphasize quantity over quality, even signing displays just for the sake of signing;
> 8. Terminal shop owners emphasize form over sales volume;
> 9. The team's collaboration awareness is poor, and execution is uneven.
Does it get more and more headache-inducing? Distributors don't earn money easily, and if market spending has no effect, it's even harder to move forward. What are the basic market tasks for distributors? I have summarized seven market visit actions:
> 1. Press the storefront: Check inventory, use the 1.5 times inventory rule, and different inventory standards for different periods.
> 2. Stock the shelves: Check the display surface, stimulate sales reps' competitive awareness, and strive for display space greater than or equal to competitors. Main selling items only do category display; vivid display should focus on the last meter, have a strong heart, and fight close to competitors.
> 3. Do more points: Check whether the product is carried to the door, sold in whole boxes, and displayed in a prominent position.
> 4. Vivid display: Build materials such as POP, KT boards, bottle hangers, price tags, highlight product advantages and disadvantages, do in-store brand communication, and build sales and consumption scenarios.
> 5. Keep clean: FMCG products are becoming more homogeneous; the competition is service, product and brand image. Carrying a rag is an important indicator of a qualified sales rep.
> 6. Do experiences: Experience is not always free; the purpose is to make consumers like it. It should be done anytime, anywhere, such as proactively recommending when consumers are choosing products.
**Summary: These two basic capabilities are required for distributors; they are the cornerstone of offline channel operations. Any idea that leaves basic capabilities can be defined as empty talk.**
**Establish a "Foolproof" Process System**
"Foolproof" process system—I often mention this in consulting and training work. Why "foolproof"?
For grassroots personnel (including sales reps and supervisors) currently engaged in FMCG work, they would rather do more physical "manual labor" than sit down and think deeply. This is to adapt to human nature.
**Less thinking, more working according to standards—this is the process system that distributor bosses need to design for frontline operators.**
Establishing a "foolproof" process system can bring multiple benefits.
**First, it is easy to operate.** A "foolproof" process system simplifies complex processes into easy-to-operate steps, reducing the difficulty of learning and execution. This allows new employees to adapt to the process faster and reduce the possibility of errors.
**Second, it improves efficiency.** By simplifying and optimizing process steps, unnecessary links and repetitive work are reduced, improving work efficiency.
**Finally, it provides traceability and data analysis.** By establishing a "foolproof" process system, you can better track and record the execution and results of the process.
Making simple things complicated is not a skill; making complicated things simple is!
So how do you establish a "foolproof" process system?
**1. Understand needs:** Clarify the process you want to simplify and optimize. Understand the steps, people, and resources involved, as well as the goals and expected results.
**2. Map the process:** Record the current process steps in detail, and mark the responsible person and required documents or information for each step. Visualize the process, such as using a flowchart or process diagram.
**3. Simplify steps:** Review each step and identify redundant, complex, or unnecessary links. Consider how to remove or simplify these steps to reduce workload and the possibility of errors.
**4. Assign roles and responsibilities:** Clarify the responsible person and required permissions for each step. Ensure everyone is clear about their role and responsibilities, and understands their position and role in the process.
**5. Provide training and documentation:** Provide necessary training and documentation for people involved in the process to ensure they understand and master the requirements and operation of the process. Write simple and clear operation guides and ensure they are easy to understand and execute.
**6. Use automation tools:** Consider using software or tools to automate some repetitive and tedious tasks.
**7. Regularly evaluate and improve:** Establish a regular process evaluation mechanism, collect feedback and suggestions, and continuously improve the process based on feedback. Regularly check the effectiveness and efficiency of the process to ensure it is always in the best state.
In consulting, I generally suggest that brand managers extract the market operation model based on market conditions (population and per capita consumption), distributor conditions (capability and willingness), and manufacturer-distributor cooperation model (responsibilities and rights of each party), so that even if there is personnel turnover, new people can get up to speed quickly.
For example: Zhang San is newly appointed to a market (large population, low per capita consumption). Based on market conditions, it can be determined that the primary work in this market is C-end work, i.e., how to do consumer operations well. Based on distributor conditions (high capability, strong willingness), it can be determined who should hold the main operating authority in the market. Based on the manufacturer-distributor cooperation model, it can be determined who is mainly responsible for team, expenses, inspection, etc.
With this set of process systems, Zhang San can quickly determine the work direction, reduce the confusion period, and complete market work well according to the work process. This applies to brand owners and distributors alike.
**Establish a Standardized Problem-Solving System**
When doing market research with several enterprise managers, from market visits to the formulation and implementation of final solutions, I found a common problem: **there is a lack of a standardized process from problem discovery to solution implementation.**
A problem is not just a single phenomenon; behind it must be hidden a "problem chain." At this time, you must get to the root. FMCG manufacturers and distributors should form a complete problem-solving system to clear it thoroughly from point to area.
Take a simple example: During a visit, it was found that the quality of distribution points in a market was low, the average SKU per store was low, and the display compliance rate was low. So the next morning's meeting immediately rectified it, proposed a series of rectification plans, and required implementation. But in reality, the effect was not ideal, and even sales reps, under pressure, resorted to large-scale fraud.
What was the reason? It might be that this month the company assessed the number of distribution points, which determines the sales rep's income. The temporary indicator led to insufficient energy, so they had to cheat, and complaints arose: the leader makes decisions on a whim.
To put it vividly: if you have a pustule on your face, you immediately buy medicine and apply it to the pustule, but in essence, you have internal heat. The application effect is almost zero; while you apply it here, it bubbles up there. Market problems are the same. **Behind one appearance lies a deeper reason, requiring a complete solution system.**
The closed loop of this system is: **Current situation description—Process system—Execution analysis—System empowerment.**
The occurrence of a problem must be caused by the matching or lack of the underlying process system. The first thought when discovering a problem is to see whether the process system that caused the problem is blank, needs supplementation, or needs improvement. This sets the tone for the problem. If the process system is fine, the next step is to check execution.
Self-disciplined people are really rare; otherwise, there wouldn't be so many regulatory agencies in society. Tracking and inspection are meant to force grassroots teams to develop habits close to "self-discipline," learn self-reflection, and learn to work under leadership supervision. Finally, there is the empowerment of related systems, including performance appraisal, incentive policies, and multi-functional implementation of digital systems.
**On March 16, in Chengdu, the "Second China FMCG Distributor Conference" will be held. Distributor bosses, traditional retail enterprises, brand executives, industry research experts, etc., will gather to focus on core distributor issues and examine the new directions, new thinking, and new opportunities of the current era. We look forward to your arrival!**
On March 15, a closed-door private sharing session for distributors will be held: "Low-price impact, manufacturer direct control, declining customer traffic, what are the options for distributors?" It will involve one-on-one dialogues with excellent large distributors to share experiences, explore business opportunities, and discuss the era's dividends.
During the three-day conference, centered on the theme "Supply Chain Revolution," in addition to the Second China FMCG Distributor Conference, there will also be a main forum, a China FMCG Distributor Conference, more than ten sub-forums and closed-door exchange meetings, and the first major debut of the [Extreme Supply Chain] Brand Factory Direct Procurement Fair. It will meet with thousands of FMCG brand owners, distributors, retail transformers, and industry service providers from across the country in Chengdu for continuous brainstorming to discuss the challenges and opportunities, changes and ways out in the era of supply chain revolution.


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