---
title: "Industry Exclusive | White Paper on Cost Reduction and Efficiency Enhancement in Warehouse and Distribution Logistics for Chinese FMCG Distributors"
description: "Distributors with business scale exceeding 50 million yuan often fail to achieve sustained growth due to management issues, with warehouse and distribution management being the most critical aspect after core business operations. Although warehouse and distribution logistics account for the highest proportion of operating costs for distributors, they spend minimal time optimizing and refining it. In the future, the number of distributors in a city will decrease while their scale will increase, making multi-SKU and multi-category management essential, with warehouse and distribution efficiency as a key indicator of operational performance. Based on this, New Distribution, in collaboration with BEST Supply Chain, has launched the industry's first white paper on cost reduction and efficiency enhancement in warehouse and distribution logistics for FMCG distributors, covering approximately 300 small, medium, and large distributors nationwide."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-03-20"
language: "en"
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# Industry Exclusive | White Paper on Cost Reduction and Efficiency Enhancement in Warehouse and Distribution Logistics for Chinese FMCG Distributors

> Distributors with business scale exceeding 50 million yuan often fail to achieve sustained growth due to management issues, with warehouse and distribution management being the most critical aspect after core business operations. Although warehouse and distribution logistics account for the highest proportion of operating costs for distributors, they spend minimal time optimizing and refining it. In the future, the number of distributors in a city will decrease while their scale will increase, making multi-SKU and multi-category management essential, with warehouse and distribution efficiency as a key indicator of operational performance. Based on this, New Distribution, in collaboration with BEST Supply Chain, has launched the industry's first white paper on cost reduction and efficiency enhancement in warehouse and distribution logistics for FMCG distributors, covering approximately 300 small, medium, and large distributors nationwide.

Distributors with business scale exceeding 50 million yuan often fail to achieve sustained growth due to management issues. Beyond the business itself, the most critical aspect is warehouse and distribution management.
Although warehouse and distribution logistics account for the highest proportion of operating costs for distributors, they spend minimal time optimizing and refining it.
In the future, the number of distributors in a city will decrease while their scale will increase. **Behind the scale lies multi-SKU and multi-category management, and warehouse and distribution efficiency is a key indicator of whether distributors can improve operational efficiency.**
Based on this, New Distribution, in collaboration with BEST Supply Chain, has spent three months launching the industry's first **"White Paper on Cost Reduction and Efficiency Enhancement in Warehouse and Distribution Logistics for Chinese FMCG Distributors"** . The report's survey covers approximately 300 small, medium, and large FMCG distributors nationwide, providing an in-depth analysis of cost changes, efficiency performance, and operational trends in warehouse and distribution logistics.
The report focuses on the pressures, challenges, and problems faced by distributors, and explores how to effectively reduce logistics and warehouse distribution costs, improve operational efficiency, and thereby enhance overall profitability.
We aim to provide FMCG distributors with market-validated strategies and practical cases for cost reduction and efficiency enhancement in warehouse and distribution operations, helping them solidify their position and enhance competitiveness in a changing market environment.
At the same time, the report is committed to sharing cutting-edge first-hand information, providing valuable insights for upgrading cooperation among distributors, brand owners, and third-party logistics companies, and jointly promoting the industry's continuous progress and innovative development.
**Survey Summary**
The first half of the report interprets the warehouse and distribution operations survey of approximately 300 distributors.
The second half of the report provides specific recommendations for distributors to reduce costs and increase efficiency based on the survey.
The core is four major directions for cost reduction and efficiency enhancement:
**1\. Basic Stage—Optimize Management**
> Information Management
>
> Inventory Management
>
> Distribution Management
>
> Picking Management
>
> Warehouse Management
**2\. Consolidation Stage—Improve Labor Efficiency**
> Process Formulation
>
> Professional Division of Labor
>
> Staffing
>
> Compensation and Performance
**3\. Expansion Stage—Share Resources**
> Warehouse and Distribution Outsourcing
>
> Unified Warehousing and Joint Distribution
**4\. Innovation Stage—Model Upgrade**
> B2B Platformization
>
> Warehouse and Distribution Logistics Platformization
**Case Study 1**
**Optimizing the warehouse, picking, and distribution management system is not only the cornerstone for FMCG distributors to improve warehouse and distribution operational efficiency and reduce operating costs, but also the key to driving overall business specialization.**
By implementing standardized and specialized warehouse, picking, and distribution management, distributors can systematically improve warehouse and distribution processes and systems, ensuring that every link is carefully designed for efficient execution.
**This specialization is not only reflected in the formulation of standard processes and systems, but also in the continuous optimization of operational indicators and efficiency.**
A specialized warehouse, picking, and distribution management system can significantly improve warehouse and vehicle utilization, reduce operational errors and losses, increase inventory turnover, lower hidden operating costs, and thereby enhance distributors' cash flow and financial stability.
More importantly, by optimizing warehouse and distribution processes, improving service quality and response speed, distributors can better meet customer needs, enhance customer loyalty, and lay a solid foundation for long-term cooperation and business expansion.
**Case Study 2**
Improving labor efficiency in warehouse, picking, and distribution operations is crucial because **labor costs account for the largest expenditure.** Improving labor efficiency not only effectively reduces operating costs but also improves overall operational efficiency, bringing greater competitive advantages to distributors.
To systematically improve the efficiency of warehouse, picking, and distribution personnel to achieve cost reduction and efficiency enhancement, distributors can take the following key measures:
**First, clarify job responsibilities, formulate operational processes, and reasonably allocate staffing.** Ensure smooth and efficient workflows, avoiding repetitive labor and resource waste.
**Second, establish a scientific and reasonable compensation and performance system.** By appropriately utilizing basic wages, commissions, performance assessments, bonus systems, allowances, profit sharing, contracting, and other mechanisms, distributors can maximize employee motivation and work drive, ensuring they perform at their best in their respective positions.
**In addition, using suitable warehouse and distribution management software is also important support for the normal functioning of the compensation and performance system.**
**Case Study 3**
**To achieve cost reduction and efficiency enhancement, many distributors are actively adopting logistics resource sharing strategies, especially warehouse and distribution outsourcing and unified warehousing and joint distribution services.**
These two models optimize distributors' logistics processes through resource sharing and collaborative operations, reducing redundancy and waste, thereby lowering inventory and operating costs, improving logistics efficiency and response speed, and enhancing customer satisfaction.
**To ensure the successful application of outsourced logistics resources, distributors need to carefully select partners and establish close cooperative relationships with them.**
Selected partners must have rich category and channel experience, stable operational strength, and good brand reputation. Under the unified warehousing and joint distribution model, effective communication and collaboration among franchise distributors are particularly important.
Warehouse and distribution operating costs account for a considerable proportion of the total operating costs of FMCG distributors, with approximately 30% highlighting its importance in the entire operation process. Considering the potential of this cost center, **transforming it into a profit center** and granting it independent accounting and independent operation capabilities is a strategically significant decision.
As the market environment continues to change and technology rapidly develops, FMCG distributors need to continuously transform and upgrade to adapt to new market demands. **Upgrading from the traditional distributor model to a digital distributor is an important step in this transformation process.**
On the basis of digital distributors, further expanding businesses such as third-party storage and distribution, and unified warehousing and joint distribution, can upgrade the company **to a trading and logistics company.**
Ultimately, trading and logistics companies can, through technological integration, industry cooperation, and model innovation, **transform and upgrade into platform-based enterprises** , such as B2B platforms or warehouse and distribution logistics platforms. This platform strategy can attract more partners to jointly create an open, shared, and collaborative ecosystem, achieving broader value co-creation and resource sharing.
However, the transformation path is full of challenges. Distributors must fully understand the essential elements required for each type of transformation, **actively build core competitiveness** , and ensure a smooth transition. During the transformation and upgrade process, FMCG distributors also need to focus on technological innovation, talent development, partner relationship management, and other aspects to ensure the success of the transformation and the sustainable development of the business.
**Special Thanks**
This report is jointly launched by **New Distribution** and **BEST Supply Chain** . Some of the on-site inspections, in-depth interviews, practical cases, and some industry data of distributors in the report were provided by BEST Supply Chain.
The above is part of the report content. For more details, please refer to the full report.
**Add the WeChat below to obtain the report**
Attachment: Detailed Table of Contents of the "White Paper on Cost Reduction and Efficiency Enhancement in Warehouse and Distribution Logistics for Chinese FMCG Distributors"


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