Click to read the original text for details Inventory loading is an old topic that every distributor has encountered. It is also a sensitive topic, known to both manufacturers and distributors, but neither side is willing to bring it up at critical moments. It is also a pseudo-topic: what is inventory loading? How much counts as inventory loading? It is a matter of each side having its own argument, with manufacturers and distributors each holding their own views, resulting in a muddled account. In previous years, the 1.5 times inventory method for minimum safety stock was popular as a standard for distributor inventory, but manufacturers treat their inventory levels as "top secret," and domestic logistics is about as reliable as flight punctuality, so safety stock is generally not very safe. Distributors' inventory information management is relatively lagging, and the 1.5 times method is more experience than precise calculation. The goods that should be out of stock continue to be out of stock; the slow-moving inventory continues to be slow-moving. The 1.5 times method eventually became just talk. In recent years, with a poor economic environment, intensified channel competition, and declining distributor profits, the good old days of big meat and big bowls of wine are fading away. Some people have brought up the old topic again, starting to talk about inventory loading. Inventory loading, on the surface, is a coercive act, but at its root, it is about interests. Inventory loading is a typical Chinese marketing term that foreigners find hard to understand, but Chinese marketers are familiar with it. There are many manufacturers who say they never load inventory but are honest with their actions; there are also many distributors who say they never accept inventory loading but take a gamble when the time comes. In reality, what can be loaded are big brands, and what cannot be casually loaded are big distributors. There are countless cases where big manufacturers crush small distributors with inventory loading, and small manufacturers are played to death by big distributors using inventory loading. On the surface, inventory loading is a coercive act, a last resort. At its root, it is about interests: only when there is profit will there be loading, and only when there is profit will there be willingness to be loaded. Those distributors who are crushed by inventory loading either misjudged the sales situation of the product at the outset or are true novices who thought they were getting a pie but fell into a trap. Going deeper, both parties in inventory loading are adults, not like children playing house where they can start over if things go wrong. Both parties are independent economic entities, with one hand paying and the other delivering goods. The essence is a clean transaction, and not doing a one-off deal is benevolence. In short, it is a case of one willing to beat and the other willing to be beaten. Some say that loading inventory on distributors is useless now! But this statement itself is wrong. First, inventory loading should be a two-way behavior; as long as both sides profit, it cannot be banned. Moreover, effective inventory loading is one of the channel management tools, even if it is outdated. Second, one of the products of the market economy is the coexistence of investment and speculation, so today we have presale of properties, mortgages, credit cards everywhere, and futures trading is thriving. Using today's money to buy tomorrow's goods is the same principle as using tomorrow's money to buy today's goods. So, we see that companies that abandon so-called inventory loading are actually forced to do so. If the channel is out of control, sales are declining, and loading is useless, why use the word "abandon" to elevate their awareness? As for distributors who absolutely refuse to accept inventory loading, they are probably just saying it for fun. In most cases, smart distributors always play the game of whether they are willing to be loaded, not whether to be loaded. How can distributors take the initiative in the inventory loading game? Inventory loading, in the final analysis, is a variant of distributors sharing risks and fulfilling warehousing functions. To completely eliminate inventory loading, it is difficult to distinguish it from normal warehousing functions in practice. So, inventory loading is unavoidable at its root. Given this, what preparations should distributors make to take the initiative in this game?

  1. Mature distributors do not load just any goods, nor do they refuse to load all goods. Distributors with smooth sales channels, or normal sales channels, actually have a clear picture before being loaded: how much of this batch will go into the warehouse? How much will be distributed? How much will be for special supply? How much will be for retail? They know this before ordering. There are also distributors who think of solutions after loading, either because the market is good and they grow step by step, or because the loaded goods become slow-moving, they cut prices to recover capital, then load again, cut prices again, and finally the business shrinks step by step. Some say, if you have a clear picture before loading, is it still inventory loading? Isn't it just normal restocking? Here lies a trick of being a distributor, which is the watershed between good and bad distributors. One characteristic of excellent distributors is that they have some products that sell poorly elsewhere but sell very fast in their stores. Mediocre distributors can only follow the trend and sell products that sell well everywhere else. So when mediocre distributors are loaded, it easily forms a red ocean of everyone rushing in, while excellent distributors, even when loaded with products that others think are hard to sell, are actually still in the so-called blue ocean.
  2. As a business, everything is negotiable. Whether to accept inventory loading depends on what conditions are used to exchange. I have repeatedly mentioned in previous articles on inventory loading that inventory loading is not scary; what is scary is only inventory loading. If a company only completes so-called inventory transfer through loading, it is indeed a rogue behavior. But as a distributor, if you do not understand that inventory loading should be a continuous action, do not know how to exchange resources through loading, and only know whether to load or not, even if you are crushed to death, you will die with regret. Some say that if salespeople dare to load inventory, it must be that the manufacturer-distributor game is disadvantageous to the distributor, so it makes no difference whether you negotiate conditions with the salesperson. My point is that if a distributor does not even have the courage to negotiate, being crushed is inevitable. Rather than being crushed and then having a falling out with the company, it is better to state the ugly words upfront, which can prevent problems and also allow for settling accounts later.
  3. Inventory loading is a wolf, and restocking is a sheep. If you only restock and never load, the sheep will be comfortable to death; if you only load and never restock, the house is full of wolves, where is the meat to eat? Business has risks, and sometimes you have to take risks. Distributors always set their sales targets within their controllable range, which is stable but also loses many opportunities. Look at today's distributors who have become regional powers: did they not make decisive moves and win fame in one battle under incomplete market information? Inventory loading is sometimes a risk, sometimes a windfall. The key is, when should you take risks and when should you be conservative? My suggestion is: before loading each batch, evaluate yourself: if you do not load this batch, will the company get rid of you? If the company will not get rid of you, will the salesperson make things difficult for you, and can you bear it? If you do not care about these two questions, then do not load; if you cannot accept these two results, then bear it silently. At the same time, you should realize that it is time to dig another well for yourself.
  4. In the forty-year history of distributor development, most distributors have only learned to calculate small accounts, not big accounts; most have only learned rough management of "estimate" and "about," and few can do precise management of the enterprise, including inventory. In the early 1990s, distributor informatization was not realized. In the first two decades of the 21st century, e-commerce, especially O2O and B2B, barely helped distributor informatization take a step forward. The next two decades are precisely the two decades when, taking advantage of the informatization trend, marketing management, including distributor management, will achieve precise calculation. The worse the economic environment, the more valuable precise management becomes. Under strict numerical control, each product entering the warehouse has a final sales deadline (note: the time a product stays in the warehouse, strictly speaking, does not depend on the product's shelf life, but on the distributor's average gross profit and inventory turnover frequency. If the distributor's average gross profit is high and inventory turnover is fast, even if the product has not reached its shelf life, it should be sold at a loss, because all operations include opportunity costs). Even if distributors are loaded, they can use relatively reasonable formulas to quickly calculate when this batch of products should be sold. As long as it is sold before a certain time, even at a loss, the distributor is actually losing on the surface but gaining in reality. Can precise inventory management methods completely solve the problem of distributor inventory loading? Of course not, but precise management can help distributors have a clear reference coordinate when loading. With this reference coordinate, the loaded goods are not a batch of dead goods but a living thing under constant monitoring, making the handling of slow-moving inventory more proactive and flexible. -END-