Editor's Note: On December 10, 2021, the 2021 China Consumer Goods Supply Chain Innovation Forum, co-hosted by Anneng Zhilian, New Distribution, and LOGW, was successfully held at the InterContinental Guangzhou Poly with the theme "Boundless. Pathways. Co-creating Value." Nearly 200 supply chain heads and marketing executives from consumer goods brands across the country attended this professional conference to discuss the important topic of how companies can excel in omnichannel operations in the current era of uncertainty. Professionals from Anneng Zhilian, New Distribution, LOGW, Tsingtao Brewery, Lee Kum Kee, Jiangxiaobai, Yihai Kerry, C&S, Shanghai Jahwa, P&G, and Yashili brought their deep insights and practical experiences from their respective fields to the conference. At the conference, Anneng Zhilian's One Inventory strategy, which helps FMCG companies enhance omnichannel delivery capabilities and seize deterministic growth in an uncertain era, drew strong reactions and attention from attending brands. This article focuses on the "One Inventory" model, compiling the brilliant viewpoints and content shared by some guests at the conference, and is now published for our readers. In the Era of Uncertainty, Most Growth Comes from Diversification and Fragmentation At the high-level closed-door meeting on the morning of December 10, Mr. Zhang Fujun, President of Lee Kum Kee China, pointed out, "In the current and future VUCA (uncertain) era, the vast majority of growth comes from uncertainty, and this is a reality we must accept and face." During the afternoon conference sharing, Pan Yonggang, founder of LOGW, also stated, "Data shows that over the past three years, the channels that have maintained growth are all digital-related channels, such as traditional e-commerce, live-streaming e-commerce, and online-offline integrated channels. Channels without digitalization still hold absolute volume but are clearly on a downward trajectory." C&S, known as the "noble of paper," is the fastest-growing brand in the high-end paper products segment in recent years and is also a paper brand favored by the capital market. Fang Guanghua, Supply Chain Director of C&S Paper, said, "C&S's leapfrog growth in recent years is due to seizing the incremental dividends of emerging channels." The FMCG market is still growing, but growth mainly comes from emerging channels. These emerging channels are characterized by being digital, relatively dispersed, fragmented, with smaller individual orders and uncertainty. In other words, orders that can sustain future growth are highly discrete. The fragmentation of traffic and orders means that the costs of acquiring transactions and fulfilling deliveries for all brand orders remain high. Sustaining incremental growth is the natural mission of business operators. Lack of growth is the most painful thing, but when incremental orders become too dispersed and fragmented, the pain mask remains firmly on the faces of brand owners, unable to be removed. This is why in recent years, brand supply chain and logistics departments have been working extremely hard, and even their relationships with marketing departments have become increasingly tense. If it were just hard work, it would be tolerable. But more seriously, when orders become fragmented and dispersed to a certain degree, delivery costs can even exceed gross profit. When every order results in a loss, it means this part of growth is unhealthy, low-quality, and unsustainable. The omnichannel era environment cannot be changed. Therefore, the entire FMCG industry is calling for an omnichannel delivery model that can meet the needs of dispersed and fragmented orders in this era. The One Inventory Strategy Has Been Proven to Be an Effective Path for Omnichannel Delivery Ten years ago, offline business accounted for 99% of FMCG sales, with online negligible. Today, offline business still accounts for over 70% of FMCG sales, but some FMCG categories have online sales exceeding 10% or even more. China's consumer goods delivery system is divided into two parts: one is offline channels, from factory to regional distributors, to wholesalers, to retail stores, and then to consumers; the other is online e-commerce, using express delivery. From factory to express warehouse, then through 4-5 levels of transfer to consumers. But for the vast majority of low-value, high-volume FMCG products, the latter accounts for a small proportion. Today, various emerging channels rely more and more on mobile internet, and 2B and 2C orders are increasingly converging in characteristics: people are willing to wait less time, pay less, but demand higher service. In the past, FMCG 2B orders were accustomed to full-truckload shipping, solving cost issues with large order volumes; using offline distributors and wholesalers to solve terminal delivery, and adding layers to solve the problem of order subdivision. In the era of continuous offline growth and relatively objective product gross margins, this model of mass production and mass distribution was fine. But today, it is unsustainable. So what should be done? At this conference, Liang Pengfei, President of Anneng Zhilian, proposed the "One Inventory" strategic model with the "Five Most" as fulfillment goals, which received high recognition from all attending brand supply chain heads. What are the "Five Most" goals? The "Five Most" goals should be the highest standard for current FMCG supply chain management. It refers to "After product production, can our supply chain reach the smallest distribution unit with the shortest chain, fastest speed, and minimal loss, and meet omnichannel orders with minimal inventory, achieving the final 'daring leap' of operations." Undoubtedly, this "Five Most" goal is the best omnichannel delivery model for FMCG in the omnichannel era. The "Five Most" goal is the core objective of Anneng's One Inventory model, but how is it implemented, and how does Anneng achieve it? FMCG omnichannel operations are divided into two major parts: one is commercial flow, with the core being transactions; the other is logistics, with the core being delivery. Anneng's "One Inventory" completely separates the two major functions of omnichannel transactions and delivery. The company's commercial flow team continues to focus on transactions and capturing growth; Anneng focuses on completing high-quality logistics and delivery. In the One Inventory model, Anneng Zhilian fully opens its nationwide full-chain network to FMCG companies. The company's product inventory is fully shared across all channels within the Anneng system, using digital systems for real-time response, and the national service network to complete delivery fulfillment. From a logistics perspective, in the past mass distribution model, FMCG companies only needed to establish fewer than 10 regional warehouses nationwide. But today, to support efficient omnichannel order delivery, hundreds of sub-warehouses and thousands of front warehouses are needed. Obviously, this task of managing a thousand warehouses cannot be accomplished by FMCG companies alone without the collaboration of third-party professional logistics. △Mr. Liang Pengfei, President of Anneng Zhilian Shi Yonggang, Deputy General Manager of Tsingtao Brewery's Innovation Business Division and E-commerce Director, stated at the conference, "In recent years, Tsingtao Brewery has made rapid progress in e-commerce and innovative retail, and is now an industry leader. But in the past, we were very painful in supply chain. The uncertainty of omnichannel orders was too great, fluctuations too large, and demand too complex to handle. After cooperating with Anneng Zhilian, we solved Tsingtao's delivery problems, and now we have reached the stage of BC order integrated delivery cooperation." Shi Yonggang gave an example: In the past, for online shipping, each platform had its own warehouse and its own waybill system, causing significant data sharing problems and high customer complaints. But Anneng Zhilian solved all problems with one waybill because it is a professional third-party service platform, connected with all e-commerce platforms, express companies, and logistics companies. Shi Yonggang also said, "In the future business society, transactions and delivery will be separated. As a beer maker, our job is to brew beer with heart and brew happiness for consumers. That is the mission and purpose of a brand enterprise. We can hand over delivery to the most capable Anneng Zhilian, using its huge front warehouse system to make corresponding actions according to our order requirements, such as warehousing operations, consumables purchase, order interception, return handling, gift box packing, splitting and repacking, etc. For me, it's more efficient and lower cost." Currently, the One Inventory model is one of the most feasible paths to support FMCG companies' omnichannel operations. But how should the One Inventory model be introduced to FMCG companies? What problems and challenges exist during the introduction process? Implementing the One Inventory Model Requires Steady Steps and Steady Achievements The One Inventory model can indeed help FMCG companies achieve growth, and many brand owners know its importance. But why is it still difficult to firmly implement the One Inventory model in FMCG companies? First, it's hard to make the decision to change. The hardest thing in the world is not defeating enemies, but changing oneself. Every corporate change requires the courage to point the knife at oneself, and the bigger the change, the more so. But this often goes against human nature. The most fundamental psychological need of humans is to pursue safety and stability, and change and transformation violate our inner needs. So, we often see many corporate managers and teams in pain and struggle, but still lacking the courage to change. Some companies think, "Although it's difficult, we can still get by. Let's wait and see." There is an old saying, "Repair the roof while the sun shines." Companies should best change when times are good. If they miss the opportunity and enter a downward spiral, change will have to become a revolution. Second, the first step of change is hard to take. Many companies' One Inventory transformation either never starts or, once started, takes a long time to achieve results. Why? The entry point of the first step is wrong, and the transformation goals are either unclear or too grand. If the entry point is wrong, it may lead to systematic organizational resistance at the start, resulting in the transformation dying out and the initiator fading away. If the transformation goals are unclear and unspecific, the transformation will lack direction, waver left and right, and end in failure or half-hearted abandonment. If the transformation goals are too grand, although they can mobilize a lot of resources in the short term, overly high expectations and goal settings violate the basic laws of change. As a result, after the excitement, people find the transformation far from success and become discouraged. To date, Anneng Zhilian has served more than 2,000 FMCG companies and supported and implemented the One Inventory strategy for most of them. In Anneng Zhilian's view, the application of One Inventory in FMCG companies is, in a sense, a strategic-level transformation. Therefore, in most cases, it needs to be implemented in stages and cannot be achieved overnight. Anneng Zhilian divides the One Inventory model into three levels, corresponding to the three stages of introducing the One Inventory model. Starting from the first level, which is easiest to implement and yields results most quickly, companies gradually upgrade, step by step, achieving success at each stage, and finally realizing the overall strategic goal of One Inventory for FMCG companies. The first level is called "Physical One Inventory." This means from a physical perspective, merging warehouses that can be merged to achieve physical unification of warehouses. The goals achievable at the first level include savings in warehouse area and optimization of warehouse management teams. Originally, there were 30 warehouses in a region with 30 sets of warehouse management. Now they are merged into one large warehouse, and the savings in rent and personnel are visible and calculable. Generally, direct warehouse consolidation and management consolidation can bring about 25% cost savings for the brand. This part of savings is direct physical cost savings. The second level is called "Inventory One Inventory." Warehouses are merged, costs are saved, but the inventory is still the same. If inventory can be shared, the cost of inventory goods can be greatly reduced, which is another huge benefit. For example, if a region sells 1 million units of beer per month, originally at least 800,000 units of inventory were needed to meet demand. After inventory sharing, all goods in the warehouse can be picked up by all sellers, so now only 250,000 units of inventory turning 4 times may be enough to supply the regional market. This part of savings is financial and capital costs. Don't underestimate the inventory turnover rate indicator. Reducing inventory from 800,000 units to 250,000 units not only occupies less warehouse space and capital, but also, with faster turnover, the freshness of beer products improves. Fresher beer is more popular in the market, and its shelf life is extended by more than half a month. As a result, the return and discount losses of this beer product will be significantly lower than major competitors, saving a considerable amount of real money. The third level is Omnichannel One Inventory. The third stage of Omnichannel One Inventory is also the advanced stage. Channels are hierarchical. In the past, it was difficult to know the behavior of customers' customers. Through Omnichannel One Inventory, all business behaviors are online and digitized. When brand owners have more data, they can use data for more precise analysis, find problems, and find solutions. Future marketing competition will definitely no longer be based on feelings, but on precise guidance based on big data analysis. The difference between traditional marketing competition and future marketing competition is hard to describe in words. We can understand it by comparing the difference between the Cold Weapon Era and the Hot Weapon Era in warfare. We cannot refuse the times, just as we cannot refuse to grow up and age. The only thing we can do is embrace the times. Changes in the times, especially drastic changes, will cause us pain, but we should not refuse pain. Instead, we should proactively change and proactively seek hardship. The transformation of the One Inventory model is, for business operators, proactively seeking hardship. Many FMCG companies, like C&S Paper, Tsingtao Brewery, and Feihe Dairy, have through the One Inventory model transformation, made their organizations lighter and more specialized, growing faster in this uncertain omnichannel era. This rapid growth is the best reward the times give to transformers and the most genuine recognition. Are you "watching" me?