---
title: "Orders, Reconciliation, Execution, Business Management... On the Necessity of Digital Transformation in the KA Channel"
description: "In recent years, there has been much discussion about digital transformation from various perspectives, including conceptual, managerial, operational, and practical angles. Regardless of the angle, digital transformation is a trend and a topic that is explored through practice, with its meaning constantly evolving. Different enterprises and departments have different understandings of it. Facing digital transformation, enterprises should consider three questions: Why transform? What goals to achieve? How to transform? The first issue to address is the mindset, i.e., clarifying the necessity of transformation."
author: "刘红"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-12-14"
categories: "Distribution & Channels, Management & Methods"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/orders-reconciliation-execution-business-management-on-the-necessity-of-e330be59/"
markdown: "https://xinjignxiao.com/en/articles/orders-reconciliation-execution-business-management-on-the-necessity-of-e330be59.md"
original_source: "https://mp.weixin.qq.com/s/R4FBdv2fVOMbz3gD0foryQ"
translation: "https://xinjignxiao.com/zh/articles/%E8%AE%A2%E5%8D%95-%E5%AF%B9%E8%B4%A6-%E6%89%A7%E8%A1%8C-%E4%B8%9A%E5%8A%A1%E7%AE%A1%E7%90%86-%E8%B0%88ka%E6%B8%A0%E9%81%93%E8%BD%AC%E5%9E%8B%E6%95%B0%E5%AD%97%E5%8C%96%E7%9A%84%E5%BF%85%E8%A6%81%E6%80%A7-e330be59.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/orders-reconciliation-execution-business-management-on-the-necessity-of-e330be59/"
citation: "刘红. “Orders, Reconciliation, Execution, Business Management... On the Necessity of Digital Transformation in the KA Channel.” New Distribution, 2019-12-14. https://xinjignxiao.com/en/articles/orders-reconciliation-execution-business-management-on-the-necessity-of-e330be59/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Orders, Reconciliation, Execution, Business Management... On the Necessity of Digital Transformation in the KA Channel

> In recent years, there has been much discussion about digital transformation from various perspectives, including conceptual, managerial, operational, and practical angles. Regardless of the angle, digital transformation is a trend and a topic that is explored through practice, with its meaning constantly evolving. Different enterprises and departments have different understandings of it. Facing digital transformation, enterprises should consider three questions: Why transform? What goals to achieve? How to transform? The first issue to address is the mindset, i.e., clarifying the necessity of transformation.

In recent years, everyone has been discussing digital transformation from various perspectives, including **conceptual, managerial, operational, and practical angles.** Regardless of the angle, digital transformation is a trend, a topic that is explored through practice, with its meaning constantly enriched and developed. Different enterprises and different departments within an enterprise will have different understandings of digital transformation.
Regardless, when facing digital transformation, enterprises should consider three questions: **Why transform? What goals to achieve? How to transform?** The first issue to solve is the mindset, i.e., clarifying the necessity of transformation.
Here, drawing on over a decade of service experience in the retail industry and through exchanges and services with various brand enterprises, we focus the discussion on the very specific KA channel operations to talk about current problems and how they will be solved in a digital state.
**-01-**
**Current State of KA Channel Operations**
There are generally three modes of operation for the KA channel: **one is multi-branch operation,** where each branch is responsible for a different regional market, i.e., the branch signs contracts with retailers and settles accounts with them. In this mode, the branch also handles daily business such as order processing, delivery, returns, and promotions.
**Another is direct operation by the headquarters,** where the headquarters signs contracts with retailers and settles accounts with them. In this mode, different sales teams (or regional teams) are responsible for different customers (or regional customers), and daily business such as order processing and delivery is handled by the backend supply chain department, while the sales team is mainly responsible for business and front-end store operations.
**The third mode is to delegate operations to distributors,** which is often used by brand owners in combination with the first or second mode.
**-02-**
**Problems in Current Operations**
Regardless of the mode, let's look at several major aspects of daily business, **including order processing, reconciliation, front-end execution, and business management,** and use examples to see what problems exist in current operations that can be solved through digitalization.
**First, order processing**
Retailers generally have their own supplier websites, from which suppliers download orders, convert them into orders recognized by ERP according to various rules, then input them into ERP, and ERP handles the shipment. From the order processing flow, it ends when input into ERP.
The most complex part is the order conversion rules, which differ for each retailer. These rules require order processing staff to have strong mental capacity to minimize errors in order conversion, and careful input into ERP to reduce errors. Therefore, whether centralized or decentralized, from order download to conversion to ERP input, a certain amount of manpower is required. This is still the method used by most brand owners.
**What are the main problems with this method?**
> 1. It requires manpower; the more customers, the more manpower;
>
> 2. Errors are inevitable, after all, it's handled by humans;
>
> 3. Abnormal orders cannot be processed in time;
>
> 4. It cannot reflect the true order fulfillment rate; the brand owner's internal fulfillment rate often differs greatly from the data provided by customers.
**Second, reconciliation processing**
Brand owners' finance departments are always busy, especially at the end and beginning of the month, which has become the norm in the industry. Taking the operation of 50 KA customers as an example, each month all 50 customers need to be reconciled one by one. If operating in a branch mode, each branch has several reconciliation staff; if operating directly from headquarters, the number of reconciliation staff is also considerable.
**What does daily reconciliation involve? Mainly checking payments and operating expenses.** The payment reconciliation method is to determine whether there are errors in the receipt of goods on the KA customer's website. If one order is delivered multiple times, or multiple orders are delivered once, the reconciliation staff must carefully compare using different Excel spreadsheets repeatedly, plus the inconvenience caused by different SKU names and specifications, resulting in a huge workload for reconciliation staff.
Expense reconciliation is even more troublesome. There are many types of store expenses, and each store has different expense types. If there are many product categories, it corresponds to different purchasing teams in the store, and each contract's terms will differ, which adds to the complexity of expense reconciliation.
Another headache is that finance does not understand the actual use of expenses. What is the purpose of each amount on the customer's statement? Only sales knows, so extensive communication with the sales department is necessary! The coping method is: hard work and overtime.
**What are the main problems with this method?**
> 1. Many people, simple tasks, and excessive overtime;
>
> 2. Post-event differences are difficult to handle, frequently forming bad debts;
>
> 3. Accounts are difficult to reconcile clearly, invoicing is delayed, affecting payment collection.
**Execution level**
Still taking the operation of 50 KA customers and 10,000 stores as an example. Assuming each salesperson manages 20 stores, then about 500 frontline salespeople are needed. According to daily business requirements, salespeople must visit stores every month, at least twice a month. What do they do during store visits?
By executing the 7-step store visit procedure, they understand the store's operating situation and hope to achieve the best business for each store. Despite the prescribed store visit tasks, most are perfunctory, done by feeling, and no one knows whether it's done or not, completely relying on the personal experience and responsibility of 500 salespeople.
Later, problems were discovered, so SFA was introduced. In fact, among the many functions of SFA, only taking photos with time and address is useful, indicating that the salesperson arrived at the store on time and that the display, shelf, and floor stack are done as required. Other functions have little value.
For example, when a salesperson checks the shelf and display and finds everything normal, could there be a stockout? Possibly! Suppose a certain SKU is on the shelf, but the in-store inventory is only enough for 2 days, and the brand owner's delivery cycle is 4 days, then isn't there at least a 2-day stockout? Store visits rarely detect such potential problems.
Although it's possible that some salespeople can manage stores well, most cannot. Assuming out of 500 people, 100 have strong experience and responsibility and can score 90 points for their stores, 150 can score 70 points, and 250 can score 50 points, then what is the daily loss in store operations across all stores?
**What are the main problems reflected in this example?**
> 1. Differences in personal experience and responsibility lead to significant differences in store operations;
> 2. Differences in store operations indicate that stores are losing performance every day, meaning stores can still do better.
**Finally, management**
Take daily management reports as an example. Daily business meetings require business reports, which are viewed from different dimensions, such as customer perspective, category perspective, regional perspective, etc. There are many types of reports needed for management. Where do these reports come from? From customer data.
So when a management report is needed, teams responsible for different regions and customers must act, compile statistics separately, and then consolidate. The progress of each region's statistics is inconsistent; some submit within a week, some after two weeks, and by the time consolidation is complete, three weeks have passed. In a rapidly changing retail market, how can such a decision-making speed work? But this is the current situation.
**What does this example illustrate?**
> 1. Decision-making is slow and cannot adapt to market changes;
>
> 2. There are differences in the statistical caliber of each team, and it is not ruled out that false data that cannot be verified in time affects the authenticity of statistics, thereby affecting the correctness of decisions.
**-03-**
**The Necessity of Digital Transformation in the KA Channel**
The above examples from different aspects of KA channel operations illustrate that there is significant room for improvement in current KA channel operations, and this improvement can only be achieved through digitalization. Only digitalization can achieve refinement. In a stock market environment, enterprises compete on refinement.
**We often talk about data online, referring to the timeliness, accuracy, and completeness of data. How can timely, accurate, and complete data solve the problems in the KA channel?** We will discuss this gradually later, hoping to bring value to brand owners.
About the author: Liu Hong, PhD from Shanghai Jiao Tong University, General Manager of Shanghai Amite Data Systems Co., Ltd. Former lecturer at Tongji University, General Manager of Shanghai Fudan Kingstar Computer Co., Ltd. Shanghai Branch. With 13 years of experience in retail industry informatization services, having served many well-known retailers and brand owners, with unique insights, perspectives, and digital innovation thinking on retail business.
Tips: Once the tip is adopted, a reward of 400-2000 yuan will be paid.


---

## Citation metadata

- Publisher: New Distribution
- Author: 刘红
- Published: 2019-12-14
- Canonical: https://xinjignxiao.com/en/articles/orders-reconciliation-execution-business-management-on-the-necessity-of-e330be59/
- Original source: https://mp.weixin.qq.com/s/R4FBdv2fVOMbz3gD0foryQ

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671