---
title: "Poor Warehouse Management Limits Distributor Growth"
description: "As the FMCG distribution industry enters a phase of intense competition, warehouse and distribution efficiency has become a critical factor for success. Warehouse planning, not just management, is key to reducing costs and improving efficiency, as highlighted at the 11th China FMCG Conference."
author: "徐桢"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2026-04-08"
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---

# Poor Warehouse Management Limits Distributor Growth

> As the FMCG distribution industry enters a phase of intense competition, warehouse and distribution efficiency has become a critical factor for success. Warehouse planning, not just management, is key to reducing costs and improving efficiency, as highlighted at the 11th China FMCG Conference.

The distribution and retail industry has entered a stage of stock competition, where the front end competes on sales volume and customers, while the back end increasingly competes on warehouse and distribution efficiency. Warehouses are no longer just a backend link for inventory and shipping, but a crucial factor directly impacting fulfillment capability, staffing, service levels, and profit margins.
Especially against the backdrop of B2B business growth, more fragmented orders, and more piece-picking, more and more companies are discovering that warehouse issues are not simply management problems, but rather planning, structure, and efficiency problems.
On March 18, at the 11th China FMCG Conference and the 6th China FMCG Distribution and Retail Conference, Xu Zhen, founder of Qingdao Jingchu Zhiku Logistics Consulting Co., Ltd., shared insights on scientific warehouse management, the underlying logic of warehouse planning, and how distribution and retail enterprises can achieve cost reduction and efficiency improvement through warehouse system optimization.
The following is an excerpt of his on-site speech (partially abridged), compiled by New Distribution for readers.
## Warehouse Planning Is Not a Relocation Action
## But a Prerequisite for Growth
Many companies truly pay attention to their warehouses not because of proactive upgrades, but because the warehouse has already "reached its limits."
Several common scenarios are very typical: business expansion requires more warehouse capacity; preparing to develop new business but not knowing how to choose and layout a new warehouse; the old warehouse is not moved, but problems of low efficiency, high cost, and chaotic operations have emerged, making adjustments necessary; and another type of company has already reached the stage of building its own warehouse, needing to think through structure, processes, and subsequent operations from the start.
On the surface, these are issues of moving, expanding, building, and adjusting warehouses; but looking deeper, the core is actually only one: can the warehouse still support business growth for a period of time in the future?
This is also the most critical judgment in this sharing: what enterprises truly pursue in warehouse planning is not just putting goods in and shipping orders at the moment, but optimizing the warehouse's **volume utilization rate, efficiency, and cost** over a future period.
This logic is important because many companies still understand the warehouse as a "logistics department" or "support department." But in the distribution and retail system, warehouse and distribution costs often already account for a very significant portion of total costs. If a company calculates its warehouse and distribution-related costs and finds they account for more than 40% of total costs, it can no longer treat the warehouse as an ordinary operational action, but must view it as an important variable in profit margins.
Why say this? Because with the same business scale, the carrying capacity of different warehouses varies greatly. Taking B2B business as an example, with a 6,000 square meter warehouse, some companies can stably support a higher volume; while other companies, to achieve the same business scale, may need 10,000 or even 12,000 square meters.
The gap is not just in warehouse area, but reflects differences in volume utilization rate, layout, processes, and operational organization capabilities. The same applies to piece-picking operations: some warehouses have labor efficiency several times higher than peers, while others, due to chaotic traffic lines, too many obstacles, and unreasonable operational organization, have labor costs forcibly raised to three to four times that of peers.
Therefore, warehouse planning is never a simple "relocation action," nor is it as simple as drawing a floor plan. Essentially, it answers three questions: First, can this warehouse accommodate future growth? Second, can this warehouse achieve labor efficiency? Third, can this warehouse reduce costs while maintaining service levels? True cost reduction and efficiency improvement do not start from cutting investment, but from getting the underlying warehouse structure right.
This is also why many companies seem to have many warehouse problems, but the real root cause is not at the execution level, but in early planning. Among the main factors affecting efficiency, planning has the highest weight, reaching 30%. Because which warehouse to choose, how to layout, what tools to use, and how to set incentive mechanisms are not decided by frontline employees, but are determined by the company at the front end. If a warehouse is already severely ill, even close to paralysis, it is often not because employees are not working hard, but because warehouse planning went wrong first.
## Once a Warehouse Gets "Sick"
## Problems Won't Only Appear on Site
Many bosses judge whether a warehouse is good based on intuition: whether goods can be shipped, whether the site looks chaotic, and whether employees complain a lot. But real warehouse problems are usually not fully visible just by looking at the site. Because once a warehouse enters an imbalanced state, surface symptoms will increase, but the real problems are often hidden in the structure.
The first typical signal is frequent overtime. Many companies treat overtime as the norm in warehouses, thinking that warehouses are busy, orders are many, and goods cannot be shipped, so overtime is normal. In reality, overtime during promotional periods is normal, but if non-promotional periods also rely on long-term overtime to maintain operations, it often indicates that warehouse efficiency has problems.
The second typical signal is chaos inside the warehouse, with no stable order among storage locations, flow directions, and processes.
The third and more dangerous signal is heavy reliance on temporary workers, even changing people every day, calling names, filling in, and covering positions. At this state, the warehouse is basically very fragile; as soon as orders fluctuate a bit, the site will quickly lose control. Further down, management frequently goes to the site to put out fires, no matter how adjustments are made, things don't go smoothly, and costs keep rising.
Why do these phenomena recur? Because warehouse problems are never single-point problems. They are often the result of several links superimposed: warehouse not adapted to business, problematic operation flow directions, unreasonable storage location planning, excessively long picking distances, imbalanced personnel organization, distorted incentive mechanisms, and finally all pressed onto the site. On the surface, it seems like insufficient manpower, but in essence, it may be that the warehouse structure is wrong; on the surface, it seems like low employee efficiency, but in essence, people may be walking in vain; on the surface, it seems like the warehouse manager lacks ability, but in essence, the early layout may have already wasted space.
Use two cases to illustrate the differences brought by planning.
One is Shijiazhuang Dunjie, where the breakthrough was in space planning. The original warehouse had fallen into trouble. The solution was not to continue patching up the old warehouse, but to re-select a warehouse and re-layout. After the warehouse adjustment was completed, business scale began to grow year by year.
Another case is Jiayun Yunshi, where the core was not a single relocation, but doing time planning earlier. In 2023, they moved to a new warehouse ahead of time; in 2024, due to excessive personnel investment, they promoted automation upgrades; and in 2025, they entered the self-built warehouse stage, forming a warehouse rhythm of "do one year, look three years, think five years." What is reflected here is not a single action, but a complete set of warehouse planning capabilities that follow the business rhythm.
Behind these two cases, they are actually illustrating the same thing: warehouses should not be repaired only after problems arise, but should be arranged in advance following business growth. Many companies are very proactive in the front end, doing marketing, customers, and channels, but when it comes to the warehouse, they habitually put it off, thinking they can wait until sales volume increases.
The result is that as soon as sales volume rises, the warehouse becomes chaotic; once the warehouse is chaotic, service and customer experience decline together; once service declines, growth will quickly hit a ceiling. This is especially true for B2B business. Many companies think they can wait until daily sales stabilize at 200,000 or 300,000 before adjusting the warehouse, but when they actually reach that point, they often miss the best adjustment window.
Therefore, to judge whether a warehouse is healthy, one cannot just look at how busy the site is, but must look at more underlying issues: whether it relies on long-term overtime to handle order volume, whether it heavily depends on temporary workers, whether costs are significantly higher than peers, and why adjustments are always slow to take effect or even ineffective. If these problems appear simultaneously, it is not a single-point management problem, but the warehouse system has begun to get "sick."
## Warehouse Planning
## Look at Structure First, Then Equipment
When warehouse planning is actually implemented, the most common mistake many companies make is to skip structural judgment and directly look at equipment. Seeing others adopt high-level racks, electronic labels, and automated equipment, they feel they should too; seeing standard warehouses as tidier and newer, they subconsciously think a "good warehouse" should look like that.
But the order of warehouse planning is exactly the opposite. Look at structure first, then hardware; look at suitability first, then standardization.
From a structural perspective, the warehouse must at least determine what form suits the operation flow direction. The U-shape, L-shape, and I-shape warehouse structures directly affect the inbound and outbound traffic lines and operation processes.
That is to say, it is not enough for the warehouse area to be suitable; if the structure is wrong, any subsequent adjustments will incur extra costs.
Further down are hardware conditions such as height, floor, docks, lighting, fire protection, and insulation. Especially for food warehouses, the floor, hygiene, and working environment are not minor issues; they directly relate to daily management, employee status, and product safety.
Equipment selection follows the same logic.
High-level racks are not the default answer for a "standard warehouse." They are suitable for storage, especially above the second level, essentially a tool to improve storage capacity, not automatically suitable for picking.
If a company's business requires a lot of piece-picking and frequent picking, but it blindly adopts high-level racks, problems such as empty upper levels, low picking efficiency, and long detours for workers will arise.
For 1,000 square meters, if two levels of mezzanine are added, the pallet volume utilization rate is about 0.7; if high-level racks are used, the volume utilization rate can reach 1.43.
But this does not mean all warehouses should use high-level racks, because a high volume utilization rate does not necessarily mean high overall efficiency. Ultimately, one must return to a judgment: is this warehouse mainly for sorting or mainly for storage?
The same applies to traffic line design. A good warehouse does not necessarily have the most advanced equipment, but it will definitely not make employees walk in vain. The speech clearly stated the principles of traffic lines: first, no congestion; second, no backtracking; third, achieve the highest output per unit of walking distance. Why do some piece-picking warehouses have labor efficiency three to four times worse? It is not that employees are not working hard, but that a lot of time is consumed in ineffective movement. The more walking, the more obstacles, the more back-and-forth, the lower the effective output per unit time, and naturally the higher the labor cost.
This is also why real warehouse planning focuses not on "what equipment to use," but on how "goods, people, routes, locations, and processes" match. Equipment is just an amplifier. If the structure is right, it amplifies efficiency; if the structure is wrong, it only amplifies waste.
## True Cost Reduction
## Is Not About Cutting Costs First
The most noteworthy sentence in this sharing that deserves to be written into the conclusion is: **Cost reduction is a result, not a starting point.**
Many companies, when managing warehouses, first think of spending less: can rent be cheaper, can equipment be postponed, can people be reduced, can the site be used as is for now. On the surface, this is cost awareness; but from a warehouse management perspective, if one only focuses on costs from the start, it often messes up all the more critical things ahead.
Management order: safety, 6S, accuracy rate, efficiency, service, cost. This is not a nice slogan, but the order of decision-making in warehouse management.
The reason is that there is a "trade-off" phenomenon in warehouse management:
Solving one problem often brings out another. If costs are reduced, efficiency may drop; if accuracy rate is improved, the operation pace may slow down.
Therefore, true management is not about focusing on a single goal, but making choices in a structural order. First do safety and basic management well, then improve accuracy rate and efficiency, stabilize service, and then costs can naturally come down.
This also explains another common misconception: equating a "standard warehouse" directly with a "good warehouse." Warehouses with good hardware certainly have value, but whether a warehouse is good ultimately depends on volume utilization rate, efficiency, accuracy rate, and cost control, not on whether it is a GLP, a high-standard warehouse, or has more equipment.
In reality, there is no shortage of warehouses with good hardware but poor management. When visiting warehouses, one cannot just look at the surface; one must look at data, accuracy rate, efficiency, and expense-to-sales ratio. Without data support, even a beautiful warehouse may just be superficially tidy.
There are also several judgments that are very practical.
First, the warehouse rental environment has changed, and costs need to be re-evaluated. In November 2025, the new supply of general warehouses nationwide was about 250,000 square meters, a month-on-month decrease of 63.29% and a year-on-year decrease of 65.23%; the national average rent was 23.16 yuan per square meter per month, with a vacancy rate of 16.51%; the average rent in 41 cities was 23.46 yuan per square meter per month, with a vacancy rate of 15.94%. This means the warehousing market is no longer following the price logic of previous years. Many companies, if they have not re-evaluated warehouse rent for several years, are likely bearing unnecessary costs.
Second, do not blindly "self-medicate." When warehouse problems become complex, bosses often go to the site themselves, thinking they can quickly turn things around with experience. Reality is often the opposite. Especially for B2B warehouses, the order structure, picking logic, and operation organization methods are different from traditional trade warehouses. Applying old experience to new business will often result in paying one to two years of tuition.
Third, automation is not a panacea. Automation is certainly a trend, but the premise is to first understand the principles and business structure clearly. Otherwise, equipment is not a cost-reduction tool, but may become a burden. The speech even mentioned that some warehouses, after adopting automation, eventually had to dismantle it. The reason is not complicated: if the underlying logic is not straightened out, automation will only solidify or even amplify the original problems.
Fourth, B2B warehouses cannot be managed with the mindset of traditional trade warehouses. The business model has changed, and the warehouse logic must also change. Front-end orders are more fragmented, more frequent, and fulfillment is faster; if the back-end warehousing system still uses old methods, it will eventually get stuck on the growth path.
Final Thoughts
Warehouse management, in the final analysis, is not simply about managing goods, but about re-straightening the relationships among space, traffic lines, equipment, processes, personnel, and costs.
As the distribution and retail industry enters its current stage, the warehouse is no longer just a backend support system, but an important infrastructure that determines the quality of growth.
If warehouse planning is done early, the company's growth space is larger; if the warehouse structure is done correctly, personnel efficiency and service stability are stronger; if the management order is clear, costs have the possibility of truly decreasing.
Conversely, if the warehouse is always treated as a "later" matter, and when business grows, it is patched up, the result is often either the warehouse dragging down growth, or growth dragging down the warehouse.
True scientific warehouse management is not about "stricter management" or "more equipment," but about whether systematic methods are used to make the warehouse an operational unit that can support long-term business growth. The more basic the warehouse seems, the less it can rely on experience to tough it out; the more one wants to reduce costs, the less one can only focus on costs. If planning, efficiency, and management order are done correctly, cost reduction and efficiency improvement will become results, not slogans.


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## Citation metadata

- Publisher: New Distribution
- Author: 徐桢
- Published: 2026-04-08
- Canonical: https://xinjignxiao.com/en/articles/poor-warehouse-management-limits-distributor-growth-be0a406d/
- Original source: https://mp.weixin.qq.com/s/giembg-YGg5QgF706fsxgg

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