Click the image for details. Market competition is intensifying, and the entire FMCG industry has entered a true era of thin profits. However, downstream costs such as distribution, labor, and warehousing are increasing at a rate far exceeding official GDP growth. Upstream manufacturers are becoming increasingly tough and demanding, while downstream hypermarkets impose endless fees. If this trend continues, bankruptcy may be "just around the corner." Market capacity is declining, operating costs are rising, and manufacturers, in their quest to stay competitive, are leaving us with increasingly "reasonable" margins. Under the combined influence of internal and external factors, distributors seem to be cornered, and many once-thriving distributors are starting to wind down or switch industries. But in the current market economy, are there still untouched opportunities waiting for you? Entering a new industry requires even more effort. So the best choice is to stay in a familiar industry, find good methods, and adapt to the current competitive environment. To make money, you must first control costs. To control costs, you must truly analyze where your costs lie and what your major expenses are. After consulting several distributors, the three major burdens weighing on distributors are: inventory, wages, and fuel costs.

  1. How to cut inventory? A market with monthly sales of 500,000 yuan typically maintains inventory of around 250,000 yuan. This means you have 250,000 yuan tied up in the warehouse every day, generating no value. If you could reduce inventory to 100,000 yuan, you would free up 150,000 yuan in working capital for investment. But how can you control inventory reasonably without affecting normal sales? First, we need to understand what is a reasonable inventory level. Some clients say to keep it within 40%, and never exceed 60%. These are empirical judgments, but experts tell us: Safety stock = (daily maximum sales - daily minimum sales) × order cycle. For a market with monthly sales of 600,000 yuan, if your maximum daily sales are 40,000 yuan and minimum are 15,000 yuan, your inventory should be (40,000 - 15,000) × 3-day order cycle = 75,000 yuan. If you don't believe this and worry about stockouts, I can responsibly tell you that our company basically achieves this. If we followed your empirical approach, with sales of 60 million yuan, we would keep inventory at 30 million yuan, but in reality, our maximum inventory is only 6 million yuan. How do we do it? It's simple: we arrange production based on your orders, and the products produced are already sold. But how can distributors achieve this? You need to forecast your sales needs for the next three days. To do this, you must fully understand the sales situation of your customers, establish channel sales tracking, and use that to forecast sales for the next three days—i.e., online management. If you can't do this, your inventory won't come down, and if it does, you'll face stockouts.
  2. How to control fuel costs? Many distributor bosses manage fuel costs by comparing sales or other vehicles, without specific evaluation metrics. For example, Vehicle A has sales of 7,000 yuan and fuel costs of 110 yuan; Vehicle B has sales of 4,000 yuan and fuel costs of 40 yuan. Which vehicle performs better? Some say A, some say B. Neither is reasonable because without standards, you can't evaluate value creation. After consulting many distributor friends, a typical vehicle serving townships spends 60-80 yuan on fuel per day, with sales between 4,500 and 7,000 yuan, visiting 30 customers and closing 12-15 deals, a close rate of about 50%. How to control fuel costs? It's simple: don't visit customers who don't want goods. This saves time and avoids fuel waste from stopping and starting. How to make effective visits? It's also simple: divide areas, build routes, and classify outlets. Some stores are visited every three days, some every six days, some every half month... Vehicles should strictly follow routes and visit according to outlet classification, spending limited time on the most valuable customers. If some townships are truly remote, with a vehicle spending over 3 hours on the road (round trip), how can you operate effectively? It's simple: find a special agent in that township to handle operations.
  3. How to optimize personnel and resource allocation? Many distributors allocate resources based on past experience rather than the current number or type of channel outlets. Since many distributors lack even basic channel data, how can they manage channels? If you don't know your channel status, how can you know how many people to assign and what compensation to offer? Some routes may have over 90% distribution coverage and need maintenance; you can assign a worker at 2,000 yuan to handle restocking. Other routes have many blank outlets and need salespeople with strong development skills, possibly requiring 5,000 yuan to hire more capable sales staff. Some routes have many special outlets, so you need people with strong negotiation skills... Your vehicle allocation should also be based on the number of outlets and sales forecasts, avoiding situations where some customers get on board but don't generate sales, and vehicles sit idle half the time. If you divide areas, build routes, and classify outlets, you can standardize visits and reduce fuel costs. If you implement online management, you can minimize inventory and cut inventory costs. Only by truly understanding your channel status can you reasonably allocate vehicles and personnel, and control or eliminate unnecessary waste and blind resource increases. Only with complete outlet data can you make targeted responses in distribution coverage, product mix, and flavor management, thereby increasing sales and profits. Money is earned, not saved—that was true in the early market economy. As times evolve, you not only need to know how to earn money but also need to improve your process management to cut unnecessary cost waste and increase overall profits. If you want to cut costs and increase profits, you must abandon traditional habits based on intuition or memory and adopt the modern marketing systems already used by Coca-Cola, Pepsi, and even Master Kong: inventorying outlets, classifying outlets, online management, and standardized visits. Distributor friends, are you ready to standardize visits, cut costs, and increase profits to welcome the spring of profitability? If you believe the above points, your profits have already started to increase. Source: Distributor's Home -END-