Preface: In August this year, at the "2019 China FMCG Conference" organized by New Distribution, Mr. He Jianfeng, founder of Chengpu Henghe, shared the "Nine Swords of Digital Distribution" for digital distributors, which left a deep impression. What should the future distributor look like? It is definitely not five or six vehicles, a warehouse, the boss managing business, the wife managing finances, a "mom-and-pop" manual operation. Scale, standardization, and process orientation should be the standard for every distributor. This article is based on Mr. He Jianfeng's "Nine Swords of Digital Distribution" as a blueprint to interpret how distributors should manage internal operations and management in the digital era. There is a strange phenomenon: whenever a certain FMCG B2B platform announces a strategic cooperation with a brand, or a platform secures financing, many distributors clamor that distributors cannot be replaced, and platforms can never do product promotion and service work. Well, that makes sense. But how many distributors have calculated how much time their salespeople actually spend on promotion and service in their daily work? Or do they spend 80% of their time on taking orders? Of course, this is not to say that the above work is not valuable, but distributors need to balance: how to maximize the output efficiency of a single store within a certain time for a salesperson. Similarly, consider the efficiency of delivery drivers or the efficiency of the financial settlement process. According to Mr. He Jianfeng, reduce investment in routine work and spend more time on areas that generate more efficiency and business. In the digital era, how should an excellent distributor manage operations? Focus on efficiency and business. Don't constantly think about sales and store expansion; when business is bad, blame sales; when business declines, blame e-commerce impact. Sometimes stop and think: is there an internal problem in the company? Sword One: Procurement Management Generally, the products a trading company distributes are decided by the distributor boss or professional manager, based on the existing product structure or business direction to match suitable products. Product selection tests insight. But after selection, it's not done; it enters a cyclical procurement process where product sales are analyzed in real-time. Look at the gross profit contribution rate of a single SKU to see if it meets expected plans; whether safety stock is within a reasonable range; whether the sales growth rate of a single SKU is a long-term positive growth, or after a promotional policy ends, it maintains for a period and then shows negative growth, and whether it can achieve sustainable natural growth and has cultivation potential. The turnover rate of a single SKU evaluates its usage efficiency, as well as the contribution rate and reconciliation statements with upstream suppliers. The ultimate goal: Use key data indicators to determine whether a single SKU is necessary to continue distributing, what position it holds in the product structure—whether it is traffic-generating, profit-generating, or cultivation-oriented; whether it is high or low compared to the same category or average; and if it still has distribution value, whether there is room for improvement. The core purpose of key procurement data indicators:
1. How much profit does a single SKU contribute, and what is the proportion? 2. Is it necessary to continue distributing this SKU? 3. Where is the next growth point for this SKU? Sword Two: Open Source Visit Selling In fact, many distributors have already adopted digital management tools, but the strategy for their use needs consideration. Often, distributors use system software as a "supervision" tool to check if employees are on duty, late, or slacking off. These do not bring business growth but rather negative incentives. "You are in the open, salespeople are in the dark." Even if they sign in on time and have accurate positioning, can you guarantee they are working seriously? In front-end business, the core purpose of using digital tools is threefold: 1. Transform the daily work of frontline salespeople into quantifiable actions, thereby promoting their work enthusiasm, changing from passive to active work. For example, a salesperson completes a store visit: taking a photo of the storefront plus a selfie earns 0.5 yuan; completing a "standard display of this product" photo earns 1 yuan; new store development earns 2 yuan. By completing quantifiable actions, they earn income. 2. Based on the store's historical order data, determine the core work of this visit: whether to place an order for this product, increase product items, or promote new products? In the past, data was often used by distributors to assess salesperson performance; now, data is more of a tool to help salespeople persuade terminal store owners to place orders. 3. Reduce routine basic work, such as communicating policies, filling orders, new product communication, returns and exchanges, and store information, to tools, while salespeople focus on key persuasion, such as profit forecasts, sales forecasts, and price comparisons. Therefore, the role of tools is to assist salespeople in selling better, not to manage them better. The key is to quantify work through tools, convert quantification into positive incentives, and activate the subjective initiative of frontline employees. Treat tools as multifunctional "calculators" for key matters, reducing routine simple information communication work. Sword Three: Open Source Vehicle Selling 100% visit selling is the ideal state, with sales and delivery separated. But in actual operations, it is unrealistic to fully implement visit selling, especially during new product promotion or distribution to remote townships. How to use digital tools to improve vehicle selling efficiency? In the front-end sales part, it is similar to visit selling, using tools to improve sales and work efficiency. Additionally, another pain point of vehicle selling is: when goods are in the vehicle, they are still counted as inventory. At the end of the day, when returning to the warehouse, how to quickly synchronize data with the warehouse? Also, when settling accounts with the finance department, simple but tedious tasks were previously done manually, consuming a lot of time and generating no incremental value. Through digital tools, transactions, inventory, and products are online, achieving seamless integration, not only saving manpower and time but also reducing error rates. Sword Four: Open Source Ordering Many distributors are intimidated by "ordering platforms": "I only have 100 SKUs, not 3000, how can I do an ordering platform? Also, I tried promoting an ordering platform before, but small store owners were unwilling to install it, and salespeople felt it would replace them, so they were unwilling to promote it." It should be emphasized that the ordering platform here is not a real platform; distributors can view it as an operable display interface. Even if terminal owners are unwilling to install it, it can be shown through the salesperson's phone or via information push. The key purpose is to reduce salespeople's information communication work, allowing terminal owners to see product policies and new product introductions at a glance. Through continuous display and information push, gradually encourage owners to download and install the APP, ultimately achieving self-ordering by terminal owners. Some distributors use digital tools and want owners to use them immediately, even resorting to lowering prices and sacrificing profits to induce stores to order online. Here, it is advised that distributors do not use such "rough" methods. FMCG B2B platforms use low-price subsidies to get small store owners online, aiming to achieve scale effects in the short term and reduce field promotion visits. Distributors themselves have stable business and regular visits; terminal store downloads are just a matter of time, not requiring low prices to force them online. Distributors can add appropriate incentive indicators to gradually guide owners online during visits, but without overdoing it. Sword Five: OMS Order Management Order management includes not only the aggregation of different items in a single order but also the aggregation of orders from different channels, including KA supermarkets, CVS convenience stores, and increasingly various online e-commerce platforms (FMCG B2B platforms, food delivery platforms, local orders from new retail enterprises, etc.). In the future, a distributor's business will not be limited to traditional circulation channels; online and offline integration is the trend. As local service providers, distributors will definitely undertake diverse online orders. At this point, system tools can be used to categorize and aggregate orders. Sword Six: WMS Warehouse Management In the future, in a regional market, the number of distributors will decrease, but their quality will increase. Behind high quality is the distribution of multiple products and items. At this time, how to efficiently manage the warehouse will also become key to whether distributors can improve operational efficiency. In the storage of multiple items, according to the turnover speed of goods, they are divided into high, medium, and low frequency; according to storage requirements, they are divided into low temperature, refrigerated, and ambient; for items such as snacks, daily chemicals, and seasonings, there are also tasks like breaking bulk, picking, and rechecking. How to accurately pick the most goods in the shortest time is the only goal. The key processes to achieve this goal are three: standardization, process orientation, and personnel. Standardization and process orientation concern how to plan warehouse zoning and the process from goods receipt to goods issue, which is the top-level design in warehouse management. Once standards and processes are determined, the key factor is how to motivate warehouse operators. For example, daily settlement, per-piece accounting, or per-picking-amount accounting can effectively enhance the initiative of warehouse staff. Sword Seven: DMS Delivery Management The core of delivery management is, first, matching appropriate vehicle types based on product attributes and regional characteristics; second, selecting corresponding route delivery methods based on order density and delivery radius, such as centralized regional delivery or route-based delivery. There is no good or bad between the two; it depends on order density and delivery radius. DMS delivery management uses data analysis to determine the most time-saving and cost-effective delivery method. Sword Eight: Driver APP Management The core of using an APP for driver positioning and trajectory monitoring is not the monitoring itself, but real-time connection with the finance and warehouse ends for signing, payment collection, rejection, and returns. At the same time, to encourage drivers to deliver more and faster, data support can be used to treat drivers like Didi drivers, as individual business entities, completing the delivery of goods from warehouse to store. Regarding driver and vehicle management, there are currently two mainstream forms: First, fully self-operated, with own vehicles and drivers, managed through KPI assessment; second, drivers with their own vehicles on a contract basis, earning commissions per order, per piece, or per amount, with more work yielding more pay. The advantage of drivers bringing their own vehicles is reduced management and communication costs and effectively lower risk. If vehicles are self-owned, maintenance and fuel consumption cannot be monitored in real-time. Even if monitoring is possible, it adds extra costs without generating value or benefits. If drivers are self-employed, issues like workload saturation, driver management, and social insurance add extra costs to the enterprise. Of course, in the early stages of distribution scale, such as below 50 million in business volume, stable drivers and vehicles can maximize efficiency. But once above 50 million, with relatively stable business, self-owned vehicles and drivers may not be the most efficient or cost-effective. Both vehicles and drivers have many hidden costs in actual operations. Sword Nine: FMS Financial Management All distributors know that finance is of utmost importance. Therefore, distributors often "heavily guard" it. He Jianfeng told New Distribution that distributors with annual sales of 100-200 million often need 7-8 financial staff, but these staff are doing "statistics, summarization, and organization" work. Especially after salespeople or drivers finish visits and deliveries, the work of handing over money, checking goods, and settling accounts with financial staff consumes a lot of time and energy. What should financial staff do? They should focus on budgeting, final accounts, and business analysis, not on making Excel spreadsheets and data. Summary: Returning to the title of this article, why is the bottleneck for 50 million distributors success in marketing, failure in management? Because at 50 million, distributors have basically completed the transformation from a mom-and-pop operation to a formal trading company. Whether in functional departments or business departments, a relatively stable and mature structure has formed, with stable distribution agency and stable terminal customers. But behind stability, there are often hidden crises. Heavy on sales, light on management. In the past, business relied entirely on verbal communication and calculators to analyze business conditions. But at 50 million, to cross into the 100-million-level business, management must be given serious effort. Mr. He Jianfeng repeatedly emphasized: process orientation and standardization. The implementation strategy for process orientation and standardization is to use digital tools to help enterprises establish standards and processes. Finally, it must be emphasized that tools are not the goal. The goal is to use tools to "force" the trading company's operations to be standardized within the system. There may be pain in the middle, but once the pain period passes, higher operational efficiency will inevitably follow. As the saying goes, 'Sharpening the axe will not delay the work of cutting wood.' Distributor bosses, while thinking about business every day, should also remember to look back and see if the 'axe' behind them is sharp!