---
title: "The Relationship Between Order and Warehouse-Distribution Integration in Third-Party Unified Warehouse and Distribution Models for FMCG"
description: "The unified warehouse and distribution market is huge, with the national urban distribution scale reaching about one trillion yuan in 2016, two to three times that of the express delivery industry in the same period, yet its concentration and intensification are extremely low. In the FMCG circulation field, unified warehouse and distribution has been a hot topic, with various forces attempting or focusing on this business model. Logically, it is an intensive economy that separates business operations from warehouse and distribution delivery, achieving socialized professional division of labor as infrastructure for commercial development."
author: "廖磊"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-06-26"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/n8iq0rnfW2ijNZZPGQdhAA"
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# The Relationship Between Order and Warehouse-Distribution Integration in Third-Party Unified Warehouse and Distribution Models for FMCG

> The unified warehouse and distribution market is huge, with the national urban distribution scale reaching about one trillion yuan in 2016, two to three times that of the express delivery industry in the same period, yet its concentration and intensification are extremely low. In the FMCG circulation field, unified warehouse and distribution has been a hot topic, with various forces attempting or focusing on this business model. Logically, it is an intensive economy that separates business operations from warehouse and distribution delivery, achieving socialized professional division of labor as infrastructure for commercial development.

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"The unified warehouse and distribution market is huge. According to 2016 data, the national urban distribution scale is about one trillion yuan, two to three times that of the express delivery industry in the same period, but relative to such a large market, the concentration and intensification of unified warehouse and distribution are extremely low."
In the FMCG circulation field, unified warehouse and distribution has been a hot topic in recent years. Various forces are trying or paying attention to this business model. Logically, unified warehouse and distribution is an intensive economy that separates business operations from warehouse and distribution delivery, achieving socialized professional division of labor, serving as the underlying infrastructure for commercial development.
Unified warehouse and distribution is an inevitable requirement of channel reform.
In the planned economy era, the state implemented a unified purchase and marketing system with supply and marketing cooperatives as the main body, which was in fact unified warehouse and distribution. In the era of commodity shortage, the rationing system effectively solved people's basic living needs. After entering the market economy, commodities became greatly abundant, single channels were broken, forming multi-level channels that interweave and cross. The distribution system combining commercial flow and logistics became the main form of commodity circulation. This high-consumption and concentrated distribution system provided a fast track for brand owners' products to enter the market, but with intensified market competition, brand owners' channel promotion and maintenance costs are increasing, while channel-level profits are decreasing. Thus, the unified warehouse and distribution model has attracted widespread attention.
Six elements of unified warehouse and distribution operations.
Unified warehouse and distribution collects goods from many brand owners or distributors for centralized storage and intensive distribution. The reason this model can save costs and improve efficiency is based on the comprehensive effect of six aspects: commodity category distribution, high-frequency and low-frequency combination, order quantity, distribution network density, business management process, and system technology. If these six are unbalanced, warehouse and distribution cannot achieve the ideal state, and cost reduction and efficiency improvement are empty words. This is a major operational issue for unified warehouse and distribution.
Commodity category distribution, high-low frequency combination, business management process, and system technology belong to the operational level, which can be adjusted by the unified warehouse and distribution operator. Order quantity and distribution network density belong to the commercial flow level, which are uncontrollable externally. External uncontrollability directly affects internal costs and efficiency. How to coordinate internal and external factors to control warehouse and distribution costs within 2% is a major issue for unified warehouse and distribution operations.
Balance among the six elements of operations.
The separation of commercial flow and logistics is the theoretical basis of unified warehouse and distribution and the necessity of socialized division of labor, but viewing them in isolation is a misunderstanding. The essence of business is transaction. Transactions generate changes in commodity ownership, thus forming logistics. The front-end commercial flow and the back-end logistics are mutually causal. Without commercial flow, there is no logistics; without logistics delivery capability, commercial flow is stagnant. Therefore, the unified warehouse and distribution operator should regulate or intervene from the following six aspects:
**1. Unified warehouse and distribution must provide safety guarantees to cargo owners (brand owners or distributors), forming a relatively stable and scaled full-category supply chain;**
**2. Conduct warehouse and distribution investment promotion in a planned manner, fully considering factors such as high-low frequency matching, standard and non-standard products, distribution network distribution, and the simplicity and complexity of order delivery scenarios;**
**3. Form strong relationships with terminal retail stores through distribution and service;**
**4. Implement channel reform to eliminate secondary wholesalers, using warehouse and distribution fee leverage to guide suppliers (brand owners or distributors) to sink channels, increase distribution network density, and increase order quantity;**
**5. Open platform warehouse and distribution network points to suppliers, increase coverage of second- and third-tier products, and enrich order volume;**
**6. Introduce B2B platforms or independent controlled companies for self-operation to further balance the six elements.**
The focus of unified warehouse and distribution is on orders. If order sources are uncontrollable, distribution is uneven, and frequency is inconsistent, warehouse and distribution integration operations will always be in an irregular state. No matter how perfect the process, advanced the technology, or refined the operation management, it is difficult to achieve efficient operations. This is one of the fundamental reasons why unified warehouse and distribution is difficult. Therefore, to achieve ideal warehouse and distribution efficiency, effectively control warehouse and distribution costs, and reduce operational risks, it is necessary to have scale in orders, density in distribution network points, complete commodity categories, and reasonable matching of high- and low-frequency products. This requires the planning, coordination, organization, and communication of warehouse and distribution operations to maintain high coordination with brand owners or distributors, and when necessary, intervene in commercial flow to solve the stability and balance of order sources, promoting the healthy development of third-party unified warehouse and distribution itself.
From August 22 to 24, the "2018 China Digital Innovation Conference (2018FDIC)" with the theme "Finding New Growth Engines" will be held in Shanghai, hosted by the China FMCG Industry Association and organized by New Distribution.
The conference will last three days, focusing on two main themes: marketing and supply chain, with six parallel forums: brand, channel, communication, B2B, city logistics, and innovative retail. We will invite industry experts, CEOs, and brand executives to deeply interpret the trends and drivers of digital transformation in the FMCG industry.
We will invite more than 500 executives from FMCG companies, 200+ CEOs from B2B industries, and 1000+ major FMCG industry merchants to gather together to discuss how the FMCG industry can use digital tools to achieve rapid growth again in the digital era. This conference will build a bridge for brand owners, distributors, retail enterprises, and marketing agencies, helping FMCG manufacturers obtain the latest information, understand best practices, and master more transformation practical skills.
Proposed invited companies
Conference time
August 22-24, 2018
Conference location
Shanghai Baohua Marriott Hotel
Conference content
August 22: Full-day check-in
Afternoon 14:00-17:30
Distributor city logistics parallel forum
Evening 18:30-21:00
New Distribution Night celebrity dinner
August 23: Theme: Marketing digital innovation
Morning 9:00-12:00
Marketing digital innovation main forum
Afternoon 14:00-17:30
Brand, channel, communication parallel forums
August 24: Theme: FMCG supply chain digital upgrade
All day: FMCG supply chain conference
Registration method
Registration channel is now open. Long press the QR code below or click 'Read Original' to register. Only 50 early bird tickets remain at half price, while supplies last!
Registration consultation
Ticket inquiry:
Media cooperation inquiry:
Highlights of New Distribution's previous conferences
Click the links below to review the highlights of the first, second, third, and fourth FMCG + Internet conferences:
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