E-commerce is growing wildly, while traditional distributors are falling one after another. The fallen distributors unanimously attribute the cause to e-commerce's savage development stealing their jobs. Is it e-commerce that has taken away the traditional distributors' jobs, or are traditional distributors clinging to outdated models and being eliminated by the market? In 2016, I tracked the annual operations of 400 food and beverage distributor trainees. Their previous year's turnover was all above 10 million yuan, with the highest at 230 million. The tracking results are as follows: 57.42% of distributors saw sales revenue decline compared to the same period last year, 72.6% saw net profit decline, and 78.7% saw operating costs increase. Among them, 5 brand distributors transferred their businesses and exited. From the above data, we can draw the following conclusions:

  1. More distributors experienced declining sales than those with increasing sales.
  2. Some distributors saw sales growth, but profits declined.
  3. Some distributors who were once thriving are now unable to continue.
  4. In the same market environment, some distributors still achieved both sales and profit growth. In the sample, there were two distributors in the same provincial capital city, with similar scale, similar product categories, same number of delivery vehicles, same team size, and team members at the same level of competence. However, in 2016, Mr. Li's company saw increased costs and declining sales, while Mr. Zhang's company achieved simultaneous growth in sales and profit. Why is the gap so large? The performance of a distributor's business depends on three factors: 1. Products. 2. Team. 3. Model. The difference in sales and profit between Mr. Li and Mr. Zhang is mainly reflected in the difference in their models. Mr. Li also took many growth measures: adding two logistics vehicles, adding four marketing staff, purchasing a terminal ordering APP, warehouse management and delivery software, but still failed to reverse the declining sales trend. The fundamental reason: Mr. Li still uses the traditional supply chain model combining vehicle sales and visit sales. With product profit fixed (constant), costs keep increasing, efficiency keeps decreasing, and profitability inevitably continues to decline. The hard-earned money goes to supporting people, vehicles, and warehouses. This is also the pain point of the traditional supply chain model for distributors. Despite getting up earlier, sleeping later, working harder, and being more dedicated, sales and profits decline. Below we conduct a qualitative analysis of the reasons.
  5. Direct costs increase. To boost sales, develop more outlets, and improve efficiency, Mr. Li added 4 marketing staff, 2 drivers, and two Foton delivery vehicles at the beginning of the year. A. Regardless of business results, to maintain team stability, employee wages are raised somewhat each year. Mr. Li's employees received an average annual raise of 5%. B. To retain core employees and due to the popularization of labor laws, even the five insurances and one fund for trading company employees have been put on the agenda. Mr. Li's company handled five insurances for employees this year, which is a significant expense. C. At the manufacturer's request, Mr. Li's company developed two KA systems, advancing 640,000 yuan in entry fees. D. Purchasing vehicles directly increased fixed asset investment by 80,000 yuan. E. After adding people and vehicles, due to poor management, sales did not increase proportionally, and per capita sales actually declined.
  6. Indirect (warehousing and distribution) costs increase A. The booming real estate market drove continuous increases in warehouse rents. B. Mr. Li's company initially achieved order and warehouse-distribution integration, but order taking, warehouse picking, vehicle scheduling, and order flow mainly rely on manual labor, resulting in high labor costs, low logistics efficiency, and errors due to manual operations. C. Vehicle usage costs. Due to lack of advanced technology control, vehicle loading rates are insufficient, and even full-truck shipments are returned full. Secondly, route planning is unscientific; goods that should be delivered in half an hour take an hour due to traffic jams. Also, vehicles in transit lack 360-degree effective control, leading to high overall vehicle usage costs.
  7. Poor coordination across ordering, warehousing, and distribution. The main reason for increased warehousing and distribution costs is that Mr. Li's order, warehouse, and distribution information cannot be shared. Mr. Li also spent heavily on terminal order APPs, warehouse management, and delivery software, but the three systems either have difficulty interfacing or cannot interface at all. The purchased systems became decorations. Due to the lag in promoting the order APP, many terminal stores still place orders by phone. After the order taker receives the order, due to poor system integration and information sharing issues across order taking, warehouse, and delivery, management becomes chaotic: either missed orders, dispatch problems, route planning problems, warehouse picking problems, or multiple vehicles waiting to load simultaneously.
  8. Lack of a standardized "order-warehouse-distribution" integrated solution system and management and operation plan. This is also the main reason why Mr. Li's company's order, warehouse, and distribution information cannot be shared, cannot be connected, and is inefficient. Everything operates in a non-standard state with employees relying on personal experience rather than modern system tools. This traditional approach heavily relies on the personal experience of dispatchers. Whether order splitting is fast, vehicle consolidation is effective, and single-vehicle freight profit is high depends entirely on the dispatcher's skill level. If the dispatcher leaves, the company's management immediately falls into chaos. Even if staff are stable, because orders are taken by phone, paper documents are issued, and Excel is used for archiving, the human brain's capacity is limited. As terminal stores increase, it becomes difficult to achieve optimal allocation of goods and vehicles, leading to management chaos, accounting errors, low vehicle loading rates, high vehicle costs, difficulty in profitability, and low efficiency. Mr. Li's company's dispatch and loading process relies mainly on manual operations, not only heavily dependent on the dispatcher's personal experience but also limited by human brain capacity. The dispatch and loading process is time-consuming and labor-intensive, and it is difficult to achieve the highest matching rate between goods and vehicles. Often, delivery routes are unreasonable, and optimal route planning cannot be achieved in advance.
  9. Poor delivery timeliness. In an era of saturated competition, every category has competing products of the same grade. If your product cannot be delivered on time, it means you leave an opportunity for competitors. In urban distribution services, delivery timeliness is one of the main criteria for evaluating urban distribution distributors, but it is also the most "painful" link. Among the many distributors that have begun to implement warehouse-distribution integration transformation, the delivery link lacks advanced technical tool control. There is great room for efficiency improvement in loading scheduling, route planning, goods picking, order flow handover, loading and departure, and driver management. Poor connection between links, information asymmetry, lack of transparency, and long vehicle waiting times also seriously affect the improvement of overall delivery timeliness.
  10. Low service level. After a terminal store places an order by phone, it cannot know the order progress in real time: which vehicle is delivering, when it will arrive, and where it is currently. After the delivery vehicle leaves the warehouse, the company also does not know the vehicle's real-time location. Terminal stores can only call the company to check progress, and the company then calls the driver to verify information, then the company replies to the customer, resulting in extremely low customer experience. Once goods leave the warehouse, there is no time record for order transport nodes, driver and vehicle positions are difficult to track, and actual delivery routes, timeliness, and actual fuel consumption are a mess. Driver service processes are not standardized, delivery operation efficiency is uncontrollable, and service quality is even harder to manage. Not to mention the embarrassing experience when users inquire about orders and customer service knows nothing because the driver is "out of contact" after leaving the warehouse. In case of abnormal orders, it is even harder to assign responsibility. In the past, stores required large quantities and low frequency, but now they prefer small quantities and high frequency. In the past, one truckload could be distributed to a few stores, but now dozens are needed. This places high demands on distributors' delivery: how to balance efficiency, on-time delivery, and reducing empty driving rates? As distributors bearing the responsibility of the last mile, improving efficiency and service quality is a problem that must be faced. In the same market environment, Mr. Zhang achieved simultaneous profit and sales growth entirely because his company introduced and utilized the cTMS "order-warehouse-distribution" integrated service system. What is cTMS? cTMS is a professional urban distribution management system developed using "SAAS + Robot + APP" technology. The cTMS "order-warehouse-distribution" integrated system uses intelligent coordination robots to achieve data sharing and overall planning, helping B2B platforms achieve seamless connection of ordering, warehousing, and delivery, promoting efficiency improvement and cost reduction across the entire chain, thereby realizing true order-warehouse-distribution integrated services. •What functions does cTMS have? 1. Intelligent Loading
  11. The cTMS order, warehouse, and distribution integrated system's intelligent loading function achieves seamless connection and data exchange with the ordering system. Batch import of thousands of orders can complete scientific loading of orders and vehicles in 10 seconds, with all vehicle loading rates above 95%.
  12. The system plans the shortest driving route and optimal unloading order for each vehicle, achieving efficient delivery.
  13. According to actual business needs, fixed drivers can be set by area, and orders in that area are automatically matched, achieving block scheduling. 2. Order, Warehouse, and Distribution Coordination The cTMS order-warehouse-distribution integrated system achieves dynamic synchronization and comprehensive coordination of order data information across multiple systems such as OMS/ERP-WMS-TMS. Warehouses pick goods according to delivery routes, distribution allocates vehicles based on inventory, and vehicles are scheduled according to dispatch wave plans, achieving seamless coordination between warehouse and distribution, precise vehicle-goods matching, and efficient operation. 3. Full Visibility
  14. Through the cTMS order-warehouse-distribution integrated system, every shipment from warehouse to signature is fully visible and controllable online, greatly improving the receiving experience and reducing customer complaint rates.
  15. Real-time tracking during transportation is achieved, with vehicle location, cargo status, and transport status information available online in real time, queryable, and traceable.
  16. It helps carriers track real-time information on delivery time nodes for each order, including when orders are received, loaded, and signed for. Value brought by the cTMS order-warehouse-distribution integrated system 1. Comprehensively Reduce Warehouse and Distribution Costs
  1. By implementing intelligent loading in the delivery link, loading rates above 95% are achieved, greatly reducing vehicle space waste and lowering vehicle usage costs.
  2. The system achieves comprehensive coordination of the entire "order-warehouse-distribution" supply chain, optimizing and improving the connection and operation efficiency of ordering, warehousing, and delivery links, thereby reducing management costs for system connection.
  3. By using artificial intelligence to fully replace manual operations, the solution greatly reduces labor costs in dispatch and other links, easing the burden of employment for enterprises. 2. Greatly Improve Delivery Timeliness
  4. Through functions such as intelligent order splitting and one-click loading, the system can complete efficient and intensive scheduling of tens of thousands of orders in 10 seconds, greatly improving the efficiency of the dispatch link.
  5. The system achieves dynamic real-time updates of warehouse and distribution order data. Warehouses pick goods according to delivery routes, and vehicles are precisely matched with waves, reducing vehicle waiting time in the warehouse, achieving orderly and fast entry and exit of vehicles in the warehouse area, and improving goods outbound efficiency.
  6. Through intelligent routing functions, the system plans the optimal driving route and unloading order for each vehicle, shortening invalid driving routes; at the same time, through functions such as order aggregation and block scheduling, the system greatly improves vehicle delivery efficiency. 3. Improve Logistics Service Quality
  7. The system achieves real-time online information for every order from placement to warehousing, outbound, loading, until user signature and receipt return, and through SAAS+APP, achieves full visibility and real-time monitoring of all processes of goods ordering, warehousing, and delivery, effectively improving the refinement, controllability, and safety of goods ordering, warehousing, and delivery management and services.
  8. Through real-time online and queryable information on goods ordering, warehousing, and delivery, upstream and downstream users can query goods purchase orders, warehouse management, and order delivery information through multiple methods, greatly improving customer service experience, reducing user complaint rates, and achieving a great improvement in enterprise logistics service quality.
  9. Through a driver evaluation system, users can rate and score each driver's service quality, effectively controlling terminal service quality and improving driver service levels. 4. Key Data
  1. Intelligent loading can complete loading of tens of thousands of orders and vehicles in 10 seconds, with vehicle loading rates above 95%.
  2. Time and labor costs for dispatch and loading are reduced by more than 50%.
  3. After intelligent route planning, total delivery mileage is reduced by 20%.
  4. Average waiting time for delivery drivers decreases by 30%.
  5. Time required for order flow and management labor costs are reduced by about 30%.
  6. Order flow error rate decreases by 99.999%.
  7. Upstream and downstream settlement time is shortened to a few seconds. With the same product categories and the same team capabilities, the performance gap is mainly due to different models. The model is determined by management tools. The iteration level of tools determines the advancement of management, and the advancement of management determines performance. Consumers are already using mobile phones, but you are still using pagers. No matter how hard you try, you won't get the results you want. Others are using guns, but you are still wielding a big knife. Even if it is a treasured sword that can cut iron like mud, it is still vulnerable in front of a gun. Others are driving cars, but you are still riding a bicycle. No matter how hard you pedal, you can't catch up with a car. For FMCG distributors, your future depends on what management tools and systems you use! -END-