Once you enter the deep sea of 2B warehouse and distribution, who knows the truth? First, let me recommend a song: Wakin Chau's "Dream of Swords and Sabers" My sword, where to go; love and hate, hard to be loyal. My blade, cuts through the sky; right and wrong, I don't understand. I'm drunk, all hazy; gratitude and grudges, illusions and emptiness. I wake, a spring dream; life and death, all empty. ...... I cry, tears in my heart; sorrow and joy, heaven's tricks. I laugh, I'm wild and crazy; heaven and earth, winds and clouds surge. I'm drunk, all hazy; gratitude and grudges, illusions and emptiness. I wake, a spring dream; life and death, all empty. ...... Follow the melody, don't laugh. All you warehouse and distribution practitioners, aren't you feeling the same frustration as the lyrics? How should warehouse and distribution be done to create value? Today, we analyze the "fulfillment value chain" of warehouse and distribution from multiple perspectives, trying to sort out a different way of thinking. Please read the following with questions in mind: What is true fulfillment capability and what is fake fulfillment capability? Fulfillment Value 1: For distributors, it's time to outsource warehousing to third parties! One day, a regional distributor in the Northwest, after two to three years of continuously "changing circles"—visiting excellent enterprises, attending various training classes, participating in distributor private boards—decided to upgrade their business management model. Drawing on "fission entrepreneurship" and Kazuo Inamori's "Amoeba model," they established a partner-driven transformation model for regional big distributors. Simply put, they re-divided the business team, developing business supervisors and company executives as partners, while sharing the company's backend departments—finance, office, HR, warehousing, and distribution. He made an important decision: to hand over his warehousing and distribution to another company, Weijie City Distribution. Why? Because after visiting Xi'an Weijie, he found that outsourcing warehouse and distribution is not just about transferring risk and reducing costs—that would be too narrow. Xi'an Weijie's unified warehousing and distribution is committed to becoming the best infrastructure for the consumer supply chain, providing a complete set of solutions that make him worry-free, at ease, and confident. While the company can focus its efforts on the front end to conquer markets, Xi'an Weijie fully supports the logistics! It's more worry-free and labor-saving than doing it in-house, and it facilitates precise data accounting among partners! Remember, the premise of a partner mechanism is transparency to avoid misunderstandings, and trust must be built on every small matter. Moreover, even with our own people, we couldn't do it well; every year it was an unclear account. Turning the company into a front, middle, and back office operation model, using "socialized warehouse and distribution service outsourcing" best solves the problem. He calculated the difference between doing it himself and outsourcing to a third party:
| No. | Pain Points for Brand Owners and Distributors | How Weijie Solves Them |
|---|---|---|
| 1 | Product date management issues leading to expiration and loss, exceeding allowable limits | From receiving to outbound, system control with three-code integration (product barcode, pallet code, and location code) to ensure FEFO |
| 2 | Chaotic returns management, high loss | 24-hour returns management system, timeliness; PDA scanning for date and batch verification upon receipt |
| 3 | Low warehouse utilization, low efficiency | Double-deep racking warehouse, volume ratio 1:1.2, 50% higher than industry standard |
| 4 | Manufacturer requires labeling and coding to prevent channel diversion | Dedicated personnel for printing special codes |
| 5 | Low delivery efficiency, high capital occupation, slow inventory turnover | Sufficient transport capacity, 24-hour operations, delivery efficiency T+1, T+0.5 |
| 6 | Delivery efficiency affects ability to expand business | |
| 7 | Low delivery efficiency, poor downstream customer experience, distrust, risk of losing customers | |
| 8 | Short delivery radius, low efficiency, unable to increase business volume | |
| 9 | Delivery process cannot be monitored, downstream customers cannot track arrival time | Weijie Tianyan system, process visualization; PC and mobile monitoring, and can provide tracking for customers' customers |
| 10 | Operational data cannot be collected, hindering resource allocation decisions | Weijie Tianqiong system, operational data, providing daily and weekly reports, especially historical order data from downstream customers, to support resource and personnel decisions |
| 11 | Warehouse and distribution conditions not up to standard, unable to cooperate with major brands and international hypermarkets (e.g., Xi'an 7-11, Yili requires standard warehouse conditions) | Professional city distribution company, first-class warehouse conditions |
| Not only he calculated, but another first-tier dairy distributor also compared before and after: | ||
| Category | Before Cooperation | After Cooperation |
| ---------- | -------------------- | ------------------- |
| Business Volume | 6 million/year | 18 million/year |
| Distribution Customers | 2 DCs (Gudu, Meiyitian) | 5 DCs (Gudu Fangxin Breakfast, Meiyitian, Lingshoutong, 7-11, Zebra) |
| Distribution Stores | 200 Suning stores, 300+ convenience stores | |
| Delivery Efficiency | T+3 | T+1 |
| Inventory Value | 350,000 | 400,000 |
| Inventory Turnover Days | ~15 days | ~9 days |
| Loss Amount | 3-5k/month | Basically zero loss |
| Inventory turnover improved by 6 days, loss zero, business volume tripled! | ||
| So, choosing a good partner, outsourcing the non-value-added labor-intensive, hard, dirty, and unprofessional parts to a better external partner, and focusing on market promotion and distribution network building, is a strategy for distributors to innovate their business model. | ||
| Does this principle only apply to FMCG distributors? | ||
| Of course not. Fruit, fresh produce, frozen food, catering, clothing, mobile phones, etc., have long been doing regional one-warehouse plans and unified warehousing and distribution. | ||
| For example, OPPO's distributors merged 38 distributor warehouses into unified warehousing and distribution, improving efficiency by 43%. (The author has also written about this.) | ||
| Fulfillment Value 2: For distributors wanting to transform into third-party city distribution, why should you be able to? | ||
| Above, we discussed from the perspective of distributors outsourcing warehousing. Now let's switch perspectives: How should a distributor start their own third-party city distribution business? The author tells a story of twists and turns, rediscovering the value of warehouse and distribution. | ||
| For example, Wang Tian and Liu Wen, partners of Weijie City Distribution Xi'an Branch, are actually professional retail industry practitioners. They understand retail and distributors but not city distribution. They previously served as executives at a large domestic retail enterprise. The author listened to him in his office over tea: | ||
| Discovering the opportunity: I've been in the chain retail industry for over 10 years, all as a professional manager in chain hypermarkets. You know, chain hypermarket retail is getting harder. It's tough, but I've dealt with many distributors, and years of retail experience made us more aware of the pain points of brand owners and distributors: shrinking sales, rising costs. I suddenly thought, is this a good entrepreneurial opportunity? | ||
| Starting immediately: Also, because we're in Xi'an, a core frontier city of the "Belt and Road," we can enjoy the dividends of hub economy, gateway economy, and flow economy. So I thought of starting a business in logistics to solve customers' backend pain points. On June 2, 2016, we rented a warehouse of over 2,000 square meters, leased 10 new energy vehicles, hired a warehouse manager, and a few employees, and started. With little experience and being new to the industry, despite having many customer resources, most were hesitant. It took nearly a year to fill the warehouse. | ||
| Problems arise: By June 2018, although the company was on track, we hit a bottleneck in scale development. We fumbled around for a long time, getting confused. After all, we weren't professional, though we understood distributors well. We couldn't break through. No IT system, the team couldn't quote different customers, internal operations were unclear... a host of problems. We entered with joy and imagination, but found it wasn't making money. So many pitfalls! I was overwhelmed and almost gave up. What to do? We talked to many city distribution service companies, hoping to find ideas and solutions. Unfortunately, some partners didn't work out after trial. The main reason was differing views on "customer first." We came from big companies, didn't want to be opportunists or speculators in city distribution. We didn't just want to serve our own distribution business; we wanted to be a pure third-party 2B city distribution service company. That's our original intention and persistence. | ||
| A coincidence: By chance, we got to know Weijie. They provided great help and guidance to Xi'an company in network-wide large customer operations management, IT construction, and large customer resources. From July 1, 2018, to May this year, in less than a year, we went from less than 300,000 in monthly revenue to over 2 million. We now have over 3,000 square meters of high-bay racking warehouse, over 1,000 cooperative vehicles, dispatch over 200 vehicles daily, and over 30 staff. We mainly serve Xi'an urban area and surrounding counties like Xianyang, Gaoling, Yanliang. Customers are mainly FMCG, catering, and pharmaceutical brand owners and distributors. | ||
| Great results: Since February this year, distributors from Shijiazhuang (Hebei), Guangyuan (Sichuan), Lanzhou (Gansu), Hohhot (Inner Mongolia), etc., have visited Xi'an Weijie. They affirmed our development over the past year and strengthened their belief in cooperating with Weijie. So far, cooperation has been established in Hebei and Hohhot. In May, we cooperated with Xi'an local B2B platform Jiapin Yunshi on delivery systems, supporting an annual business volume of over 300 million and improving operational efficiency. | ||
| Sometimes, choosing a reliable, professional partner is hard, but when you choose right, it's a happy thing. | ||
| Future outlook: Data shows Europe uses third-party logistics services at about 20%, the US about 40%. What about China's third-party warehousing and logistics? Currently only about 3%! So, there's huge opportunity for professional third-party city distribution companies. Also, full-chain inventory management capability is a topic to keep studying. Besides, cooperating with a company with entrepreneurial spirit like Brother Qi is important to me. Unlike other companies, Brother Qi emphasizes organizational capability, operational standards, SOPs, processes, IT, training, job responsibilities, and compensation systems. He teaches us hand by hand, not just giving a system or shares. It's truly an empowerment mindset, not a one-off cooperation. I admire that and feel reassured. | ||
| Most importantly, we're profitable! | ||
| Fulfillment Value 3: Empowering customers, customized city distribution solutions must be a trinity. | ||
| There's a term, "old gun," known from Feng Xiaogang's movies. | ||
| Actually, startups in industrial internet must also be composed of a group of old guns. | ||
| For example, Weijie City Distribution's founding team, its operations and management team, have been in the third-party city distribution service industry for over a decade. | ||
| As the saying goes, only with immersion can you have control. | ||
| With immersion, you can replicate and spread the industry's best algorithms and operational experience. | ||
| Let me give three core algorithms: | ||
| 1. Resource allocation and management: Weijie ensures warehouse volume ratio above 1.0 through warehouse planning, reasonable rack and flow line design, making the cost of using high-standard warehouses the same as ordinary or even farmer warehouses. This improves warehouse operational efficiency, increases labor efficiency and vehicle turnover. Through training and management of social drivers, we improve driver service awareness and customer fulfillment experience. | ||
| 2. Process design and optimization: Through process design for different projects from inbound, putaway, in-warehouse management, to replenishment, picking, transfer, and outbound, we improve warehouse staff efficiency, increase dock throughput, and improve vehicle turnover. | ||
| 3. System development and iteration: Whether resource allocation or process design, it needs to be solidified in a system and analyzed for improvement. So, system development and iteration capability is Weijie's core weapon. | ||
| The three core algorithms combine to form an integrated "warehouse and distribution service and fulfillment capability." | ||
| Without deep industry understanding from over a decade of work, without segmenting, deconstructing, and iterating solutions for multiple application scenarios, such empowerment and fulfillment cannot be provided. | ||
| Of course, how these three algorithms came about, and how they manifest in operations, IT, multiple account roles, and business scenarios, we'll share in the next article. | ||
| In short, Rome wasn't built in a day. Warehouse and distribution services must be seen in the context of industrial internet to discover value, present value, and fulfill value. Essentially, it's a supply chain revolution. Different understandings of revolution, like Chairman Mao and Chiang Kai-shek, lead to completely different paths and outcomes. | ||
| In summary, warehouse and distribution services are an innovation in social collaboration under the background of industrial internet. | ||
| Innovative business models will inevitably adopt extensive socialized collaboration, crowdsourcing, outsourcing, subcontracting, etc. | ||
| From 3G, 4G to 5G, changes in infrastructure will bring new innovative business model changes. | ||
| And innovative business models must consider how we empower partners with more. | ||
| Think about how to empower our own customers. For example, in the above cases, third-party city distribution companies empower distributors, distributors empower partners by purchasing professional services, and city distribution solution companies empower partners, thus building a complete system where each can "fulfill" each other. If one link fails, the whole chain breaks. | ||
| The truth of gold mining in warehouse and distribution might be here! | ||
| Tips will be paid 400-2000 yuan if adopted. | ||
| China FMCG + Internet Professional New Media | ||
| Dedicated to FMCG manufacturer transformation and channel digital solutions |