---
title: "Wang Qi of Weijie City Distribution: Lean Operations for Same-City Logistics, a Fueling Station for FMCG Digitalization"
description: "The market is huge but turbulent, and FMCG distributors feel the pain firsthand. The current supply chain, with its information, capital, and logistics flows, faces challenges from internet platforms entering the trillion-yuan B2B space. To address inefficiencies and service gaps, a lean operations system, supported by intelligent information systems and unified warehousing and distribution, is essential for building a logistics platform that serves the digitalization of FMCG."
author: "王琦"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-10-17"
categories: "Supply Chain & B2B"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/wang-qi-of-weijie-city-distribution-lean-operations-for-same-city-logist-37f71d7e/"
markdown: "https://xinjignxiao.com/en/articles/wang-qi-of-weijie-city-distribution-lean-operations-for-same-city-logist-37f71d7e.md"
original_source: "https://mp.weixin.qq.com/s/OFS8lJ8P6rdf4qoLLlGMJA"
translation: "https://xinjignxiao.com/zh/articles/%E5%94%AF%E6%8D%B7%E5%9F%8E%E9%85%8D%E7%8E%8B%E7%90%A6-%E5%90%8C%E5%9F%8E%E7%89%A9%E6%B5%81%E7%9A%84%E7%B2%BE%E7%9B%8A%E8%BF%90%E8%90%A5%E4%BD%93%E7%B3%BB-%E5%BF%AB%E6%B6%88%E5%93%81%E4%BA%92%E8%81%94%E7%BD%91%E5%8C%96%E7%9A%84%E5%8A%A0%E6%B2%B9%E7%AB%99-37f71d7e.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/wang-qi-of-weijie-city-distribution-lean-operations-for-same-city-logist-37f71d7e/"
citation: "王琦. “Wang Qi of Weijie City Distribution: Lean Operations for Same-City Logistics, a Fueling Station for FMCG Digitalization.” New Distribution, 2016-10-17. https://xinjignxiao.com/en/articles/wang-qi-of-weijie-city-distribution-lean-operations-for-same-city-logist-37f71d7e/"
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---

# Wang Qi of Weijie City Distribution: Lean Operations for Same-City Logistics, a Fueling Station for FMCG Digitalization

> The market is huge but turbulent, and FMCG distributors feel the pain firsthand. The current supply chain, with its information, capital, and logistics flows, faces challenges from internet platforms entering the trillion-yuan B2B space. To address inefficiencies and service gaps, a lean operations system, supported by intelligent information systems and unified warehousing and distribution, is essential for building a logistics platform that serves the digitalization of FMCG.

The market is huge and the industry is in turmoil, and the pain points of FMCG distributors are felt by all. I don't want to rub salt in the wound. The picture I'm showing you is a scenario that is still valid today, concerning the B2B and B2C of the consumer supply chain. It's very complete. In this supply chain system, you can see information flow, capital flow, and logistics. Manufacturers and producers have made many efforts through various channels to ultimately deliver products to consumers. **But this perfect scenario is now facing a challenge: internet platforms are entering this huge market, a trillion-yuan B2B space.** Besides the market size attracting giants, have we considered the problems in the existing system, such as efficiency and service? I only started studying the consumer supply chain after starting my business; I previously worked in industrial supply chains. I took a rough look at the current level of consumer supply chains, and frankly, it lags behind high-end manufacturing by ten years or more.
**Against this backdrop, retail needs transformation, costs need optimization, and services need improvement. All these changes point directly to the arrival of a platform ecosystem.** In a platform ecosystem, there are opportunities for better resource allocation, better process design, better efficiency, and smarter systems, leading to higher productivity. In this context, we must face it and rebuild a logistics platform for the consumer supply chain.
What new concepts or models will the consumer supply chain logistics platform bring compared to before? For example, consumer logistics is a market with many non-standard products. How to productize and standardize services is quite difficult. But it must be done, otherwise it's hard to scale. For instance, in solutions, we aim for platform-based operations, optimizing service experience and efficiency across different locations, categories, and channels. Just as B2C e-commerce has benefited greatly from the development of express delivery over the past decade—without rapid express delivery and excellent delivery experience, B2C e-commerce wouldn't be as good—the reconstruction of the consumer supply chain also requires a logistics system that better fits the digitalization of FMCG.
What are the main characteristics of this system? I believe it's a lean operations system. In the past, logistics development benefited from strong national economic growth and various dividends; you could make money doing anything. Extensive management wasn't a core issue. But today, we must pursue higher efficiency. The main idea of lean management, as the textbook says: **Lean management aims to improve customer satisfaction as the core, reduce costs to the greatest extent, improve efficiency, and reduce input.** The key to lean operations is to have lean thinking. What is lean thinking? It's using the smallest cost input—including human resources, equipment, space, and time—to provide services that satisfy customers, maximizing waste elimination. Waste is common in our daily operations, such as wrong services (delivering the wrong item when a customer wants a bottle of water), over-service, other service failures, resource allocation issues, and problems in efficiency and process design. These all pose great challenges. **Therefore, lean management is the core requirement of the B2B logistics system.**
Let me give you an example to illustrate the application of lean operations thinking in resource allocation and management. This warehouse is in Shanghai, not large, 9,800 square meters, managing 5,765 SKUs, handling 780,000 items daily. I wonder how many of you with warehouse resources and management can achieve this? **This warehouse, in its design and management, heavily adopted EIQ thinking and tools.** Based on product category, order structure, order volume, and order shipment frequency, we designed the warehouse location, functional area planning, optimized process design, and optimized storage locations, picking paths, and flow lines. There are two formulas: the first calculates the optimal warehousing resources for a stable volume; the second helps us track warehouse vacancy and calculate the vacancy coefficient, helping us maximize efficiency and reduce waste.
This diagram is a delivery model. The formula is complex, but in plain terms: given a total delivery order volume, how to deploy the minimum number of vehicles. Then, for each vehicle, we optimize loading and route design to achieve the lowest cost per vehicle. All this is for higher efficiency, especially in FMCG, a tough category with low unit added value. A few days ago, I discussed with Brother Bo why logistics accounts for a high proportion of China's GDP. As a logistics person, I only bear half the blame; the other half goes to our clients and the government. For this category, we must achieve the highest efficiency.
Is it enough to have lean operations thinking in resource, warehouse, and vehicle management? How do we implement it? **I believe only through systems—intelligent information systems are the important carrier, even the core carrier, of lean operations.** Connect the client side (including driver side) with the warehousing and distribution platform system, adding intelligent dispatching and process management modules. Dispatching is very complex, considering time windows, order volume, route conditions, vehicle matching, driver capability, cost, and business familiarity. Manual processing can handle hundreds of orders, but thousands or tens of thousands of orders are impossible without automation. In the system architecture, you can see many functional modules and action executions. Let me turn this diagram into our actual interface. This is a real scene: a dispatching center screen showing order distribution, vehicle status, execution status, punctuality, exceptions, real-time temperature control for low-temperature products, and warehouse scenes. Only through the implementation and use of information systems can we truly improve efficiency. For example, one of Weijie's city companies this year has output 2.5 times last year's, with only 9 people on the operations team (last year 7, this year added 2). This design achieves cost growth far less than revenue growth.
Does having lean operations resource management and a good intelligent system mean we can immediately find the path to revolutionary success? Not necessarily. **Everyone wants to save money and worry, but how to save requires designing different models.** Many guests mentioned this morning, and I can't avoid it either: I believe unified warehousing and co-distribution is the best model. Single-product direct delivery and multi-product co-distribution yield completely different results. Recently, a distributor friend from a county under Anyang, Henan, came to me. The county has a population of over a million. If they integrated more than 30 distributors for unified warehousing and co-distribution, completing the entire solution design, execution, and informatization, and optimizing resources, they could save about 60% of costs. That is, if the cost is 10 million, after optimization it would be only 4 million. Second, regarding warehouse scale and category design, I recently met with General Sheng of Yihai Kerry in Shanghai, and we agreed: order structure and SKU count significantly affect efficiency and cost. We previously cooperated with other platforms, and in the worst case, warehousing and distribution costs accounted for 9% of the product value, which many distributors couldn't bear. But we can now achieve 3.5%. I discussed with General Sheng: if SKUs double, from 6,000 to 8,000, or over 10,000 like Walmart's central warehouse, costs could be controlled at 1.8%. The gap from 9% to 1.8% is huge. A good model helps us find the key to the best fit between efficiency and service.
Time is limited, so let me introduce myself in two minutes. Weijie City Distribution is a very new company, started in 2014. Today, we operate in 23 cities nationwide, with about 608 self-owned vehicles, over 1,700 contracted vehicles, 180,000 square meters of dry storage, and 25,000 square meters of cold storage. What is Weijie's professional value? During the Mid-Autumn Festival this year, Xiamen was hit by Typhoon Meranti, a category 17 storm. The left picture shows the aftermath. Xiamen is a beautiful city, but the typhoon ravaged it. Thanks to our good typhoon prevention measures, compared to some companies in Xiamen that lost tens of millions, we only lost our front and back awnings, and were also affected by SF Express, costing us two rolling doors. No other losses. While others were doing disaster relief, we were shipping. All Weijie customers had no supply interruptions during the typhoon. The entire park lost power, and the diesel generator was small, so we allocated power to the cold storage, which held goods worth tens of millions. Without elevators, our team carried goods from the second and third floors by hand to ensure delivery. This is professional commitment and operational capability. **Everything I've talked about—process design, information systems, unified warehousing and co-distribution—ultimately comes down to the team.**
Finally, I'd like to share a quote: **"Above professionalism, value is priceless; below professionalism, it's worthless."** Times have truly changed; the days of easy money are gone. When I first entered logistics over a decade ago, gross margins could be 50-60%, 150-160%, or even 300%. But the days of huge profits will never return. Like our distributor partners, who suddenly grew their business from hundreds of thousands to hundreds of millions, but suddenly became unprofitable. Our government leaders call this the "new normal." In this new normal, how do we improve efficiency, maintain competitiveness, and achieve industrial upgrading? I think pursuing better professionalism is the only option.
Finally, I'd like to thank everyone. In the top left corner is my WeChat QR code. Feel free to scan it and add me. You are all welcome to visit Weijie and guide our work. Regardless, we believe the future will be exciting, and I hope to work with all friends to create a brilliant future together. Thank you!
-END-
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## Citation metadata

- Publisher: New Distribution
- Author: 王琦
- Published: 2016-10-17
- Canonical: https://xinjignxiao.com/en/articles/wang-qi-of-weijie-city-distribution-lean-operations-for-same-city-logist-37f71d7e/
- Original source: https://mp.weixin.qq.com/s/OFS8lJ8P6rdf4qoLLlGMJA

## Copyright and AI use

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Contact: zhaobo258@gmail.com · +86 158 5481 7671