--- title: "Wang Qi of Weijie City Distribution: You Can Wring Water from a Dry Towel—The Way to Reduce Costs and Increase Efficiency in FMCG Distribution" description: "At the 'New Forces, New Ecosystem 2017 (3rd) FMCG + Internet Conference' held in Chongqing on November 9, Wang Qi, CEO of Weijie City Distribution, delivered a keynote speech titled 'You Can Wring Water from a Dry Towel—The Way to Reduce Costs and Increase Efficiency in FMCG Distribution'. The following is a transcript of his speech." author: "New Distribution" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2017-11-11" language: "en" canonical: "https://xinjignxiao.com/en/articles/wang-qi-of-weijie-city-distribution-you-can-wring-water-from-a-dry-towel-e52f021c/" markdown: "https://xinjignxiao.com/en/articles/wang-qi-of-weijie-city-distribution-you-can-wring-water-from-a-dry-towel-e52f021c.md" original_source: "https://mp.weixin.qq.com/s/unrdE61RGznQPEK4tOVXVQ" 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%B9%B2%E6%AF%9B%E5%B7%BE%E4%B9%9F%E8%83%BD%E6%8B%A7%E5%87%BA%E6%B0%B4-%E5%BF%AB%E6%B6%88%E5%93%81%E5%88%86%E9%94%80%E9%99%8D%E6%9C%AC%E5%A2%9E%E6%95%88%E4%B9%8B%E9%81%93-e52f021c.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/wang-qi-of-weijie-city-distribution-you-can-wring-water-from-a-dry-towel-e52f021c/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Wang Qi of Weijie City Distribution: You Can Wring Water from a Dry Towel—The Way to Reduce Costs and Increase Efficiency in FMCG Distribution > At the 'New Forces, New Ecosystem 2017 (3rd) FMCG + Internet Conference' held in Chongqing on November 9, Wang Qi, CEO of Weijie City Distribution, delivered a keynote speech titled 'You Can Wring Water from a Dry Towel—The Way to Reduce Costs and Increase Efficiency in FMCG Distribution'. The following is a transcript of his speech. _At the 'New Forces, New Ecosystem 2017 (3rd) FMCG + Internet Conference' held in Chongqing on November 9, Wang Qi, CEO of Weijie City Distribution, delivered a keynote speech titled 'You Can Wring Water from a Dry Towel—The Way to Reduce Costs and Increase Efficiency in FMCG Distribution'. The following is a transcript of his speech._ Distinguished guests, good afternoon. I am very pleased to have this opportunity to exchange ideas with you. In the second half of last year in Fuzhou _**[1]**_ and in the first half of this year in Chengdu _**[2]**_ , I met many FMCG experts and entrepreneurs on the New Distribution platform. I not only learned a lot about the industry but also gained many friendships. At the same time, I came to understand more deeply how huge and exciting the FMCG market is, and the strategic partnership between city distribution and FMCG that benefits each other. Having delved into the FMCG industry, I have come to understand its vital importance to residents, especially urban residents. It is thanks to the efforts of FMCG channel distribution partners that our lives have become more convenient and the commercial market so prosperous. This is a schematic diagram of the circulation path from production to final consumption. In this process, distribution work is repeated in segments, with each level undertaking sales, capital advance, and logistics functions. The market is highly competitive, and terminal services are increasingly difficult. During peak seasons, there is a shortage of funds for stocking up; during off-seasons, there is a shortage of funds due to overstocking. In peak seasons, warehouse space and vehicle resources are insufficient, causing anxiety; in off-seasons, they sit idle, which is also frustrating. So we see a strange phenomenon: FMCG is a huge market with rigid demand and high-frequency transactions, and consumption capacity is increasing day by day. On the other hand, with rising operational costs and management difficulties, our partners who have made great contributions to the FMCG industry also have to bear the three new mountains: sales, capital advance, and logistics. I am not sure about other aspects, so I won't show off in front of experts. Even in logistics, the costs of distributor partners may not be clearly calculated. Visible costs include warehouse, vehicles, personnel, auxiliary equipment, fuel, and maintenance. But have you calculated the invisible costs? What is the per capita efficiency? What is the inventory turnover rate? What is the vehicle turnover rate? What causes cargo damage and loss? What is the proportion of idle resources? How can redundant and ineffective inventory be avoided and reduced? Where is the gap in service experience compared to competitors? How many orders are lost due to service failures? If these costs are carefully calculated and allocated to each order and each item, they are not much less than the visible costs. These problems are not only the distress of traditional distributor partners but also the pain points of B2B e-commerce. Even e-commerce platforms like Retail Link find the logistics pressure unbearable. What should we do? Where is the new way out for FMCG distribution? These problems cannot be avoided, and decisions need to be made quickly. After two years of exploration, I have some insights to share with you. FMCG logistics is not a scourge. With the development of time, a new warehouse-distribution integrated model that fits the industry has been found, which can effectively solve problems. Weijie City Distribution has conducted in-depth research on FMCG logistics. For the complex logistics needs of multiple categories, multiple SKUs, multiple temperature zones, and multiple scenarios, we have highly matching solutions in resource integration and management, solution design and optimization, and intelligent information system construction. When we are about to start a project, it is not simply a matter of selecting resources; it requires analysis and design. First, we need to conduct demand research. B-end consumer logistics needs are far from standardized and are highly personalized. We need to provide close service to understand the current situation of customers. Second, based on the research information, we design operational plans and train the team. Third, we conduct trial operations. No matter how good the plan sounds, if it doesn't work, it's useless. Trial operations can also reveal deep-seated problems. Fourth, we begin formal operations. At this time, personnel, resources, and systems can basically coordinate well. Finally, we need to conduct periodic reviews and continuous cyclical summaries, because problems will always be found in long-term operations, and these problems must be solved fundamentally, otherwise efficiency cannot be improved. Behind this operational design, professional capabilities are needed as support. Today's logistics operations must gradually transform from extensive management in the past to a management approach that integrates logistics engineering, data analysis, intelligent systems, and automated equipment as the main carriers, with lean operations as the main philosophy. Due to time constraints, I will share briefly from three perspectives: data analysis, lean optimization, and information systems. You can look at this complex set of formulas, which is used to calculate the ratio of logistics costs to sales. For example, for FMCG orders delivered to BC small stores, if designed according to best-selling categories such as beverages, food, alcohol, daily chemicals, and condiments, with an average order value of 1,200 yuan, about 15-16 items, and an average value density of about 3,500 yuan per cubic meter. If the monthly inventory turnover rate is 3 and the daily vehicle turnover rate is 2, then the warehouse and distribution cost for such an order is about 48 yuan, accounting for 4% of sales. Of course, any change in data will greatly affect the results. For example, if the average order value decreases or increases by 50%, logistics costs may double or decrease significantly. If the category structure changes, with beverages accounting for 90%, logistics costs may increase two-fold. But with this mathematical model, as long as various parameters are input, it is easy to draw conclusions. Next, let's look at lean operations. Lean operations are not experience or tools, but an industrialized process optimization philosophy that pursues excellence. Here is a small case of warehouse storage location optimization. By redesigning the distribution of goods in storage locations based on factors such as outbound frequency, weight, specifications, and picking routes, the result is higher warehouse utilization, faster operation efficiency, fewer labor hours per order, and more timely disposal of slow-moving products and redundant inventory. Therefore, this optimization strategy is worth promoting, and there are many similar methods and tools. Third, let's discuss the driving force of intelligent systems for FMCG logistics. In recent years, the significant progress in the logistics industry has greatly benefited from changes in business flow and the development of information technology, especially mobile internet technology, which has completely broken through the spatial and temporal axes, theoretically allowing unlimited expansion of management scope and improving operational efficiency. Weijie's Tianqiong Information System _**[3]**_ mainly includes an order processing system, warehouse management system, and delivery management system, as well as other functional modules such as intelligent scheduling, driver mobile terminal, and process monitoring. In the warehouse management system, with operation process and efficiency as the core focus, it reduces personnel's thinking and judgment, allowing the system to directly flow to the next step. It also provides real-time reports and alerts for inventory design and monitoring, reducing the time goods stay in the warehouse. It merges delivery orders in advance to achieve optimal vehicle loading and route planning. In the delivery system, the core functions are intelligent scheduling and transparent process monitoring. The development cycle of the intelligent scheduling engine is relatively long, related to the improvement of basic databases, the establishment of real-time optimization rules, and VRP mathematical model algorithms (such as genetic algorithms, immune algorithms, ant colony algorithms, and simulated annealing algorithms). Currently, about 70% of our orders can be completed through intelligent scheduling and automatic billing systems, while the rest still require manual assistance. Transparent process monitoring is relatively less difficult, so today Weijie's system can support all-weather, all-round, and whole-process transparent management. Operations colleagues, customers, and other relevant personnel can know the vehicle location, order execution status, and temperature control situation anytime and anywhere, providing a good service experience. For example, if an anomaly occurs during order execution, the system will alarm and remind colleagues via bullet comments. We also face some challenges, not in the implementation of technology itself, but in the improvement of basic databases and the establishment of rules. We have to admit that many consumer-side customers have poor informatization, and the overall informatization level is still relatively low. When we receive customer orders, sometimes they are empty, for example, 75 items without specifications and weight information. We hope that after customers join hands with Weijie, they can work with us for one or two years to improve, thereby making the warehouse and distribution system better. In the past two years, logistics technology has made great progress, and these are not problems. The bigger problem is how to cooperate well with customers to separate logistics from business flow and achieve socialization of logistics. We have established such a system, where data analysis capabilities, lean optimization thinking, and intelligent information systems, combined with the warehouse-distribution integrated operation model, give wings to logistics cost reduction and efficiency improvement, allowing rapid progress. Seizing the two core indicators of inventory turnover rate and vehicle turnover rate to build a new logistics system for FMCG distribution is a real and good thing that creates value. Our company started in 2014. In three years, we now have operations in more than 20 cities, nearly 200,000 square meters of warehouse space, 8,000 vehicles, and deliver to more than 70,000 stores daily. This year, for the BRICS Summit in Xiamen _**[4]**_ , we handled the entire catering logistics. We were the only enterprise allowed to enter the core area, delivering and supplying food ingredients for Chinese and foreign leaders during the meeting. So our capabilities have been tested. What I just talked about is mostly the basics of a company. The overall competitiveness of a company is its team. In our team, 17% have master's degrees, and about 60% have bachelor's degrees. Of course, I don't blindly worship high education, but higher education has been proven to be beneficial for company development. We recruit many people who can arm themselves with knowledge and experience and can control and apply technology. Technology is the primary productive force, and talent should be too. The logistics industry is similar to the catering industry in that professionalism still needs improvement. With the development of the logistics industry in recent years, more people with higher education, better experience, and better management capabilities will join this industry, driving rapid development. Our company is also unswervingly practicing this approach. Overall, I hope to have the opportunity to cooperate with more distributor partners and work together. I believe that under the current circumstances, cooperation between us has become more possible and has a better foundation than before. I hope to cooperate with all FMCG distribution partners, whether traditional distributors or B2B e-commerce partners. We are very willing to share and grow together. You can wring water from a dry towel. Would you like to try it together? Once again, thank you to New Distribution, and thank you all for listening. I welcome your criticism and corrections! _Notes:_ _[1]: On October 16, 2016, at the 'New Food Era, New Distribution 2016 FMCG + Internet Summit Forum' in Fuzhou, see link:_ _[2]: On March 22, 2017, in Chengdu, at the 'Empowerment, Evolution 2017 (2nd) China FMCG + Internet Conference', see link:_ _[3]: On July 25, 2017, in Shanghai, at the Weijie City Distribution 'Tianqiong' Intelligent City Distribution System 3.0 launch event;_ _[4]: For catering logistics services for the BRICS Summit, please refer to the Shanghai Catering and Cuisine Association: 'From the Perfect Guarantee of the BRICS Summit to Top-Level Catering Logistics Services';_ --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671