anuary 3, 2012 20:02 Song Juan
A company started by operating large communication machines. In 1993, the visionary general manager of the company successfully obtained the distribution agency rights for a high-tech product of a large domestic enterprise, thus transforming into electronic distribution. With the continuous expansion of marketing networks and business, the company has become a leader in the industry's distribution industry in recent years. However, the marketing network quickly established through traditional methods such as map segmentation and red flag insertion often makes the general manager of the enterprise feel threatened: how many customers do I have? How do each branch operate? How to obtain authentic and timely first-hand sales information? All of this made him feel uncontrollable. So, in 1997, under the leadership of the general manager, the company worked together and successfully launched a simple and practical distribution management system. After the system was launched, it had an immediate effect and the business volume increased significantly. However, the financial audit reports indicate that while the company's operating revenue continues to increase, its Economic Value Added (EVA) has mostly been below zero since 2000, and the profit target has been delayed. Why is this situation happening? Faced with increasingly thin profits in the circulation field, the general manager is at a loss
Encountering the itch of logistics
Just as the general manager of Company A was struggling to figure it out, an analysis report from the financial manager caught his attention: since the company launched the new system, although the business volume has grown significantly and the operating income has continued to increase, the company has not been able to pay enough attention to the high logistics costs, and the level of logistics informatization is still in a relatively primitive stage... The general manager was enlightened and realized the importance of logistics management in distribution enterprises.
Is it a challenge or an opportunity?
Just like Company A, many companies have become increasingly aware of the importance of logistics in their operations and have placed greater emphasis on logistics management. The rapid development of logistics has brought both survival challenges and development opportunities to distribution enterprises. In distribution oriented enterprises, the status and role of logistics cannot be underestimated.
The need for market competition and the competition of core competencies: Logistics has become the most important supporting factor for expanding, maintaining, and controlling its marketing network, and has become one of the important factors in acquiring customers and influencing customer satisfaction. Some distribution oriented enterprises even occupy the position of chain owners in the entire supply chain with their strong logistics capabilities, and have advantages that are difficult to replicate in suppliers and end markets.
The final battle for profit sources: With the intensification of competition in many industries and the flattening of marketing channels, the era of huge profits for distribution enterprises seems to be gone forever. Profits are getting thinner and more efforts have to be made in terms of costs. However, there is not much room for enterprises to explore in terms of sales, marketing, finance, and human resources costs. Logistics is the area with the greatest potential for cost reduction, and enterprises are paying more and more attention to this area. To earn 1 yuan, it may be necessary to sell goods worth 20 yuan, but saving 1 yuan in logistics costs is equivalent to a profit of 1 yuan.
As is well known, distribution oriented enterprises are located in the supply chain more directly facing the end market, and therefore generally have a wide and deep marketing network. Their customer orientation is becoming increasingly clear, and correspondingly, they also have their own characteristics in logistics management.
High requirements for nationwide logistics network coverage: Distribution oriented enterprises generally have a nationwide marketing network (branches, distributors, and retailers), which is widely distributed in first tier cities such as Beijing and Shanghai, second tier cities such as provincial capitals, and third - and fourth tier cities with underdeveloped logistics capabilities. These marketing networks not only require transportation between cities, but also distribution within cities. There are significant differences in the types of customer needs in different regions, and many distribution oriented enterprises' marketing channels are constantly developing in depth, requiring higher logistics coverage capabilities for satellite cities and suburban counties. How to plan an efficient logistics network covering the whole country is an important issue that logistics managers of distribution oriented enterprises must solve.
This report (China MBA Network)
