AOKANG Shoe Industry And Cost Increase Race

In December last year, a slightly mandatory directive reached more than 3000 stores in AOKANG: "sell a pair of shoes a day". What does this mean for AOKANG? The 3000 stores sell more than one pair a day, that is, they sell 3000 pairs more. The average price of each pair of shoes is 300 yuan, which can be charged more than 900 thousand yuan per day. This not only means that the sales of AOKANG will increase by more than 300 million yuan at the end of the year, but more importantly, the increase of cash flow, the acceleration of logistics and the acceleration of production will finally lead to the improvement of labor productivity. The background of such an optimistic plan is actually a very realistic environment: the continuous rents of store rents, the rising production of raw materials, the significant increase in labor costs and the decline in export profits brought about by the appreciation of the renminbi, of course, including the "intimidation" of BELLE's strong competition. For example, in 2007, the average rental of each store rose by 30%, which is enough for AOKANG to discuss for half a day. The reform of the "super ministry" system is very difficult for AOKANG's manufacturing enterprises in an excessive competition industry. It is difficult to translate the factor cost continuous rise into a sustained and substantial increase in terminal commodity prices. The key is whether the speed of the increase of labor productivity of enterprises can win the speed of rising costs. Even if you can't win the cost increase, you should at least win the opponent. This is the new rule of survival that AOKANG has made for itself in the era of global inflation. "Selling a pair of shoes a day" is only an external manifestation of AOKANG's increasing speed. This is not a slogan of planned economy. Behind it, from research and development, design, production, procurement, logistics to marketing, market development, every link is closely linked to this goal. In the past, AOKANG has five brands, namely, AOKANG, beautiful beauty, Kanglong, red Firebird and a foreign brand of its agent. Under the headquarters of AOKANG shoes, there are five brand divisions, which manage their own logistics, marketing and retail terminal construction. In the early stage of career development, this sub brand governance mode is conducive to encouraging enthusiasm. Because each brand leader will be responsible for their respective profits, earn more and earn more, lose money at the expense, and there will be some competition between them. In addition, because each brand has different customer groups, this divide and conquer way can make their market strategy more flexible and fast. If the red Firebird is dominated by the western market, the beautiful ladies occupy a certain position in the northern women's shoes market. Kanglong has performed well in the middle and low end market of the south, and their pertinence is very clear. However, with the expansion of AOKANG shoe market, the malpractice of the brand division has been gradually revealed. If each department is responsible for its own sales, they will set up branches in the major tier cities, and then manage the direct outlets of their cities. The final result is that some cities will have AOKANG and beautiful beauty and Kanglong branches at the same time. They are independent of each other, resulting in waste of resources and duplication of construction in rent, personnel management, logistics and commodity promotion. The production departments are directly butted with various departments, and they often deal with different brands' supply information at the same time. Because of the increasingly complex institutions, the company's finance department often complains that every year's financial budget is well done, but almost every year there is a serious phenomenon of overspending. In the second half of last year, when the cost of external elements increased and internal management was like every octopus, but every day, when the efficiency was not effective, AOKANG started decisively to reform the company's "large part system". The management system for the future reform companies is just like shoes for feet, not as long as they are right. AOKANG insiders say that the current reform must take into account the future. Otherwise, it will probably be easier to do in the near future, like buying discounted shoes at the end of the season, but it will cost more in the long run. On the eve of the implementation of the "super ministry" reform, the company clearly stated that the management system after the reform should not only meet the expansion of the domestic market, but also conform to the future of AOKANG towards internationalization. "The company's brand will continue to increase, and will continue to buy and proxy foreign brands in the future, including their international channels." AOKANG spokesman, Mr. Liang said that the new company management system needs to have the potential capacity to manage these potential brands. Therefore, the company boldly abolished the original brand business unit, and divided the company's first level units into three parts according to their business: R & D center, production company and sales company. The sales company mainly set up four major core departments: brand management department, commodity purchasing department, sales department and market department. If the sales department will uniformly manage the branches, store managers and terminal goods sales of various brand divisions in the past, the marketing department is mainly responsible for channel development and shopping mall development management. On the face of it, the management of the former personnel has changed, and the staff have been deleted. But in fact, it also includes the transformation of AOKANG network development strategy: for example, the unified location and opening of the market department will have a comprehensive consideration on the trend of the rapid rise of the rent in the market, and the decoration and purchase of the store will be unified under one department, so that the cost can be greatly reduced. In addition, AOKANG will change its way of specializing in chain stores and begin to enter the department stores and other channels. Packaging all brands by the market department and negotiating with shopping malls can reduce entry barriers and costs. Behind this change, we can see BELLE's stimulus to AOKANG. Last year, when the fashion women's shoes company went public in Hongkong, they immediately bought AOKANG's rival shoes, Sunda. BELLE's channel resources have been further expanded, and its channel advantages in department stores are also far ahead. AOKANG's move is undoubtedly a way to complement each other. Another result of the reform of the "super ministry" system is the marked improvement in efficiency. Take the Department of commodity purchasing, including logistics functions as an example, because of intensive management of logistics, AOKANG has changed its practice of replenishing the terminal market in the past to a quarterly cycle, increasing to a monthly or Bi monthly period. This, in turn, is closely related to the "selling a pair of shoes a day". Generally speaking, the "large part system" management means subtraction. Through the process reengineering and the proper redeployment of personnel, we can reduce expenditure and improve efficiency. The finance department has become more relaxed now. In addition, in order to further reduce operating costs, AOKANG stipulates that the cost of AOKANG departments will exceed the budget and will be paid by the department heads. The establishment of AOKANG international R & D center in Dongguan is an addition. The R & D center was established in the second half of last year, covering an area of more than 2000 square meters, and is expanding rapidly. In January this year, AOKANG group has just won the VALLEVERDE global brand management right in Italy, and its global brand marketing is all run by AOKANG. VALLEVERDE will provide product R & D resources for AOKANG's international R & D center, providing technical and legal support.