Enterprises Operate Cash As King, And The Quicker And Better The Inventory Management Is.

Enterprises operate cash as king, and the quicker and better the inventory management is.

At the end of each year, many brands will choose to impact the sales performance at the end of the year in order to complete the annual KPI, and the e-commerce platform is no exception.

This year, the performance of China's consumer market is slightly lower than in previous years, and the business is more than a year, and the competition is very fierce.

We all want to achieve better sales performance, but we may fall into the risk of inventory backlog and cash flow interruption.

At the end of the year, businesses will choose to give up news of renewals with Tmall, Jingdong and other electronic business platforms. Some of them are giving up their reasons.

At the end of the year, enterprises will be encouraged and worried.

In the traditional farming society of China, spring and summer are the farming season. The harvest of a year depends on the efforts of spring and summer and the time of the year. Autumn and winter are the season for harvesting and enjoying the fruits of labor.

Agriculture, as the foundation of society and commerce, not only determines our traditional festivals, but also governs the cyclical nature of retail business and continues to this day.

Nowadays, China's retail business has a very obvious cyclical nature.

The two seasons of spring and summer tend to be off-season. One is the concentrated disposable consumption of disposable income at the end of last year.

In the autumn and winter, it is the peak season. People begin to think about rewarding themselves and their families when their pockets are full.

The demarcation line between the two is very clear. Before doing business, there was a jargon in the past: nine dead and alive, and turning over the whole body, saying that it was the peak season. In July, the business was very light and had to lose money. In August, it was better to see hope, but in September it could start to make money.

In the real estate industry, there are similar claims of gold nine silver ten.

As long as the company persists in the off-season, it has the opportunity to earn a year's profit in the peak season.

The rise of electricity providers and new retailers has brought about the rising popularity of artificial growth.

Therefore, we can see that the second half of the year is going to be a big promotion, one after another.

From the Mid Autumn Festival and national day to the Double Ninth Festival, double 11, black five, Christmas and new year's day, and then entered the longer sales promotion season, almost lasted for half a year.

For enterprises, the second half of the year, especially the end of the year, is both a huge opportunity and an invisible pressure.

Due to the relatively concentrated sales promotion, limited to the efficiency and cost factors, the supply chain of enterprises can not be stocked in advance for the purpose of expanding the scale.

Product design, order, production, logistics and other long cycle, many enterprises in order to double 11 ahead of time three or four months or even longer to prepare.

In view of sales expectations and user experience considerations, or in order to grab the year-end KPI target at the end of the year, enterprises tend to increase their stocking volume.

From preparation to formal sales, there is a long span time. Even if the information collected before is very accurate, some new changes will inevitably appear in the market. This brings huge risks to inventory backlog.

Every year, double 11 has repeatedly set a new record of overall sales, but there are several joys and worries, some of them are selling well, and there are also many backlog businesses.

Even good sales companies are often heavily returned and exhausted.

It is said that when Taobao set double 12, there were two purposes: on the one hand, to comfort Taobao's small sellers; after all, double 11 was given to Tmall; on the other hand, it was convenient for some businesses to clean up stocks after double 11 and end of the year, and to digest these stocks by importing users through large flows.

Backlog stocks are becoming more and more normalized, which makes inventory processing a new market segment.

A few years ago, vip.com and jumei.com, which are the main sale, can rise rapidly. It is precisely this special market segment.

Alibaba CEO Zhang Yong even said at an internal meeting that Tmall had raised Jingdong and vip.com.

This is of course exaggerated and arrogant, but it reflects the scale and potential of the domestic stock disposal market from the side.

If vip.com and jumei.com still have some hidden words, then love the stock through professional inventory to win the recognition of the vast number of enterprises, it is more than a year to achieve the annual GMV over 3 billion yuan sales scale.

However, compared with the mature retail discount system, China's stock market is still in its infancy, and there is still room for growth.

Starting from ofo and Jin Li, the importance of cash flow in business operation

The electricity supplier is only a microcosm of retail business. In fact, backlog is a long-standing problem for enterprises. It is only the end of the year that centralized sales promotion makes it more prominent.

Backlog will reduce cash flow. How important is cash flow to enterprises? Let's look at the experience of ofo and Kim Li, a loser in the domestic market this year.

The main reasons for the ofo small yellow car getting into trouble are: 1, the competition strategy has not been adjusted in time because of the change of the market situation, and the early blind market occupation of the market has been unmanageable, consuming a lot of valuable cash resources, and finally investing a lot in bad assets. 2, it has not focused on the core business efficiency, extensive operation, coupled with poor quality and defective bicycles, the serious damage of the vehicles in the actual operation, resulting in high overall cost, and the revenue can not cover the cost. 3, the proportion of bad cars is too high, resulting in poor user testing, and many of the customers lost to rival camps such as the city of worship, harrow and so on, which in turn resulted in a decline in revenue and a sharp downward trend in cash flow.

At one time, Jinli, who was a gratifying force in the second camp, was once the most promising company to squeeze into the front line. However, under the circumstances of the advance burn marketing and the boss's capricious appropriation of funds, the supply chain funds suddenly failed to continue, and the operation of enterprises suddenly broke down.

Similar examples include neighborhood convenience stores and Rui Jinlin. The former is a more successful convenience store brand in the Beijing market, while the latter is the leader in the operation industry. Because of the involvement of the boss in P2P, the main business that has caused a good operation has been implicated.

Although their respective circumstances are different, the direct cause of their predicament is the fragmentation of capital chain.

Coincidentally, before and after 2008, under the impact of external economic crisis, many domestic business owners were running away.

There are few enterprises that fail because of losses, most of which are caused by the breakup of capital chain.

That is to say, for enterprises, cash flow is more important than profit. Cash flow is a necessary condition for enterprises to maintain normal operation. This is also true: cash flow has no profit, ofo and other share bike companies do not have financing, and they can still survive for a period of time by relying on the deposit. While the finance shows profits and no cash flow, they operate a good neighborhood convenience store.

And fall instantly.

Judging the cash flow status of an enterprise, there are usually two indicators: first, how much cash and cash equivalents hold; and two, capital turnover.

Faster turnover of enterprises not only means higher production efficiency and more business, but also means lower cost.

This is because the efficiency of the overall fixed assets is high under the fast turnover rate, and the lower the unit cost is.

In this case, even if the gross profit margin of the business is low, enterprises can still maximize profits through high turnover.

For most enterprises, the probability of management's embezzlement of funds is very small. The real trouble of cash flow is the backlog of inventory.

At the end of the year, a number of enterprises are forced to choose to suspend operations.

Therefore, the backlog of inventory is not a small problem, but a matter of cash flow and lifeline, which must be properly solved.

Correctly understand the value of backlog stock and deal with the cash back in time.

Backlog will bring the following cost to the enterprise: 1, unable to return the funds in time to occupy a large amount of capital costs; 2, direct costs of occupancy of windows and warehouses, such as rent, labor and management fees; 3, the opportunity cost of new products due to occupancy of windows and warehouses.

Most enterprises often attach great importance to the cost of 1 and 2. After all, these two are the explicit costs that can be found from the finance, but it is easy to overlook the implicit cost of 3.

In fact, in many cases, 3 of the impact may cause great harm.

Due to the backlog of inventory in the sales channel, not enough funds to develop new products, or the new products can not be sold normally, the consequences will be huge, which will cause enterprises to lose their sense of rhythm in the market competition, be left behind by their competitors and consumers, and then step by step passively.

After the 2008 Beijing Olympic Games, some sports brands in China were left behind by international companies because of excessive inventory and improper disposal. They lost the initiative of the market. It took several years for them to regain their vitality.

How should enterprises see and solve the backlog problem?

First of all, improve capabilities in R & D, production, marketing and other links. Through big data and other technologies, try to get close to users and understand the market, so that their products will be closer to market demand.

After all, excellent products and excellent marketing are the foundation of selling well. The stronger the comprehensive ability of enterprises, the more competitive the products will be, and the proportion of inventory backlog can be effectively reduced.

In some industries, reverse customization, order production and sales can be adopted to avoid inventory risks.

Second, we must have a correct understanding of the actual value of backlog of goods.

The backlog stocks of many enterprises are not serious at the beginning, but they are more and more pressure because they can not afford to deal with them.

From an economic point of view, backlog of inventory goods is the sunk cost that has occurred, and it is wrong to ask it for normal gross profit margins.

The backlog of goods stored for more than one day will result in an extra cost of one day, resulting in a continuous impairment of assets.

The longer the disposition is, the greater the loss. Even if it can eventually sell a good price, it often does not return the additional cost generated later, not to mention the opportunity cost. The actual overall loss is far greater than the proceeds.

Thirdly, we must establish a standardized process for stock disposal.

According to the quantity and grade of inventory, we plan the way and channel in advance.

A small batch of code breaking products can be sold in private channels.

But we must not discount sales of overstock products in mainstream channels for a long time. This is very easy to damage the original brand image, resulting in the serious consequences of the reduction of brand premium.

For example, JEANSWEST in recent years in order to deal with backlog of inventory, in its stores outlets frequently discounted, resulting in new product sales frustrated, overall performance decline.

Therefore, it is also recommended that most enterprises establish a long-term cooperative relationship with professional de stocking channels, such as the orbits under the line, the online love inventory platform.

There are many advantages in choosing a professional third party platform to inventory.

First, it can cut with existing sales channels and mainstream consumer groups to maximize brand premium.

Even if users find other people to buy the same price at a low price, they will be proud of others because they bought the tail goods from the discount store and they are buying the authentic products at the official store.

Second, the professional third party platform has a stable consumer group, which can achieve quick return.

Foreign discount retailers can achieve 31 days, and domestic love inventory is faster. At present, it has 600 thousand distributors. By touching 400 million + consumers, they can get money back in 7 days. The efficiency is much higher than their own processing, which greatly saves time cost.

Cash in operation

Choose the professional third party cooperation

When dealing with inventory, enterprises often hope to achieve two goals at the same time: on the one hand, protect the premium of the brand from damage; on the other hand, how to sell quickly and reduce the loss.

It is very difficult to achieve these two goals at the same time, often taking into account the former, it is very difficult to take account of the latter.

In the past, we saw that the surplus production of surplus milk in capitalist countries was actually the helpless choice of the relevant enterprises in order to protect the brand and the market.

Although the loss is large in the short term, it is beneficial to itself and the industry in the long run.

With the improvement of our productivity and the prosperity of the market economy, we have heard something similar.

In fact, as long as we find the right channel, we can avoid the backlog of milk.

Enterprises can choose to deal with their backlog stocks in a professional third party channel, so as to achieve two goals as far as possible. They take account of both the protection of brand premium and the rapid return of funds. This is why more than 5000 well-known brands at home and abroad cooperate with love inventory.

Finally, I would like to emphasize that: if an enterprise wants to solve the inventory problem effectively, it must correctly treat the backlog stock. It is not a normal inventory but a sunk cost. If the cash is the king, the faster the inventory will be processed, the better it will be.