Woe and blessing rely on, and blessing and misfortune lurk. Good news and crises always come with it. This is the wisdom of life summed up by China's ancestors thousands of years ago.

Lin Yan knows what the crisis behind the explosive sales is, that is, the problem of production, circulation, and sales. The problem, specifically, could look like this.

Let's say a store sells exactly a hundred home consoles in one day. It stands to reason that he should have purchased 100 units when he bought them the next day, but the store owner would place an order for 10 more units in order to prevent them from being out of stock. That is, a total of 110 units of orders.

And the store's superior dealer, after getting all the store orders, will find that the sales are very gratifying. At this time, he will generally make such a decision, on the basis of the order submitted by the merchant, add another 20 units to the guarantee. In other words, at this time, the store that sold 100 units actually purchased 130 units.

The store's superior distributor and then the superior sales agent. The sales agent took a look and said, "Oh, that's good." The sales are so good, in order to avoid running out of stock, I also bought 30 more units. And so it turned into a hundred and sixty machines.

The regional general agent took a look at it, this thing is going to be hot. It's good to stock up on more goods, so as to save the time when there is a shortage of goods and there is no selling. In this way, one hundred and sixty units became two hundred.

At this time, the factory took a look and got an order of 200 units. It's good, it's good, the sales are good, it's a good situation. However, the problem is that with so many orders, the production line is not enough. And whether the company has enough funds to expand the production line. What should I do?

That's when the bank came along. They were very good at "borrowing umbrellas", and when the factory was optimistic, they provided funds and the production line was successfully expanded.

The factory produced enough goods, the general agent got his own order quantity, the sales agent also got his own order quantity, the dealer also got it, and the store also got it.

Although, at this time on the supply chain. The situation is very good. However, the problem arises. Although there are many capacities and stockpiles, the number of units sold in the store every day is still 100 units.

Other words. The margin left by the layers cannot be sold at all. The factory did not get the information back, and still produced according to the original production volume. This creates a backlog of inventory. Every day, as much inventory is generated as the actual sales, and the pressure on inventory begins to increase, and the cost of inventory increases significantly.

At this time. If there is a decline in sales, let's say 100 units become 90 units. It is possible for the store to make such a judgment, and the market demand for this product is saturated. In other words, so much inventory has become a burden.

At this point, their choice is to return the goods.

They are returned to the superior dealer, the dealer is returned to the sales agent, the sales agent is returned to the regional general agent, and the regional general agent is returned to the manufacturer.

It's not just one store. From the manufacturer to the store, it is like the branches of a tree. Layer by layer.

The inventory pressure that can be felt by these stores in the details can be turned into a whole and aggregated in the factory. You'll know how terrible it is.

At this time, the factory was dumbfounded. Because the profit he earned during this period was not enough to pay for these returns. At this time, after a large-scale wave of returns, the bank's rating of the company was downgraded. The second half of the plot of "borrowing an umbrella on a sunny day and collecting an umbrella on a rainy day" begins. Begin to plan to liquidate the company's property and recover its losses.

Because the store's expectations for this product have become lower, they have stopped promoting it. Coupled with the confusion in the sales context, some people want to buy but can't. There are places where no one buys it, but it piles up. In this way, the business is almost literally finished.

Any company that is called great in the mouth of ordinary consumers is supported by countless small products.

It's like an iPhone is to Apple. The same thing is true for the Windows system for micro hardware.

It is precisely because of the large number of users as their root system that they are able to thrive and grow into a "world tree". And the roots are broken, and the life of this "world tree" will soon be over.

The reason for this result is known as the "bull-whip theory". The store is like a place at hand, and the factory is at the tip of the whip.

The demand for the store is like a farmer shaking a whip. From one end of the whip to the other end of the whip, the fluctuations are getting bigger and bigger, knowing that it becomes possible to destroy a very good overall situation.

To avoid this from happening, all you need to do is to have an accurate forecast of the actual sales volume and the demand of each store and dealer.

The most extreme aspect of this prediction is Toyota's claim of "zero inventory".

This is also the most powerful place for Japanese companies. They are able to manage the place and do it to the extreme. So as to reduce the cost of circulation, inventory cost, risk cost, so that the profit is maximized.

Of course, not all products can be built with an accurate sales model. According to the sales model, the number of shipments is topped.

For example, FMCG products such as beverages have a large sales volume and various circumstances, which have a serious impact on its sales. For example, promotions, weather, seasons, surprise meetings and events, and so on all have an impact on it.

In this case, the prediction accuracy of the model is about 80%, and as long as you set aside 20% of the inventory balance, you can solve the problem with ease.

Twenty percent inventory may seem like a lot, but compared to more than 100 percent inventory that can kill a company, it is already a very fortunate thing.

Of course, these things are idealistic. In the actual implementation of success, there are many retail stores that do not like to let manufacturers know what their sales are really like. They tend to make a surprise purchase on the eve of the year-end annual settlement. In order to influence the superior company, the grasp of it.

This behavior of the company is actually understandable. It's the same with people, no one wants their every move to be in the eyes of others. You don't need to open your mouth, people will know what all your sales status is like, and they will automatically replenish you without you placing an order.

**Hawkers, everyone has it, and it's a relatively normal thing for the store to want to have a little space for free movement.

Lin Yan turned around and found himself thinking about what he was doing so much. The Chiba Group has been operating for so many years, and it will not even have this ability.

It seems that my thoughts for so long have been in vain.

"Alas......" (To be continued.) )