Case study of logistics engineer: introduction of Avon's diversified distribution model

Avon's diversified sales model makes its sales performance keep rising. However, Avon products often have problems in the process from local branches to specialty stores and counters.

The reason is that Avon found that the satisfaction of dealers has deviated, and this deviation is mainly caused by poor logistics. Avon company stipulates that dealers must pick up the goods at branches all over the country. However, due to the wide distribution of dealers, some dealers often have to take a bus all day to reach the warehouse of the branch, and some dealers without cars have to rent a car to transport the goods back and load and unload them themselves, which has caused great difficulties for them.

Not only do dealers feel hard, but Avon also feels that the operating cost is too high. Avon uses this method to transport the goods from Guangzhou factory to the warehouses of various branches by long-distance land transportation or air transportation, and then informs the dealers to pick up the goods at various branches. In line with this logistics model, Avon's 75 branches in China will build 75 warehouses, large and small. The scattered inventory leads to poor information and Avon's sales loss is huge. In addition, the operation of multiple links also forced Avon to invest a lot of labor costs. This high consumption, slow speed and difficult management logistics model has seriously hindered Avon's development.

In order to solve this problem, Avon decided to reorganize its supply chain system in China at the beginning of 200 1.

After nearly a year's investigation and study, Avon finally came up with a logistics solution called "direct delivery". Avon has set up eight logistics centers in Beijing, Shanghai, Guangzhou, Chongqing, Shenyang, Zhengzhou, Xi 'an, Wuhan and other cities, and cancelled dozens of large and small warehouses originally set up in various branches. Avon's products are delivered directly to eight logistics centers. Distributors and specialty stores all over the country directly order goods from Avon headquarters through the Internet, and then the headquarters sends these ordering information to the responsible logistics center, which sorts out the goods ordered by the distributors and delivers them to the distributors within the specified time.

Avon has handed over all transportation, warehousing management and distribution services to professional third-party logistics enterprises.

After the "Direct Delivery" project was confirmed, Avon also selected China Post Logistics and Datong International Transportation to provide 3PL services for the company through bidding.

In March, 2002, Avon first piloted international transportation with Datong in Guangzhou, and then gradually covered other cities in Guangdong, and then went to Fujian, Guangxi and Hainan. In May 2002, China Post Logistics began to provide Avon with direct delivery service in North China centered on Beijing, and gradually penetrated into Northeast and Southwest China. China Post Logistics reorganized Avon's product sales logistics system, connected with Avon's information system, and opened online collection service. At this point, * * * Suda and Meng Xin Logistics have also become the third-party logistics providers of Avon.

In addition, on the basis of the successful cooperation between China Post Logistics and Avon Company in the early stage, the State General Post Office entrusted Chongqing Postal Administration to provide door-to-door delivery service for Avon products in designated stores, branch counters and dealer management counters in Chongqing, and the Municipal Postal Administration appointed Postal Central Bureau to be fully responsible for and implement the delivery task of Avon products in Chongqing distribution center. This is not only an excellent opportunity for postal enterprises to create economic benefits, but also a rare opportunity for postal logistics to exercise. After careful planning and arrangement, the Central Bureau issued a series of transportation, distribution, storage and service plans for Avon products: the 1 100 square meter warehouse was transformed and renovated to provide constant temperature storage space for special products; Send experienced professionals to undertake distribution tasks; Develop various distribution process schemes to support Avon's distribution time limit.

The Central Bureau has formulated scientific and perfect operation rules and supervision systems in logistics links such as transportation, warehousing, distribution, information service, fund receipt and payment settlement, etc., to ensure that "lean consciousness" is injected into each link and to build a lean logistics brand with high service quality and good reputation. In Avon's integrated logistics system, the bureau also appointed a special person to be responsible for online data information management, realizing the networking of data information management. After more than three months of initial operation, Avon's product delivery service has been affirmed by the State Post Bureau and recognized by Avon Company. The punctuality rate of delivery is 99%, the intact rate of goods 100%, the information feedback rate is 98%, and the customer satisfaction rate is 99%, all of which meet the requirements of the State Post Bureau.

At present, Avon's product distribution business has spread all over Sichuan and Guizhou provinces, and Chongqing Post, as the distribution center of Avon's products in southwest China, has covered Sichuan, Guizhou and Chongqing provinces and one city. Recently, Avon's product distribution will radiate to Yunnan, thus realizing the smooth extension of Chongqing Post's integrated logistics to the southwest region.

It can be said that Datong International Transportation and China Post Logistics have provided Avon with many services including trunk transportation, warehousing, distribution, return processing, information service, payment recovery and so on, and Avon's supply chain has become compact. The most obvious change brought to Avon by readjusting the logistics system is that after the warehouses of more than 70 branches in the past were reduced to eight regional distribution centers, the number of logistics operators decreased from 600 to 182, which reduced the logistics cost and the occupation of logistics assets.

Moreover, in terms of delivery time, before direct delivery, if the dealers in Xiamen want goods, they must first place an order through Avon Xiamen Branch, and the branch will place an order with the headquarters after counting all the dealers' orders, and then the Guangzhou factory will deliver the goods to Xiamen Branch, and the branch will inform the dealers to pick up the goods. This process usually takes about 5- 10 days. After the implementation of direct shipping, it only takes 2-3 days from the online ordering of dealers to delivery, which reduces the loss of out-of-stock.

In fact, Avon began to focus on the production and sales of enterprise products after outsourcing logistics to logistics companies, and all branches also got rid of the cumbersome things in the past and focused on market development. In one year, the average sales volume of products increased by 45%, reaching 70% in Beijing, and the market share continued to expand. Through the success of Avon's logistics transformation, we can see the importance of logistics to enterprises, especially multinational enterprises.