The survival of wholesale business Part 1

The distribution revolution has been seen for more than 10 years. Consumers and producers are directly connected via the Internet and other tools. The wholesale funciton, in many business fields, has been no longer needed.

This time, Mr. Inamori talks about the essence of the wholesale business.

Case

Company A (A corp) created an agricultural corporation. A corp buys products directly from farmers and sells them to various retailers such as supermarkets for restaurants. For retailers if the price is decided in advance, it will lead to stable management. However, when the weather is unseasonable, the supply from farmers decreases, and A corp can’t secure sufficient quantity from the market. However, retailers push A corp to deliver the contracted quantity at the agreed price. Thus, A corp buys and delivers agricultural products that are expensive in the market. This does not increase the profits of A corp. What should they do?

Mr. Inamori advised to revise contracts with the farmers and the retailers after carefully reviewing the terms and conditions.

At that time, the points to consider are as follows.

1 Considering the “reason to be “of the wholesale.

2 Putting yourself in other parties’ shoes

3 Bringing altruistic minds

4 Relying on experts

5 Conducting with courage

6 Analyzing numbers

1 Considering the “reason to be “of the wholesale.

“Originally, the agricultural production corporation (wholesale business) is to discuss with the farmers and decide the appropriate price to stabilize the purchase. This agricultural production corporation also supplies customers with stable quantities at stable prices. Therefore, it is an ideal business for customers to sign long-term contracts with low risk.”, Inamori said.

I think that the “reason to be “ is stabilizing management of both farmers and retailers. If the president of A corp has a strong sense of “self-denial”, he will not notice the reason to be and drive his wholesale business less profitable.

If the president, in his unconscious level, believes himself to be blamed or has done something wrong, he will unknowingly create a situation where he can be punished: making losses through his business. Thoughts and unconsciousness are so important in business management.

2 Putting yourself in other parties’ shoes

“According to the contract, you agreed to the purchase price, but it is unfair that the farmer’s production is halved and the price remains the same, so in the event of a natural disaster, even though the quantity is halved, the purchase price will be raised by 5% or 10%. You can’t make all the compensation for the farmers, but you ‘ll do a little better. .. “ You should tell your customers – retailers- : although I received only half of the contracted amount from the farmer, I still buy it at a price that is about 10% higher than the contract. Therefore, we would like to ask you to buy it with a price increase of about 20%. The market price has already doubled, so you should be more pleased than buying the products at the market price. ” said Mr. Inamori.

3 Bringing altruistic minds

I always tell you that the “altruistic mind” solves everything. In bad weather, we should consider each other and I think you must urgently change the terms of the contract so that you should not be the only one to burden all the losses.