Find the Problem, Solve the Problem

Making money is the greatest hobby of every merchant, and Lu Kun is naturally no exception.

When a merchant no longer loves making money, they are not far from descending into the abyss.

This is the same principle as the fundamental rule that a person should never forget their roots.

......

Nanming City. Huakun Group Headquarters. General Manager's Office.

Lu Kun was reviewing the latest monthly sales data for the Huakun Group submitted by Sun Bowen. He felt as though he were eating a massive bowl of iced watermelon in the scorching heat of midsummer—in a word: exhilarating!

"This money is truly easy to make!"

This was a rare and wonderful era!

Social inflation was quietly running at a low level, and consumer demand remained robust and sustained...

"Boss, our Huakun Group still has many issues that urgently need to be resolved!"

Sun Bowen gave a slight cough, shattering Lu Kun's pleasant fantasy.

Lu Kun straightened his expression and said calmly, "Let's hear them. Solving problems while the group is experiencing rapid development is always easier than solving them when the group falls into a development trough."

"Boss, take a look at this first."

Sun Bowen handed a document filled with various data sheets to Lu Kun.

Lu Kun took the thick document with a blank expression and began to read it carefully.

Throughout the process of reading the document, his expression shifted from surprise to astonishment, and finally to deep solemnity.

For no other reason than the management costs of the Huakun Group were simply too high!

As the footprint of the Huakun Group continued to expand, various administrative and management expenses now accounted for 8.7% of total sales, and the figure showed a continuous upward trend.

If this problem could not be resolved in a timely manner, the hidden dangers would only grow larger.

Lu Kun raised his hand, intending to take a puff from a cigarette to calm his nerves, only to find that the half-burned cigarette pinched between his fingers had fallen to the floor at some point.

The management costs of the Huakun Group had to be brought down; otherwise, once a macro environment of shrinking consumption struck, the group would have no choice but to close some stores, cut wages, and lay off staff just to survive the crisis.

That would be the worst-case scenario. Unjustifiably cutting wages and laying off employees when they had done nothing wrong would completely shatter the morale of the entire enterprise. Regrouping and uniting the corporate workforce all over again afterwards would be no easy feat.

"Old Sun, finding every possible way to reduce the administrative expenses of the Huakun Group has become our top priority," Lu Kun remarked with emotion.

If one only looked at sales performance and the growth rate of sales profits, the situation for the Huakun Group was undoubtedly bright, but after reading the statistics compiled by Sun Bowen, Lu Kun's mood was plummeting step by step from heaven.

The situation facing the Huakun Group was far from optimistic!

"Boss, that is precisely my point."

Sun Bowen leaned forward. "During the same period last year, our management expenses were only 4.7%, but now they have climbed to 8.7%. This is a massive hidden danger.

The management expenses of medium and large chain supermarkets in coastal regions mostly range between 5.0% and 6.6%, and moreover, their proportion of management expenses shows a continuous downward trend."

"Mmm."

Lu Kun nodded.

The Huakun Group could not hide in An-gui and Guizhou forever; sooner or 'later, it would have to step outside and contend with the heroes of the realm.

If management expenses were already this high now, what kind of future could it speak of?

It would likely be thoroughly beaten and routed before even managing to gain a firm foothold elsewhere.

"Let's hear your thoughts."

Lu Kun was not panicked enough to lose his composure over this matter.

After all, the domestic economy had been developing vigorously in recent years; unless an economic crisis occurred, consumer downgrading would not easily happen.

"Boss, the lion's share of our management expenses in the Huakun Group goes to logistics. If this problem is not resolved, management costs will be hard to bring down immediately. At present, logistics and transportation expenses account for twenty-one percent of our management costs..."

At this point, Sun Bowen paused involuntarily. This topic was an old tune often played, and it was not easily resolved.

"I will report this issue to the provincial government, but roads are paved one meter at a time. Expecting to improve the terrible road conditions across An-gui overnight is nothing short of wishful thinking. This problem is fundamentally insoluble."

Lu Kun curled his lip. With poor road conditions, trucks transporting goods naturally consumed more fuel, and the corresponding costs of labor and time loss would be higher.

"However..." Sun Bowen still wanted to say something.

Lu Kun understood what he meant, waved his hand, and said, "As for that industry-agriculture cooperation project, I will decouple it in the near future. You don't need to worry about that."

The management of the Huakun Group had never been very enthusiastic about the group's involvement in that industry-agriculture cooperation; it was somewhat awkward and out of place. It consumed massive capital investment with negligible returns—much like chicken ribs, tasteless to eat yet a pity to discard.

The Master Kong Food and Beverage Group had officially begun trial production and required a large amount of industrial raw materials. Handing over the industry-agriculture cooperation project to them was a much more suitable arrangement.

"Boss, aside from the factor you mentioned, another very important reason for our high logistics costs is that our transport vehicles can no longer meet our freight demands," Sun Bowen said, bracing himself.

"You mean buying heavy trucks?" Lu Kun knitted his brows slightly, not having thought of this aspect for the moment.

The Huakun Group had previously been short of money, and Lu Kun had always been reluctant to buy large freight vehicles, feeling that those things were simply too expensive.

"Correct. The sales volume and total cargo volume of our major prefecture-level city stores are rising steadily, and our previous freight vehicles are simply too inefficient!" Sun Bowen affirmed.

"Alright then, you all can do an evaluation first and see how many heavy trucks we actually need to buy. Come find me for my signature once the report is finished. Also, after buying the heavy trucks, don't just dump our original freight vehicles," Lu Kun reminded him.

Seeing Sun Bowen's slightly bewildered look, Lu Kun continued to prompt: "Didn't we acquire stakes in quite a few factories and workshops under the name of Huakun Holdings? Dump them onto those!"

For the match factories, lighter workshops, and the like in which Huakun Holdings held stakes, the freight pressure itself was not high, and small-to-medium freight vehicles were more than enough.

Charitable water should not flow into outsiders' fields.

The Huakun Group had bought those freight vehicles used in the first place, and now that they were no longer suitable, offloading them directly to the factories and workshops under Huakun Holdings without going through third parties would recoup at least fifty to sixty percent of the principal.

......

"I've looked at it. Even after stripping away the logistics cost factor, the management expenses of the Huakun Group are still far higher than those of medium and large chain supermarkets in coastal regions. What is the reason for this?"

"Boss, look, could we contact the authorities above? We are major taxpayers, after all; how can water and electricity be calculated based on residential consumer prices? This is truly a bit absurd," Sun Bowen tentatively suggested.

"Have the public relations department smooth things over and see if we can calculate water and electricity prices according to industrial enterprises. We must strive our hardest for this concession; even if we can't get the same price as industrial enterprises, there must still be a discount."

Had Sun Bowen not mentioned it, Lu Kun truly would not have thought of this.

No wonder the Huakun Group's monthly electricity expenditure was so high; it turned out they were being treated as wealthy fools.

"Old Sun, how is it that I see our labor costs on this spreadsheet are actually 1.7% higher than those in coastal regions? What on earth is going on here?" Lu Kun asked in astonishment.

This made no sense at all.

Per capita wages in An-gui were far lower than those in coastal regions; of that, there was no doubt.

Even if the average wage level of Huakun Group employees was slightly higher than the average across various prefecture-level cities within An-gui Province, it still fell far short of wage levels in coastal areas.

"Boss, during our early stage of development, we relied too heavily on cheap labor. Coastal regions have developed rapidly, changing almost with each passing day, and local chain supermarket groups have also upgraded their management standards very significantly.

Look, the previous page details their management expense expenditures from two years ago, which were about the same as ours last year, but this year, their management expenses have already begun to decline."

Sun Bowen's expression was extremely serious.

The Huakun Group was expanding rapidly, but the giants in other coastal regions were not standing still either. While grabbing market share, they were also constantly optimizing their own management systems and enhancing their managerial capabilities.

"Are we employing too many people?" Lu Kun thought for a moment and asked.

"Yes," Sun Bowen nodded.

"Previously, we purchased a batch of laser scanning equipment, but the scanning capability of this batch was not outstanding, and they frequently failed to scan barcodes. As a result, in the later stages, many of our stores had to resort to manual calculation methods.

We added a huge amount of labor in cashiering, warehousing, and tallying, which is very detrimental to our development. The accumulation of these small problems will weaken the market competitiveness of the Huakun Group.

Right now, we hold a monopoly over the An-gui market, so these problems are not yet prominent, but if we truly decide to take bold steps outward, the situation will not be optimistic."

"You mean we should repurchase a new batch of the latest laser scanning equipment?" Lu Kun smiled and asked.

This problem was genuinely Lu Kun's fault.

Laser scanning systems were not cheap, and adhering to his principle of finding the cheapest option available, Lu Kun had previously bought gray-market goods, so inconsistencies in quality were inevitable.

"It's not just that problem," Sun Bowen said with a bitter smile. "Many of our previous suppliers in the Huakun Group supply goods with packaging that doesn't include barcodes at all. Even if our staff wanted to scan them, there was nowhere to scan!还有...還有, there are also barcodes that are printed improperly, which the scanning guns can't read. And of course, some attempt to fool us with fake barcodes."

By the end, Sun Bowen was amused to the point of frustration by his own words.

"Find a time to summon the suppliers, interview them one by one, and issue an ultimatum! We will establish a standard: those who do not print barcodes will be removed from our supply channels, and those with substandard barcode printing or terribly low scanning pass rates will also be removed from the Huakun Group's supply channels.

As for those trying to fool us with fake barcodes, put them directly on the cooperation blacklist. If relevant agreements were signed before cooperation, have the legal department sue them!

Fighting lawsuits in An-gui, our Huakun Group doesn't fear anyone!"

Lu Kun's attitude was extremely tough; he would never allow these fellows to hold back the Huakun Group.

"Boss, actually, this problem is no longer that thorny. As the factories and workshops under Huakun Holdings continue to expand production, the Huakun Group can find substitutes for many of our goods.

Although it might impact our sales performance in the short term, looking at it in the long run, the pros clearly outweigh the cons. Shaping new brands will be of immense benefit in strengthening the strategic cooperation between the Huakun Group and the various factories and workshops under Huakun Holdings."

"That works too. As long as the factories and workshops under Huakun Holdings strictly print barcodes, if other suppliers remain indifferent, we will simply pull their products from our shelves. Let's see if they get anxious!"

Lu Kun had also turned ruthless.

With the development and growth of the factories and workshops under Huakun Holdings, the Huakun Group was bound to fall out with some suppliers in the future.

Rather than turning hostile with them later, it was better to find an excuse right now to weed out a few stubborn bones who refused to cooperate!

"The boss can rest easy on that. A large portion of those fellows depend on the Huakun Group to make a living. If we truly turn ruthless and clean up the barcode chaos, they will only have no choice but to obediently comply."

Sun Bowen's confidence was even greater than Lu Kun's. Large enterprises had plenty of ways to pinch small and medium enterprises in the middle and lower reaches, and every squeeze would hit the mark.

"Very well, hand this matter over to you. Boldly go interview them and don't have any misgivings. For the long-term development of the Huakun Group, a slight temporary loss in sales performance is nothing to worry about."

On this matter, Lu Kun decided to delegate authority.

Although Sun Bowen's managerial ability was not top-tier, it had continuously grown and improved alongside the expansion of the Huakun Group. Compared to two years ago, he was simply unrecognizable.

One must look at a scholar with new eyes after three days apart!

"Oh, Old Sun, what is this suggestion you wrote above about adding new campus and community supermarkets without installing alarm-receiving devices? What is that all about?" Lu Kun rubbed his forehead, utterly bewildered.

"Boss, this is mainly considered from a cost perspective. According to feedback from the staff at our campus and community supermarkets, cargo theft is actually very rare. Even when it occasionally happens, the value of the stolen goods is not high. Moreover, even if we installed alarm devices, it would be impossible for us to specifically assign dedicated gate-guard personnel to these small stores..."

Lu Kun did not hastily accept Sun Bowen's suggestion.

Human nature was a very complicated thing.

Lu Kun remembered that not long ago, on the opening day of a Huakun Group branch in a relatively remote county-level city, the alarm system malfunctioned and caused quite a bit of trouble.

The sales at the newly opened supermarket were indeed extremely booming, and the local townspeople, with limited exposure, treated the supermarket like a high-end establishment, swarming inside to stroll around.

Afterward, discovering that buying things in the supermarket was actually no more expensive than buying outside, they went on a buying spree.

A few individuals who liked taking petty advantages stubbornly hid small items in their pockets, crotches, or chests—something manual checks simply couldn't uncover.

When the opening day's sales performance was tallied up afterward, damn it, after making so many preparations, they hadn't actually made much money.

A bad review was hurled straight from the Huakun Group headquarters down to the local store manager.

......

As long as the alarm system was still there and could sound, it acted as a psychological deterrent to thieves!

To save costs and rashly withdraw it—who knew what might happen.

"How about this, for this final matter, we'll run a pilot program first. Pick a representative campus/community store to test it out. If no unexpected incidents occur, we will gradually roll it out. If any problems arise, we can adjust accordingly."

Lu Kun thought for a moment, feeling that a flat refusal of Sun Bowen's proposal might damage his pride, so he deliberated and spoke.

"Of course, a small boat is easy to turn around. Actually, I just feel that in the campus communities of certain key high schools and universities, we could explore this alarm-free model, hehe." Sun Bowen gave an awkward smile.

On this matter, it was normal for his boss to have reservations, since it related to tangible interests.

If an error occurred at any link, his own prestige within the Huakun Group would also be affected.

It was still safer to follow his boss's approach of "crossing the river by feeling the stones."

PS: The chapter published this morning was harmonized; it seems the sacred beasts are truly ruthless! How heartbreaking, I don't dare to drift anymore, I'd better continue to hunker down and survive, dog head to save my life!

Miaoshu Wu