Companies have realized enormous success by creating complex supply chains to build and deliver their products to market with maximum efficiency. New technology has enabled businesses to keep a close eye on their supply chains, but these complex networks still contain dark areas, even among the most advanced global enterprises. Understanding products sold through indirect channels, in particular, has been a major challenge for today’s businesses. It also happens to be an enormous area of opportunity for companies that are focused on new channel data management (CDM) solutions to solve this puzzle.
There is an estimated $1.5 trillion worth of inventory sitting in the channel at any given time, yet this is an area of the supply chain where companies usually have the least insight. Businesses typically get monthly reports from channel partners on the amount of inventory on hand, whom they have sold to, and what they need, and even that data is often incomplete and riddled with errors. The lack of timely and accurate channel data is the missing link in the chain connecting producers to customers, and it results in hundreds of millions of dollars in missed opportunities.
It’s an age-old problem of visibility, and there are countless ways that accurate and timely channel data can drive critical business decisions and create more efficient processes. To start with the basics, there are three areas where real-time channel data management can immediately create value for producers.
Companies can dramatically reduce the amount of inventory being held by distributors, resellers, retailers and e-tailers with better channel data management. When producers rely on monthly reports and estimates to understand their inventory in the channel, they’re forced to deliver stock months ahead of demand to ensure partners have enough of a supply cushion to meet customer demand.
However, with real-time intelligence about the amount and type of products held by each specific channel partner, companies can guarantee product availability with a much slimmer cushion. Most global enterprises keep about twelve weeks of inventory in the channel at any given time, but timely data from partners, combined with advanced forecasting and analytics, can reduce the amount of inventory producers need to ship to partners by at least 20 percent. This frees up cash and other resources for producers to invest elsewhere in the business.
Even with twelve-week cushions of inventory spread among different channel partners, producers still run up against the issue of stock-outs from time to time. Traditional processes for managing inventory, often involving internally built solutions and manual forms, are more vulnerable to error, and sometimes there are demand spikes that suddenly appear between less frequent partner sales reports. Under this system, channel partners occasionally lack the inventory to meet customer demand, and producers lose out in numerous ways – competitors have a chance to step in, customers get a negative impression of the brand, and ultimately, revenues are delayed if not lost entirely.
Keeping a close eye on inventory and sales across the partner ecosystem with real-time channel data management empowers companies to reduce stock-outs and maximize revenue opportunities.