Channel Shaping to drive more $

In my previous article, I explained in simple on what is SCM and what are the different functions in the supply chain.

In this article, let us focus on understanding the sales of a manufactured product and a few details in the sales process.

We all know that a product is manufactured by someone, while sold by someone else. This is what is called as Indirect sales. Example, any consumer brand like a Cola drink or a HP laptop.

There are also cases where the manufacturer directly sells a product using his own sales personnel or on the website (e-commerce) or some other own means. And this is called Direct sales. Example, Tesla.

Most of the manufactures have hybrid model of doing both indirect and direct sales.

Direct sales is simple and straight forward with just 1 player in each end, while indirect sales is complex and fuzzy because of multiple players between the manufacturer and customer.

Now let's understand the complexities in a indirect channel and how can a software solution solve them.

There are 3 areas majorly in the indirect sales channel business function and we can dive deeper below to understand.

1. Channel Data (Sales, Inventory, Returns etc.) : A manufacturer sells a product to various distributors (tier-1), then a distributor stocks the product and sells to various re-sellers. Then, more further down till it reaches the end-user. This sales data, inventory data, or if any returns data at various levels in the distribution/sales channel is very vital for the manufacturer. Why ?

• to understand the demand and accordingly plan sourcing, manufacturing etc.
• to understand how the distributors, re-sellers or retailers are performing sales, so next time they can sell more to a particular distributor who is selling more and give him some incentives to continue doing good sales.
• and more such use-cases to reduce inventory costs, forecasting etc.

E2Open has its solution of Channel Data Management (CDM), to collect/acquire, cleanse and enrich this data for the manufacturers to use and solve the problems as mentioned above, boost their sales (or reduce losses) at the end of the day.

Note:- The data we are talking about here is highly inconsistent, totally incomplete and with a lot of inaccurate information.

Any Partner, any Data, any Time

2. Incentives : As we just read this word above, yes, the manufacturers pay incentives to the distributors depending on their sales performance.

For example, a simple one could be paying 5% as an incentive on the over-all sales. A complex one could be paying 2% for first $10k sales, then a 4% till $50k and this is applicable only a few products during only June-July-Aug, 2019.

Yes, as we have good sales data from our above mentioned CDM solution, we can calculate incentives rightly letting manufactures to do payments accurately to the channel partners.

E2Open's Performance Incentives Solution controls over-payment or under-payment of incentives, resulting in a healthy relationship between manufacturer and its channel partners.

3. Marketing : Third and last piece, I would like to take you all through is how does a manufacturer support its distributors or re-sellers in selling more.

In general, a manufacturer has certain amount of money to fund marketing activities to result more sales.

With 1000s of distributors/re-sellers (called as channel partners) for a manufacturer, it is complex for them to manage this fund like releasing the money to partners, for promotion of which product in which country/area from when to when, if the fund is rightly used or not and many more other problems.

Here is where, E2Open chimes in solving the problems around marketing activities with its Business Planning, Marketing Incentives and Payment Services solutions.

So, a manufacturer can use the above mentioned solutions accordingly to orchestrate success in it's indirect sales channel. Success is generating more $ and controlling loss of $.