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.
Leaner Inventory Unlocks Extra Resources
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.
Maximizing Revenue Opportunities by Reducing Stock-Outs
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. Not only do producers have more up-to-date information about the products on their partners’ shelves, they also have a foundation of accurate data that can be leveraged for advanced forecasting models, predicting spikes in demand before they overwhelm suppliers.
Better Product Planning Through Increased Customer Visibility
Ultimately, getting more granular and timely data from channel partners gives producers a clearer picture of their customers. Instead of getting market information second- or third-hand from resellers and distributors, companies know exactly which products customers are buying at what price and how quickly they’re moving off the shelves. This crucial intelligence is often obscured with conventional partner reporting methods that only show the amount of products sold over a given period of time.
However, producers that have better visibility into the behaviors of end customers can use that intelligence to drive more customer-focused product design and planning. Downstream insight through comprehensive channel data management can alert producers to new demands in the marketplace as they arise, allowing them to make changes upstream to satisfy customer needs faster. Conversely, getting early warnings about negative market reactions to certain products or features empowers companies to change course and make adjustments before the channel is stuffed with inventory that won’t sell. This protects producers against the dreaded cycle of price cuts, buybacks, and write-downs that come with over-supplying a product that doesn’t fit the market.
Today’s complex supply chains enable companies to take advantage of a wide range of economic efficiencies, but they can also become unwieldy if they aren’t closely tracked and aligned with end-customer needs. With most global enterprises relying on channel partners for a majority of their sales, shining a light on this area of the supply chain becomes a necessity. Channel data management systems that deliver decision-grade insights have become an invaluable tool for managing your supply chain.
Ted Dimbero is a cofounder of Zyme and is the Chief Customer Officer. In this role, he is responsible for all customer facing activities including operations, support, professional services, and customer advocacy. Prior to Zyme, Ted spent seven years in various consulting and product development leadership roles at i2 Technologies, the market leader of supply chain management software. As Vice President of consulting at i2, Ted delivered supply chain transformation projects globally to a broad base of high-tech companies across the semiconductor, OEM and distribution sectors.
Ted was also the head of information systems for Hitachi Semiconductor America where he was responsible for all the business, engineering, manufacturing applications and infrastructure to support Hitachi’s North American facilities. Ted has also previously held management and engineering positions at Harris Semiconductor, where one of his business transformation programs was awarded the 1995 Franz Edelman award for management science achievement.
Ted has an MS in Computer Science from Florida Institute of Technology and a BS in Computer Engineering from the University of Florida.
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