Indirect channel management: check out the benefits for manufacturer and distributor

As you may have noticed, effectively managing an indirect sales channel is an extremely challenging mission. After all, once the manufacturer starts to count on distributors as business partners to sell its products, it runs the risk of not having enough information on the inventory and sales performance of these goods, jeopardizing the entire planning of its supply chain.

But, on the other hand, your company already knows the countless benefits that the use of the indirect sales channel provides and you can’t work without them, right? However, this strategy will only be really worthwhile and will offer competitive results if it is followed by proper management.

Cargill, for example, saw a 15% increase in sell-out when it gained access to data from its partners.

Distributor insights help to improve processes at both ends – for the manufacturer and the distributor. Consider the case of a manufacturer of cleaning products that, when starting the proper management of its distributors, realizes that the rate of customer assertiveness is below the established target.

Understanding this, it is possible to establish a collaborative relationship with distributors in order to investigate the causes and handle them accordingly, focusing on common goals without, however, hampering individual goals.

This can lead the manufacturer to discover, for example, that the sales team did not conduct all the visits planned for that month, leaving customers without coverage, or that the establishments are giving preference to powder detergent from competitors for offering a more accessible price. Having information like this in hand helps:

  • The manufacturer, in reassessing costs and reformulating prices or even considering the implementation of promotion actions that highlight the competitive advantages of their product. This makes it offer items that increasingly meet the needs of the end customer; therefore, increasing their market share;

  • The distributor, by identifying bottlenecks in its own process – the low rate of customer assertiveness, for example, realizes it leads to losses for them as well, such as reduced revenues and customer loyalty. By having access to results like these, the distributor can develop improvement actions such as sales training with their sales team, optimizing the routes of visits and even aligning the service provided by carriers.

Monitoring the performance of its products also helps the manufacturer to offer a more appropriate mix according to the reality of each distributor, thus, to the end consumer as well. The cleaning products manufacturer, in the example above, can even develop new products based on trends and identified consumer behavior, in addition to mapping new opportunities for working with other companies served by the distributor, such as convenience stores.

We are experts in synchronising your business to actual demand - by always making your product available to the consumer, at the right place, time and quantity. We are Neogrid - a company providing automated supply chain management.