WHAT IS CHANNEL MANAGEMENT?
Channel management is the process by which manufacturers or suppliers create formalized relationships and programs to get their products to end customers. Distribution channels take many forms and can include many of the following channel partners: ODMs (original design manufacturers), contract manufacturers, distributors, wholesalers, manufacturer’s reps, resellers, VARs and traditional retailers.
Channel-management activities have historically been a challenge for the manufacturer. After all, information and data often originate outside of the company, spread among hundreds or even thousands of channel partners. Information relating to which products are selling—when, to whom, and at what price—inventory levels, incentive and promotional program engagement and effectiveness, and sales forecasting and commissions, just to name a few. Historically, these processes were managed in-house using spreadsheets, databases and other ad hoc systems.
Increasingly, manufacturers are adopting purpose-build software and solutions to help gain control over complex channel relationships, drive pinpoint marketing programs and sales activities, and optimize inventory levels.
Channel management is a term we use to describe how companies gain control of multi-step, complex distribution channels to maximize revenues and reduce costs and cycle times. Optimizing distribution channels helps you build stronger and more profitable relationships while ensuring that revenue leaks are plugged. Core tenets include:
- Aggregate and transform complex multitier channel data into actionable information that can be used by channel sales, marketing and finance to increase revenues and gain channel insight.
- Streamline online partner collaboration and eliminate ineffective and error-prone manual processes, making it easier for your channel partners to do business with you.
- Ensure compliance at all levels, from channel partner contracts and licensing agreements to revenue recognition and regulatory requirements from the SEC or the FASB.
Channel-management application areas include:
- Channel Data Management – collection, cleansing, enrichment, and normalization of data.
- Channel Revenue Management – valuation, channel incentives, inventory reconciliation, and revenue recognition activities.
- Sales Performance Management – payment for sales performance, sales credit assignments and commission splits.
- Partner Relationship Management – partner opportunity tracking, collaboration, and scorecards.
- Channel Business Intelligence and Business Discovery – insights and analysis for reporting and strategic planning.
Channel management fundamentally transforms the way companies manage their channels and interact with their partner.