For manufacturers that rely heavily on direct business, a strategic shift to focus more on distribution sales could prove beneficial. I’ve recently noticed manufacturers focusing more on building their channel or, at least, better leveraging their channel. For example, ST Microelectronics, announced this summer that it intends for at least 35 percent of its sales to come from components distributors (almost double the 17 percent it yielded a few years ago). This caught my eye, as extending investment into the channel can be a worthwhile path for revenue growth, but not without consideration for some less than obvious bumps along the way.
High tech manufacturers that utilize distribution channels can lack full control and visibility. For what can become a significant percentage of their revenue, this void actually tends to lead more to inefficient processes and headaches. Sales operations and channel managers spend an excessive amount of time and resources gathering channel data from multiple systems. Then, additional effort is required to relate the disparate data for conducting analysis.
Lacking visibility into your distribution channel not only creates inefficiency, but also can put a high tech manufacturer at risk. These risks include:
-Over- or under-estimated reserves
-Sub-par rebates compliance
-Poor transparency on inventory volume and value
When a manufacturer sets out to significantly grow their distribution sales, I would argue that part of this decision should include an assessment of the systems they have in place to properly support these expanded efforts. High tech manufacturers need systems that can facilitate the production and communication of timely and accurate information across channel, sales operations, and executive management teams.
It is often assumed that Business Intelligence (BI) solutions should suffice; however, the reality is that companies that rely on BI solutions to analyze and report on their distribution channel are likely leaving money on the table.
Ultimately, it takes more than just capturing the data. High tech manufacturers need solutions and systems purpose-built to fully support their channel strategy. An optimal solution should help high tech manufacturers to:
1. Increase effectiveness by minimizing over- and under-stocking
2. Maintain price consistency in the market
3. Improve visibility into direct and channel sales and pricing
What additional capabilities do you think a solution should help facilitate for high tech manufacturers wanting to better leverage channel sales?