Best Practices in Channel Inventory Management

Channel inventories can represent either significant business opportunities or considerable risks for suppliers—depending upon how well they are managed. A supplier that can effectively position inventories in the channel to match demand will maximize revenues and minimize inventories. By contrast, a supplier that doesn’t properly mange channel inventory, accepts the risk of stock outs, inventory write offs and missed sales opportunities, not to mention the loss of customer
goodwill.

Inventory management also plays a significant role in supplier revenue recognition. Accurately knowing how much inventory is in the channel minimizes allowance, permitting the supplier to recognize the maximum allowable revenue.

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