How do resellers reach the mythical zero overstock level? Without help from vendors, it is almost impossible. Resellers' need for secure stock levels is derived from their understanding of customer needs. If they feel confident in being able to update stock in unexpected and volatile situations, as well as in normal operating periods, they might be able to reduce costs. This will aid the vendor's penetration and limit the volatility of the channel.
The other side of the coin is over-distribution. Saturating a specific market has long-term implications not just for the product, but for the health of resellers as well. Vendors must be interested in protecting the margin for the reseller.
Establishing closer links between vendors and resellers may alleviate problems of this kind. But this is not the end of the improvements in the nature of channel relationships that are needed. Vendors should also be prepared to participate in the risk of market fluctuations. They should try to protect resellers from any overstock that was not a part of bad planning or simply the result of market upheavals.
Stronger vendor support in this area is not just a question of better logistics and tighter lines of communication. It also depends on more flexibility in channel agreements and better understanding of all the things that can go wrong.
Narrowing the gap between vendors and resellers in terms of planning, support and logistics will strengthen the channel and also provide vendors with more stability in their markets. Vendors will not risk being caught out when the tide shifts just because they didn't trust their reseller's judgement.
They will also get a firmer grasp of market trends, reducing the time needed to research and develop products. This will include working with resellers, who can be more in tune with customers' needs, to tweak products.
But co-operation shouldn't stop there either. Vendors need to invest more resources in raising the value of customer service through the channel.
Co-operation with resellers on this is key for the long-term health of the vendor-reseller-customer relationship.
Pre-sales and after-sales service are vital differentials - anybody failing to include them into the equation today will pay heavily tomorrow. Resellers should not be left to shoulder the burden of establishing such services alone. It's time vendors invested in developing a systematic approach to arming resellers with useful services that support their products.
So, asking for zero overstock is just the start of a long list of improvements the channel needs. Implemented carefully, these changes will benefit vendors and resellers and, in turn, trickle down to users as well. The golden age? Let's just call it margin protection for resellers.
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