Channel Management Solution: A White Paper

"It is not the strongest species that will survive, nor the most intelligent, but the one most responsive to change" - Charles Darwin


Change is the only permanence. Nowhere is it more applicable than in the world of business.

The 1st industrial revolution, revised the definition of economies from agricultural to industrial. It was the age of machines. Machines that helped in mass production and standardizing products.

We are now going through a second industrial revolution. This is the age of technology. And it is about much greater efficiency in markets (cutting down on time, labour-intensive processes, overheads) and in the flow of commerce (how trading partners collaborate to streamline their businesses and generate better services for the customer).

Technology is a great equalizer; that which is available to company A will eventually be available to company B. Products and services, in due course, become homogenous. Technology has altered 2 fundamentals of business: (a) how people pay for things (b) how they inform themselves.

Today's customer is bold and aggressive. His awareness of the market and the choices available are high. It is important for any company to be customer-focused for customer retention. Also important is tapping any potential for cost saving within existing company systems.

Given the above, what kinds of value additions are going to see a company possess that edge over his competitor? Speed and smoother flow of information.

Endeavours have been made in this process to make better use of technology. It has always help speed up the business process. It is more evident today when one talks of e-business thanks to the Internet.

E-business is simply using the Internet to connect with customers, partners and suppliers and transforming existing businesses to make them more efficient. This leads to collaborative commerce.

The current trend for e-business can be traced in 3 steps:

Step 1: Electronic Data Interchange (EDI): EDI was designed to process large volumes of highly structured data. It involved storing and processing of data electronically. This helped in reduction of labour intensive tasks of exchanging data, controlled information exchange and streamlined the process. EDI by nature was rigid, with complex standards and allowed no market transparency.

Step 2: Basic E-business: Stage 2 saw the movement from EDI to business over the Internet. It was basic e-business between buyers and sellers without an intermediary. Early adopters of this were largely technology companies with technology-savvy customers and little or manageable channel conflict.

Step 3: Collaborative Commerce: Step-3 leverages on the concept of e-business. This builds on step 2 by adding support for business processes that include: before, during and after the order. It sees trading partners come together creating market transparency.

The Internet is causing radical and profound changes to companies' sales and distribution strategies - these changes can be viewed either as a threat or opportunity. Today's climate requires enterprises to assess existing business models and revise strategies to avoid loss of market share. Opportunities offered by the web for the business world are huge and how a firm leverages on this will determine their growth.

For a company going in for e-business, some key benefits would include:

• Aggregation Leading to Internal Transparencies: For the employees, gathering of information about their company on web site provides an insight into the workflow of the firm. This kind of information provides internal transparencies for personnel from different divisions in a company. This leads to sharing of information, highlighting of good business process and documenting of business methods.

• Lower Customer Acquisition Costs: Suppliers can discover new buyers at much lower costs as compared to traditional marketing avenues. When you are on the web, the customer can easily find you.

• Convenient-Ordering Generates More Transactions: If buying is convenient and information about the product, company and market is readily available, buyers tend to purchase more often. Due to ease of availability, it also attracts new customers.

• Lower Selling Costs: Orders configured online contain fewer errors. According to certain estimates, upto 40% of all orders have to be reworked because of errors, incompleteness, miscommunication or mishandling. It allows better discovery of competitive advantage. Also many overheads related to traditional mode of ordering (specially stationery) are drastically reduced.

• Market Intelligence: Information exchange will give suppliers a much better view of market conditions and savvy suppliers will serve the unfulfilled needs in the market as they identify them.

• Brings Suppliers and Buyers Closer: When trading partners move their business on-line, they can move several labour-intensive processes online and streamline their entire supply chain. This also helps create an e-marketplace.

Several companies have adopted the new system of web-based business. These early adopters have given a new meaning to business competition. Markets are now experiencing e-business competition.

Channel Management

A company uses channels to sell its products/services to the markets: they may be agents from within (marketing/sales executives) or where the market is wide, reliance is on channel partners (dealers/distributors).

The channel's job is to deliver information and products/services to customers, and to deliver the proceeds from these products/services to the producers. Channels not only add value to products or services, but also create customer and shareholder value, brand equity and market presence for a company.

Channel partners in the process become customers to the OEM/Principal.

Companies, in the past, have focused on supply chains as they helped in reducing costs and speeded up the process of manufacture. The selling chain, now, can also be streamlined using technology with the same benefits. By moving channel operations online, the channel will become significantly more efficient.

In the traditional company-channel partner system the problems are:

• Dropped Leads: Sales leads from the OEM/Principal to the channel partners are not passed on or tackled efficiently. 40% of all leads are completely dropped, and there is no accounting for the rest of the 60%;

• Lack of Product Information: It is usually difficult for a channel partner to find out what is for sale, since products and prices keep changing frequently;

• Poor Servicing of Channels: Poor service provided by OEM/Principal due to limited hours of operation, single language support, dated catalogues, poor product documentation, non-availability of product experts to respond to problems and explain products;

• Little Selling Assistance:Lack of assistance on how best to sell and position products with the customer; non-availability of advice on cross-selling or sophisticated campaign management;

• Low Customer Intelligence: OEMs/Principal working through channels tend not to know who their customers are and have little or no profile and customer segmentation data on which to base marketing and product decision.

• No Aftermarket Support: Parts and accessories are frequently the most profitable segment of an OEM's business. Customers usually prefer parts and accessories from the manufacturers. But due to lack of aftermarket support, channel partners resort to third-parties as they are easier to procure and service. Consequently, many manufacturers lose their market share in the P&A market;

• Non-availability of Inventory Information: Due to paper-intensive processes, information on availability of stocks/parts and accessories is often delayed creating selling/servicing problems;

• Fragmented View of Market: Difficult to integrate information from all channel partners to understand the complete market.

• Sales Management: It will provide details to be input for all sales related activities viz: enquiries, booking, allotment, invoice, stock transfer, returns etc. Reports generated will include: daily sales report, product wise sales report etc;

• Inventory System: This module is a control system for maintaining availability, movement and order status for various items. It is a crucial support tool for material planning; it provides a reporting tool that can maintain high level of accuracy. Functional units include: stock, sales/purchase statements, delivery notes and stock transfers, change of NDP rate/inward cost/retail price/selling price of items etc;

• Customer Relationship Management: This module is related to improving business processes associated with managing customer relationship in the area of sales, marketing, customer service and support. It personalizes services, provides multiple choices for customer support, track customer satisfaction and deliver customer-centric loyal programmes.

• MIS System: This is a module that consolidates information from the other modules to provide intelligent reports. These reports help analyze the market status of products/services by generating feedback reports, sub-dealer network details etc. This solution, at the OEM's end will be reflected in terms of structured and consolidated information, in the form of reports. These reports will throw light on sales from different standpoints including:

• Sales Performance: Generation of information on sales: daily, monthly, yearly, area-wise etc;

• Lead Conversion Performance: Helps the manufacturer keep track of the enquiry conversion rates by the dealers;

• Trends in Market: Shows the movement of the market; if there is growth or fall of market; towards what is the market moving; is there a new segment that needs to be addressed;

• Comparative Performance of Products/Services:Comparison of the several products/services offered and how they fare compared to each other; compared to zones of sales;

• Performance of Dealers: A break up of each dealer performance; which product/service has been most saleable per dealer; the market share per dealer; his growth in the market;

• Performance of the OEM: Drawn up on various parameters (market share, institutional sales etc) will reflect achievements in terms of actuals vs planned;

• Is an on-line process and has capacity for 24x7 access;

• Allows real-time reporting which in turn results in speedier and more informed decisions;

• Allows the channel partner peruse the OEM's partner e-market, get information at any time, share leads and communicate more frequently with other channel partners;

• Allows the channel partners to use the e-marketplace to schedule service request, capture leads and order parts and accessories;

• Provides Partner Relationship Management applications which would build efficiency and will completely restructure channel relationships;

• Seals loopholes that exist in current system due to use of traditional communication processes: this may be due to non-recording or due to oversight;

• Streamlines the processes of dealers; applications, entries, processes and output are uniform in nature;

• Being on the .Net architecture, provides a scalable solution with distributed processing services. These allow you to scale up or scale out optimizing site performance and provide headroom needed to increase the amount of content, transactions, applications and users;

• The architectural features allow applications to take advantage of high-performance single servers, or distributed applications across multiple servers, which ensure uninterrupted services. It also allows low downtime providing high application availability;

• Most of all, it reflects market reality and aids you in making business choices that will affect the bottom-line of the firm.

Channel Management Solution is based on the latest Microsoft .Net servers including MS Windows 2000 Advanced Server, MS SQL Server 2000, Application Center 2000 and MS Internet Security and Acceleration Server 2000.

The services used are Internet Information Service 5.0, Message Queuing Service, COM+ component services, Transaction services, Windows management tools and XML.

This system basically consists of dealer database servers, OEM database servers, web application servers and authentication and sessions manager server.

Dealer Database Servers: : Dealer databases which contain dealer transaction details are stored in these servers. It manages the various dealers of each OEM, and maintains one database per dealer.

OEM Database Servers: These servers contain information on the OEM including catalogs which remain common to several dealers . It accepts data from the dealer database servers and updates corresponding database.

Authentication and Session Manager Server: This is a centralized database which holds authentication details of all the users and their mappings to the data servers . Centralization helps in reducing redundancy and increases maintainability.

Web Application Servers: This is the entry point for all the users to access the application . It fetches data from the respective dealer and OEM database for the users. It contains the Business Components and Active Server Pages. ASP acts as the interface between the users and the business components. It communicates with all the other servers and also acts as a load balancing server.

Internet Security and Acceleration Server: This acts as a firewall between the users and the system.

The user will be able to access this system through his browser using the http protocol.