Getting stocking right is key to channel success
The problem is that getting the number right is easier said than done. A lopsided argument would be to sell howsoever much the channel partner usually sells (the traditional demand forecast based on historical data), but if one were to do just that then they may as well forget growth in market share. Our take on it differs slightly, we profess:
(1) Align channel sales & operations with marketing Quite often, aggressive salesmen push more stocks over to the channel partners without too much consideration for the end consumer demand being generated by marketing (ATL) leading to a pileup. A prudent way would be for sales & marketing teams to come up with target numbers aligned with marketing promotions being run. These numbers can then be run through closely with Channel partners (to factor in local variations) to finalise sales numbers palatable to all.
(2) Improve lead times A lot of incorrect stocking in the supply chain arises from long and frequently changing lead times causing overstocks as well as stockouts. While it is important to keep improving on lead times (considering costs), it is equally important to do so without too much variability to allow all resellers to maintain optimal stocks.
(3) Improve reverse logistics, particularly so if your products have a short shelf life. Stale/expired stock is a double whammy for the reseller - they degrade your brand value and take up valuable shelf/warehouse space from the reseller. A good reverse logistics process also helps build up valuable trust & confidence with the reseller.
(4) Improve visibility into secondary/tertiary sales Brand owners often analyze data from their direct sales only (quite often due to the lack of anything better) to plan sales. Such planning in isolation however causes the classic "Bullwhip" effect and brings about unnecessary distress to both manufacturing as well as sales. It is therefore imperative to track and factor in secondary/tertiary sales in all forecasts.
Having said all that, it is only now that advances in technology give us trade marketing guys the ability to execute it all smoothly. Now that smartphones are literally there in every Tom, Dick & Harry's hands, it's high time marketeers, sales blokes and operational staff leveraged them to win.