Challenges of Sales in Sales Out (SISO), Inventory Reconciliation and Management
The basis for attaining an accurate channel and inventory picture is clean and actionable data. Yet even after cleansing and normalization, data validation remains a major challenge. For example, if a channel partner claims to have sold 750 units, in a given period, how does one know that he even had 750 to sell? Or if he reports that he has 400 units of a given product in inventory, how does one know it is not 40 or 4,000?
Not being able to answer these questions with confidence leaves companies open to revenue recognition, incentive payment and sales compensation inaccuracies. Such inaccuracies can have dire consequences from an overall business and compliance point of view.
Get the Real Inventory Picture with cCRM
With Entomo’s cloud-based cCRM solution, based on the Entomo SmartHub® platform, companies get real-time visibility into channel activity including sales, returns, in-transit shipments and inventory levels.
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Collection, Cleansing and Normalization
Inventory data in any format or protocol is automatically collected and cleansed from partners daily, weekly, monthly or at other intervals. Once received, all channel data (POS, inventory, claims) is auto-processed by the SmartHub, extracted and cleansed of extraneous data. Cleansed data is then normalized to ensure consistent field names, date formats, etc.
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Sales In Sales Out (SISO) Inventory Reconciliation
Automated reconciliation, by part and by partner, and analysis of reported channel data including sales-in, sales-out (POS), returns, inventory, in-transit and uncredited RMAs. Automated adjustment for mis-alignment of data with respect to several factors, including reporting dates and financial periods. After investigation, unresolved variances can be adjusted by authorized sales operations or via Entomo’s managed services. Any overrides can be annotated with comments, and an audit trail is maintained.
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Serial Number Validation and Matching
For industries such as computers, telecommunications and packaged software, the SmartHub provides the ability to match sales in and sales out using serial numbers. This is undoubtedly the most accurate way to validate, reconcile and validate partner-supplied data, however it is not possible to do for all industries.
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Perpetual (roll-forward) Inventory
The SmartHub maintains a perpetual inventory view of all historical inventory levels, by partner, by part and automatically rolls forward one period’s ending inventory to be the beginning inventory for the next. This analysis can be run on the fly for any arbitrary date, for example, to recalculate ending inventory for price protection or stock rotation payments.
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Valuation and Currency Conversion
A key differentiator is the SmartHub’s ability to value inventory in a variety of different ways, including FIFO, price book or reported cost. If using reported cost, Entomo supports currency conversion for all transaction types from any reported currency to any base currency. Conversion rates can be real-time or synchronized with the company’s ERP system.
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Consignment Inventory
Invoicing and revenue recognition for consignment inventory require proper accounting of the sold-through and remaining inventory. SISO Reconciliation and inventory valuation are key elements required to manage consignment inventory.
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Deferred Margin Calculations
For the purposes of sell-through revenue recognition and booking of reserves, the SmartHub will automatically calculate deferred margins by part and by stocking distributor. If the customer subscribes to the price protection module, the deferred margins are calculated based on post-price change values.
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Inventory Analytics
Users can generate on-demand interactive channel analytics with Entomo’s inventory management module for an overview of inventory by partner, sales in sales out trends, stagnating inventory, potential stock-outs, etc. The analytics can also be visualized via the SmartHub’s dashboards. The ability to automate SISO reconciliation, is crucial to eliminating revenue leaks, improving forecasts and identifying potential gray market activity. However, even if companies use partner-supplied inventory data as the gospel truth, they can use that reported data to run the channel analytics, based on reported inventory.