Gross Margin Management



In many categories and markets, OEMs reduce prices due to competitive pressures or end-of-life product lifecycles. Channel partners such as distributors, dealers, and retailers often are holding inventory of these products, but purchased at the previous, higher price. In order to ensure their channel partners don’t incur losses or return unsold inventory, OEMs often extend inventory and price protection programs to mitigate partners’ risk. These include:

  • Price Protection Program
    A price protection program is a vehicle through which an OEM compensates a distributor following the reduction in sales price of a specific product. Upon a price reduction, distributors may still have inventory at the older, higher price. Rather than return all the goods, vendors provide price protection on these products in the form of a discount to reflect the new, lower price.  

  • Stock Rotation
    Rotating stock means arranging the oldest units in inventory so they are sold before the newer units. For example, an electronic store will restock its shelves by putting the oldest units near the front part of the shelves, and the newer units in the back. It is important to rotate stock in all areas: retail display area, warehouse, factory, and other distribution point in order to reduce losses from deterioration and obsolescence.

  • Rights of Return
    This refers to distributors' contractual right to return product within certain limitations. For example, returns may be limited to a certain percentage of inventory that is allowed to be returned.


Price Protection, Stock Rotation and similar channel inventory incentive programs are sometimes exploited with fraudulent claims. The key to preventing abuse is having the ability to calculate inventory levels and value channel inventory accurately, at any time, on demand. This is easier said than done when goods have been shipped at many different prices and multiple price changes may have happened while the partner held the goods in inventory.

Entomo's Inventory Programs module automates and streamlines the entire process of:

  • Calculating inventory levels;
  • Validating claims; and
  • Revaluing the residual inventory, thereby reducing or eliminating fraudulent or incorrect claims payments.


  • Streamlined and automated process
  • Validate claims
  • Calculate and value channel inventory
  • Eliminate claims overpayments
  • Payouts can be calculated with or without explicit claims being submitted
  • Analytics including usage metrics, program accruals and exposure

Eliminate PRICE PROTECTION claims overpayment and double-dipping

Using Entomo’s integrated solution, you can automate and streamline the entire process of calculating inventory levels, validating claims and revaluing the residual inventory, thereby reducing or eliminating fraudulent or incorrect claims payments.

  • Inventory Levels and Inventory Valuation
    On an event-driven basis (i.e. at a price drop or at the end of a period), Entomo’s SmartHub® automatically calculates the exposure due to unsold inventory in the channel. Inventory levels are continuously tracked by the SISO Inventory Reconciliation module.

    For example, if there is a price drop, SmartHub automatically recalculates the channel inventory, for every part and every partner, as of the date of the price drop. This quantity is then used to validate against the claim. SmartHub also re-values the ending inventory units to reflect the new lower price. Sales of consignment inventory require similar recalculation and revaluation of inventory prior to invoicing and revenue recognition.

  • Claim Submission and Validation
    Payouts can be calculated with or without explicit claims being submitted. If explicit claims are required, they can be submitted by email, EDI or uploaded via the Partner Portal. All price protection, stock rotation or product return claims are auto-validated against reconciled inventory from the SISO Inventory Reconciliation module.

  • Review, Adjustments and Payment Authorization
    Once automated validation is completed, program administrators can review and adjust the claims if necessary and authorize payments. Manual adjustments are tracked with an automated audit trail. Payment authorizations are automatically transmitted to the appropriate financial system for payment.



Entomo automates and streamlines the entire process of calculating
channel inventory levels, validating claims and revaluing residual inventory.


channel Incentive effectiveness and analytics

Entomo not only enables accurate and timely price protection program claims payments, but also provides a comprehensive view of inventory incentives including usage metrics, program accruals and exposure. The solution allows companies to do predictive analyses to calculate the impact of price drops based on current channel inventory, thus ensuring accurate timing of price changes. Incentive analytics can also be integrated into the Channel Analytics and Dashboards module.

Entomo’s Customer Success team is available to help you implement and manage these programs, including validation and payment.

Why Channel Management is Broken  Learn what needs to change in the traditional channel process and how to fix  it. Download Now

How to Manage Your Channel with Salesforce  Learn what it takes to manage your channel proactively with Salesforce Download Now
SSAE 16 Type II - Assure Professional


"Completing the SSAE 16 requirements reflects our commitment to our customers, to international security and data integrity, and to control standards,” More.



"Automate, streamline, and manage core channel activities to drive increased revenue and partner performance, directly from your Salesforce interface,” More.