Groups managing Channel business need to provide financial forecasting information to give guidance about future revenue, inventory, and customer outlook on major parts of the business.

To simplify this process, Channel management teams manage large customers as specific customer programs with product, program, and forecast plans that give insight to the product lines and operations about what is expected in the future. They also aggregate the remaining customers into blocks of business that they identify as “other” business keeping it segmented geographically / business center / product line to keep focus on supporting these customers.

Forecasting Distribution Business using POS

Major elements of building the POS forecast:


  • Opportunities come into the distribution business in two ways: Major customers are managed by direct salespeople driving opportunities in a CRM Sales Management system. These customers (identified as Tier 1/2 customers) often turn into fulfillment customers in the distribution channel when the production moves to contract manufacturers.
  • When a major customer program gets identified as going to a CM, the opportunity moves to the distribution channel to close the business and fulfill the demand.
  • The Opportunity and Design Registrations solutions drive everything else in the channel management system – quotes, credits, debits, and orders all need to have DRs associated with them to get non-price book action taken.

Shipments and backlog

  • Distributors report shipments through POS reports weekly or monthly
  • Distributors report inventory and backlog in regular reports
  • Both of these databases are part of the history and need to be used to build a forecast.
  • POS is not the total program shipment record for the end customer opportunity but as far as forecasting future distribution business it is all that is needed to build a forecast.

POS Forecasts

  • Building a POS forecast is no different than building a forecast for a major customer opportunity. Forecasts need to be driven by end customer demand or by revenue recognition by the supplier, and you need to make sure you are forecasting based on the right point of view.
  • For the major customer opportunities that are known and recognized you need :
  • POS shipment history –  quantity & price
  • Opportunity (Design registration) estimated demand
  • Sales builds a model of what quantity will be needed in the future by month
  • Compare that model to the distributor backlog if available
  • Adjust the model to show a distributor demand (expected shipments to the distributor to support the end customers needs)
  • Each of these pieces of information is accessible in the forecast system to enable sales to build a forecast based on the historical and current distributor position.
  • For mass market or other customer categories (General Market) the system needs to support the following:
  • Provide the aggregated POS history segmented by regions, and product lines
  • Evaluation of the “General Market” backlog on the Distributor’s books
  • Access the “General Market” Inventory if available
  • Ability to create General Market Opportunities, and Forecasts at the regional, product line, and total levels by accessing the historical data and current distribution inventory and backlog information
  • General market forecasting is a good place to use NEHANETs AI capability to evaluate what the demand will be for various categories of markets and customers as needed to get a good picture of what to expect in the future.

Building a POS forecast is really no different than building any other forecast with supporting data provided by shipping history (POS), Backlog (distributor backlog) and Opportunity info (DRs). Once you have a market demand forecast for distribution you can make sure the distributor’s order backlog and inventory reflect what you expect them to sell in the market.

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