Direct and distributor channels without double counting: the manufacturer's reconciliation

A manufacturer's sales report has a number for direct sales, a number for distributor sales, and a total. The total is right. The channel numbers are wrong whenever a distributor's sell-through report has been added to the shipments that fed it, or a customer served both ways has been counted in both. This guide sets out the channel roll-up that cannot double count.

The rule

Channel is a dimension of every row, never a separate report.

Three channels, three shipments, one total. A distributor's POS report is a fourth file that describes what D-42 did with the $410,000, and it lives in its own view.

The assertions

Per period:

shipped revenue = direct + distributor + OEM

And where POS is loaded, per distributor:

POS sales ≈ shipments to the distributor − change in the distributor's inventory

The second is approximate because inventory reporting lags. It is reported with the variance shown, not asserted to zero.

The rows you need

• Shipments: customer or distributor, product line, channel, plant, date, revenue. From the ERP.
• POS reports: end customer, product line, period, from each distributor that provides one, mapped to the same product lines.
• Distributor inventory: optional, from the same reports.

Customer identifiers only.

Building it

1. Channel on every shipment row, from the customer master's type.
2. Reconcile each channel to its shipments; assert channels sum to shipped revenue.
3. Load POS per distributor as the end-customer view, mapped to product lines.
4. Reconcile POS to shipments per distributor with inventory, and show the variance.
5. Measure fit per customer per channel; combine only where the end customer is confirmed across channels.

A worked example

One quarter.

Both variances are small and explained mostly by inventory timing. D-17's POS exceeding shipments is normal when the distributor is drawing down stock. If POS had been added to shipments, distributor channel revenue would have read $7.5m and the total $13.5m against a shipped $12.8m.

Where it goes wrong

POS added to shipments. The classic. POS is a view, not revenue.

Customer type stale. A distributor reclassified as direct after an acquisition changes the channel split retroactively unless the change is dated.

Product lines mapped differently per distributor. Each POS report has its own codes. Map to one line list before reconciling.

Inventory ignored. POS against shipments with no inventory term shows variances that mean nothing. Load the inventory change, or report the variance as unexplained.

Every month, three channels, one total

Mapped once, the shipments export and the POS reports produce the channel roll-up and the POS reconciliation every month. Covirage builds this from the exports as they are. The industrial manufacturers page describes the setup, and the catalogue fit guide covers the fit measure this roll-up makes possible.