Nine places channel margin leaks — with the benchmark for each. Read the leak map →
Channel
A credit owed to a channel partner on their existing inventory when the manufacturer reduces the price of that product.
Distributors will not hold inventory if a price cut instantly destroys its value, so manufacturers agree to protect it: when the price falls, the partner is credited the difference on qualifying stock on hand.
The exposure is therefore a function of channel inventory you do not directly observe, and it crystallises on a decision you control. Accruing it as inventory moves — rather than discovering it when the credit is claimed — is what stops price moves producing unforecast earnings hits.
Channel inventory
Product you have sold and recognised revenue on that is still sitting in a partner’s warehouse, unsold to an end customer.
Stock rotation
A distributor’s contractual right to return a capped share of slow-moving inventory, usually quarterly and expressed as a percentage of purchases.
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