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Pushing extra stocks to your channel partners is a win-lose strategy.
Many consumer goods companies indulge in recording extra sales at the month-end by pushing stocks to their channel partners. The practice is more pronounced during quarter-ends and year-ends. While it does improve the company’s performance (in the short term), as reflected by its books of accounts, does it really pay off?
Any stock push beyond the mutually agreed inventory norms is detrimental to consumers as it affects freshness of stocks on the retail shelves adversely. Moreover, channel partners often cut down on assortment if they are forced to carry extra stock of an item.
Pushing primary sales looks like a win-lose strategy in the short term, but it quickly degenerates into a lose-lose strategy as consumer needs of freshness and assortment are compromised.
My experience in working with several consumer goods companies suggests that stopping this practice leads to a virtuous cycle with a multiplier effect on both the topline as well as the bottom line.