Data Blog by Lizeo
Private panels: what are common issues for tire manufacturers?
Whether private or independent, the distributor panel is an excellent tool to understand the market. All private panels have one thing in common: they allow tire manufacturers to build a win-win relationship with their distributors. By providing the tire manufacturer with a representative view of the distribution ecosystem in which it evolves, the private panel can also become a powerful tool to manage its strategic actions. What are the issues for its sponsor, however, the tire manufacturer?
Reminders about the private panel
A private panel is sponsored by a customer named the “sponsor”. The latter will select the distributors it wants to involve in the panel – in other terms, the distributors from which it wants to recover sales details relating to its brands, and which, most of the time, are its direct customers.
The data communicated only concerns the sales associated with the sponsor’s brands. However, with the distributor’s agreement, the sponsor can recover information about its competitor’s sales. In this case, the data must be anonymous and “aggregated”, i.e. transferred without details about the brands and products.
The sponsor is free to decide what information the distributors taking part in the panel can access. This sharing is central to the agreement between the two parties when the panel is created. Within the context of private panels, the sole role of the partner that processes the registrant’s data is to process the data and guarantee the confidentiality of data. The partner cannot, under any circumstances, decide to share this information: only the sponsor is responsible for this decision.
There is a significant difference between inventory information, which constitutes a type of data that is different from sales data and customer information, which provides further details on sales information. In summary, the registrant can choose to declare only what it has sold, or provide details about the buyer (its customer).
Private panel issues for the tyre manufacturer
By creating a private panel on a sample of distributors, the tire manufacturer can obtain a real visibility of the sell-out market in the distribution sector it wants to study. Usually, this concerns its direct market.
Specially designed based on problems encountered by the sponsor, the private panel can also meet many and varied expectations.
Facilitate the sales policy management
In particular, the panel allows the manufacturer to check that its sales policy is correctly applied by partner distributors, in terms of the product mix, but also price positioning, and to manage its actions with active distribution. In general, the tire manufacturer only has visibility of the average price charged by the distributor for its references. With the panel, the tire manufacturer can see the transaction amounts in detail, and as such check that the prices are in line with its sales policy.
Measure the competitiveness of its brands and products
The distributor panel can also allow the tire manufacturer to understand how its products sell in the distributor’s sell-out market by analyzing the:
- overall performances;
- segments or brand references which sell best.
With the private panel, a manufacturer can also evaluate its market share. For this, the distributor must share the sales volume for the brand in question, and the total sales volume it achieves (without providing details on competitor brands sales).
The panel can also be used to measure the evolution of performance over a period of time and evaluate the impact of its sales operations. It therefore becomes a powerful monitoring tool for trade marketing.
Assess the distributor’s performance
A private panel allows the tire manufacturer to measure the performance of its partner distributors and compare them with the market. The tire manufacturer will build on this understanding to identify:
- The distributors with which the brand’s products sell best
- The distributors for which there is a profit margin to develop the brands sales
- Opportunities or growth sources for distributors.
It goes without saying that by helping its partners to develop its brands sales, a tire manufacturer will also manage to boost its own business. The panel is a key asset allowing the manufacturer to:
- Help its distributors identify their business opportunities
- Measure the fidelity rate of its customers in order to identify levers for growth
- Help optimize inventory management and product rotation
Improve your market understanding and end customers needs
The distribution chain is built around different links. The tire manufacturer interacts commercially with a distributor (wholesaler or distribution network), who sells the brand’s products to an end customer, or an intermediate dealer who makes the final sale.
If the tire manufacturer has good visibility of the market, it generally has less control over the dealers and end customers’ needs. With the sales details provided by its distributor customers, the manufacturer can improve its knowledge of the final market and detect new opportunities in the portfolio of its partner distributors.
The tire manufacturer can then build on this broader understanding of the market to define its strategy in terms of pricing, product mix, product plan, etc. Based on these indicators, it can then adapt its sell-in offer to the needs of its customer distributors.
Optimize the supply chain
The information from the panel, once cross-referenced with inventory information from its distributors, will allow the tire manufacturer to optimize its supply chain by making more realistic forecasts for its sell-in need.
If the sales of a reference are low and the distributor has a lot of products in stock, the tire manufacturer can anticipate that the demand for this reference will be low. It can then reduce its production capacity to avoid significantly increasing its inventory.
On the other hand, a high sell-out demand and decreasing distributor inventory will incite the manufacturer to increase its production to avoid any shortage of this reference and therefore miss opportunities potentially picked up by competitors.
Today, market data is THE resource that companies inevitably need to define their strategic actions. For a tire manufacturer, the private panel can provide access to basic key indicators to help improve its understanding of the market and as such, improve its performance. Do you need help to build your own panel?
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