How to make changes in channel strategy?

This is one of the hardest things to accomplish because once you have put all the relationships and systems in place, it is not easy to try something different.  The most difficult change to accomplish is to bypass a channel participant.  This is even harder for a small or medium sized company because business is simply easier for companies with significant size.

I often run into situations when the management realizes that sticking with the current channel strategy is impeding growth.  However, upsetting their existing partners can be disastrous as well because they bring bulk of the revenue and can drop your product line.  One of the low-risk options to accomplish this is launching a new business altogether (the business scope can be adjusted based on the precise nature of the distribution chain).

I also like to think that business-people want to make decisions that are rational and profitable, so it is still possible to do what you want as long as it does not hurt your partners.  I recommend this approach when the incremental benefit is modest from a new channel network.  Once you explain the vision to your partners and if you can convince them that their business will not be harmed (or will gain to some extent), they are most likely to be supportive.

If the upside potential is huge, then, a business case can be made to even upset your current partners.  In fact, it might be justified to terminate some relationships deliberately or let them die on their own if the benefit is huge.

What is important, though, is to understand that such decisions should not be taken without conducting an analysis, particularly looking at various scenarios and how each might play out.  To accomplish that, I strongly recommend consulting help because we can often interview supply chain participants anonymously and assess the impact on relationships.  To execute an exercise of this kind, I typically recommend the following approach: