"Sales were up this month."
Which sales?
In many monthly reviews one number goes on the screen and everyone argues about it. But in a market that works through distributors, there are three numbers. They are not the same, and they do not answer the same question.
Sell-in. What the company sold to the distributor. It drives supply and the shipment plan.
Distributor inventory. The stock held at the distributor, waiting to be sold on. It tells you whether the next order is needed yet.
Sell-out. What the distributor sold to pharmacies and hospitals. It is the closest of the three to what the market is actually taking, and it tells you where field effort and coaching should go.
When sell-in runs ahead of sell-out, distributor inventory builds up. A strong sell-in month on top of a growing stock is not good news. It is stock the market has not taken yet, and often next month's slow start.
That is why I do not load the distributor at month end to close a gap. It makes one number look good and makes the other two harder to read.
And before I judge a rep on a weak month, I check one thing first: was the stock actually available at the pharmacy and hospital?
“Sell-in is what we shipped. Sell-out is what pharmacies and hospitals bought. Inventory sits in between.”
Lesson 3 of 13 in Step 2: Targets, forecasts and numbers, with the full guide and a checklist for this week.