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Teaching notes · lesson 6 · a 20-minute class

Trade loading: sell-in and sell-out

Shipments are not sales to shoppers. Tracks: Retail, Finance.

Open the lesson

Learning goalsBy the end, students can

  • Tell sell-in from sell-out and say which one revenue is booked on.
  • Explain how loading flatters one quarter and costs the next.
  • Read retailer stock weeks as a warning sign.

The 20-minute classMinute by minute, with the lab on the projector

  1. 0:003 min, to 3:00

    Cold open

    Show two lines: shipped and bought. Ask which one goes in the accounts. Most will say bought.

  2. 3:004 min, to 7:00

    The idea

    Define sell-in and sell-out. Explain normal stock cover and what happens when the trade holds more.

  3. 7:005 min, to 12:00

    Lab on the projector

    Load the trade in the first quarter. Follow sell-in above sell-out, then below it next quarter while stock runs down.

  4. 12:003 min, to 15:00

    Pairs

    Pairs write the note an analyst would write after seeing stock weeks jump.

  5. 15:003 min, to 18:00

    Discussion

    Take the channel stuffing question and the SEC case in the lesson's sources.

  6. 18:002 min, to 20:00

    Check

    Three lesson questions.

Discussion questionsWith what a strong answer covers

  1. Why would a company load the trade if it costs margin and next quarter's orders?

    A strong answer covers
    • To hit a quarterly sales target.
    • Revenue is booked on shipments, so loading lifts it now.
    • The cost lands later, in a quarter someone else may report.

  2. Retailer stock rises from four to nine weeks. What do you expect next, and why?

    A strong answer covers
    • Lower orders while retailers sell down the overhang.
    • Sell-in falls below sell-out for a while.
    • Sell-out itself barely moves: shoppers buy nothing extra.

  3. Where does loading cross the line into channel stuffing?

    A strong answer covers
    • Repeated loading to hit targets, as auditors and regulators see it.
    • References the SEC's 2005 Coca-Cola case from the sources.
    • Notes the trust cost with retailers.

The lab as homeworkAbout 15 minutes for a student

Use the lab to follow loaded stock from shipment to shelf.

  1. Load extra stock in the first quarter.
  2. Note sell-in and sell-out in each quarter that follows.
  3. Note retailer stock weeks each quarter.

They answer: In which quarter did sell-in run ahead of sell-out, when did it fall behind, and what happened to retailer stock weeks?

A strong answer covers
  • Quotes sell-in and sell-out from the lab for at least two quarters.
  • Shows sell-out barely moved.
  • Links stock weeks to lower orders later.

Students also answer the lesson's three questions. Their score is worked out on the server from their answers.

Set this lab as homework

Students open a link, do the lab, answer the three questions and write what they found. You see each student's quiz score and finding on your class page.

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