If you work in a foodservice company’s finance, marketing, or sales department, you understand the complexities associated with managing trade spending. Contracts need constant attention. The dozens—if not hundreds—of distributors and operators for which you are responsible need attention. And so do the 2,000+ claim requests and transactions that can cross your desk each month.
Managing trade spending efficiently and in a way that drives business growth and profitability is difficult. When resources are stretched thin—which is often the case at foodservice companies—it’s even more challenging to dedicate the time and effort needed to effectively control the trade spend process and analyze foodservice data. In these situations, it is usually the claims management and settlement processes that suffer most.
Given the arduous task of managing claims, it’s understandable that so many foodservice companies do not have the time or ability to capture electronic operator unit data. But without it, it’s difficult for them to analyze compliance and sales opportunities.
Automated trade promotion management (TPM) solutions can help foodservice companies gain the visibility they need and regain control over their trade spend process and outcomes. Standardized data, contract management and electronic claims (eClaims), for example, can spark tremendous gains in process efficiency and even highlight erroneous claims more quickly.
The greatest benefit of Foodservice TPM solutions, however, lies in their ability to reveal insights into the exact nature of claims errors and additional sales opportunities.
By leveraging granular claims data and attributes down to the individual operator unit level, foodservice marketing, sales and finance professionals gain valuable information. Consider three issues that are particularly vexing for foodservice companies:
The foodservice industry is all too aware of the issues associated with GPO and non-commercial multi-dips. As the numbers of foodservice customers and distributors grow, it becomes ever more difficult to track—and resolve—claims. The more complex the supply chain, the easier it is for customers to double-dip in the claims pool.
An automated trade spending solution that captures eClaim data can quickly identify offenders by highlighting, for example, situations in which a SKU purchased from one distributor is being claimed against more than the designated GPO or non-commercial accounts in a given month. Robust eClaim validation processes reveal an average of 180+ distributors who are contributing to the indirect multi-dip rebate problem.
Contracts with GPO and non-commercial account operators typically expect a certain volume or value of product that individual operator units will purchase during the contract period. Non-compliance occurrences raise red flags, but they also reveal opportunities for white space growth within GPOs and non-commercial accounts.
An operator unit level report based on eClaim data can quickly reveal which individual operator units are in compliance with this agreement. Better yet, the report can show compliance by category, SKU or time period. Then it can be filtered even further to show compliance by brand or within specific territories or customer segments. Such a report for one foodservice company revealed a 20 percent non-compliance rate for its category segment within a large hotel chain contract (uncovering 1,100 operating units). With the report in hand, the company was able to develop a targeted sales and marketing campaigns.
One way that foodservice manufacturers can grow is by understanding their customers’ purchasing habits and then precisely targeting them via new campaigns. For example, customers that are buying particular products (but not others) and customers that used to buy certain products (but no longer are) are perfect candidates for a focused campaign.
TPM solutions with built-in reports and analytics can provide useful information—especially when TPM data is augmented with foodservice industry marketing data. By combining these data sources, foodservice companies can filter their void reports by a variety of attributes (i.e., operator unit size, volume of sale, cuisine, etc.). The resulting insights can help them quickly refine their trade spending strategies, segment prospects in a more meaningful way, and tailor promotions to better meet these potential customers’ needs.
Most foodservice companies are dissatisfied with their trade spending processes, as well as the returns they generate from their investments. It doesn’t have to be this way. Solutions are now available that enable companies to not only regain control over their trade spending, but also generate deeper insights than they ever thought possible. The secret lies in unleashing the power of operator unit level data.
When they put that data to work, foodservice companies no longer have to accept that trade spending losses are an unavoidable cost of doing business. Instead, they can appreciate trade spending for what it is: a vital mechanism for boosting profitability. And they can see, hidden in their data, countless new opportunities for improving processes and efficiencies, capturing more revenue, and growing their business.
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