The retail guys developed the processes/controls and channel relationships supporting the actual management of their huge trade budgets. Note here that “manage” is a verb that hints of action, which, in the context of
trade promotion management is dependent on knowledge.
In the Foodservice sector, “management” of trade promotions has been elusive for decades. We were the “stepchild” in most companies; while Retail got all the love and attention, Foodservice was left to its own devices.
Compounding the problem, we are an industry of “trading partners” who have acted independently, centered on their own self-interest. This “me/me” attitude has inhibited any notion of collaboration between those trading partners.
But, the business environment in our foodservice vertical is changing. We have evolved to a $600 billion industry. And with all that growth, manufacturers’ trade promotion spending now totals more than $70 billion annually.
As a result our “stepchild” status is changing. And manufacturers are bringing in a new breed of management to lead their Foodservice business units. The lingo of this new breed includes words like visibility, accountability, and results.
Let’s talk about results . . . just from improved process and controls. For every $100 million in sales, manufacturers overpay their trade claims by about $3 million. If the manufacturer invested in currently-available systems and processes to stop this leakage, what’s the ROI? It’s huge. But that’s just a start.
How about results from improved visibility and accountability for results? For example, what if we could see the financial results of spending $100,000 in a local market growth program with a distributor? Most manufacturers don’t know because they can’t connect the dots between investment and results; but, what if they could? And what if they could do this in real-time?
This is going to sound crazy, but what if those new-breed managers started operating like trade-spend investment counselors? Absurd? Probably not.
Visualize our manufacturer community out there trying to improve their ROI on their $70 billion investment portfolio. And what if manufacturers and distributors started working together to improve their collective investment…and maybe they could reel-in the foodservice operators into the investment model.
Dogs and cats, living together . . . mass hysteria!!