Posted by Janet Zlokovich
Trade Spend Management collaboration means calibrating terms for contract negotiations.
One of my “Best Practice” recommendations for foodservice is to Promote trading partner collaboration for maximizing efficiencies by improving the claim processing timeframe and driving waste from the supply chain by eliminating paper. The way to achieve this objective is with technology such as Answers Systems EclaimSM; calibration occurs when the claimant submits all billbacks in an electronic format. To learn more about what the industry is doing to support this initiative: Foodservice GS1 US Standards Initiatives
Every foodservice Manufacturer, Distributor and Operator wants to know they are a valuable asset to their trading partners. All parties need to be able to understand their business and make decisions on how to implement the most comprehensive terms for embracing and growing supply chain partnerships. Understandably, every company has their own strategies and core objectives but when the approving hierarchy is ready to sign off on the contract, they need to know they can achieve measurable ROI results.
Trade Spend for Distributor Earned Income, Deviated Pricing, Fixed Rate Allowances and Operator Headquarter Rebates are an effective way for manufacturers to incent their Distributor and Operator customers on purchase compliance. It opens the door for Manufacturers to have discussions with their customer and review expectations on their spend attainment and tracking volume milestones for new and future negotiations. An important consideration for these negotiations is to incorporate language to ensure the billback reporting is in an electronic format. It eliminates paper from the supply chain and allows Eclaim to automate the file load.
Distributors and Operators want to be able to sit down with their suppliers to understand the expectations for earning the incentive. Remember, not everything can be accomplished the first year. Begin with benchmarks that can be measured based on your current business while setting expectations to incent future milestones. This will lead the way toward new collaboration.
ContractPro® is the Trade Spend technology used by Answers Systems clients who choose claim settlement and reconciliation as a service – it is an important tool and provides visibility for the entire supply chain. Claim settlement and reconciliation is most effective when the billback reimbursement request is provided in an electronic format and provides all the required supporting information down to the unit level. This will yield the maximum benefit for everyone because there is visibility to the entire supply chain business.
When I think about the basics for trade spend contract management negotiations, I apply some valuable knowledge I received years ago during management training about how to develop SMART goals. It sounds easy and makes sense but it takes considerable time to be realistic and know you will be able to execute the terms of the contract. The reality is if you don’t negotiate correctly prior to signing the contract, you might not be able to make the Contractee accountable to your terms. Always be sure to validate that it is truly electronic reporting according to the specifications below. For example a PDF sent via email is not valid for electronic reporting.
Specifications for Electronic Reporting:
I. File Type
A flat file is the minimum requirement for sending reporting in an electronic format. This would include 1 header row for column labels.
a) EDI 867-Billback
b) Text file formats (delimited-character)
c) Excel
II. File Content
a) Detailed sales transaction records for every invoice
b) Location level summary that qualifies for a pricing, allowance, or rebate incentive
III. File Transmission Delivery
a) File Transfer Protocol (FTP) used to exchange files
b) Email
Here are some tips on how you can apply SMART goal criteria:
Specific: Goals must be clear and unambiguous.
All billback claims should be submitted in an electronic format – the standard method for Billback claim settlement.
Measurable: You need to be able to measure your goal.
Include specific language that outlines the terms and conditions to qualify.
Don’t negotiate terms that cannot be executed and measured. Make sure your Trade Spend technology solution such as ContractPro can accommodate the terms you negotiate with your trading partner.
Attainable: Implement tier components for your distributor Earned Income and Operator Headquarter contracts. Allow multiple qualifying components for eligibility but remember to validate that the Contractee’s compliance to a certain tier before entering the contract into your Trade Spend software.
Relevant: Apply enough flexibility to the goal in case your Distributor or Operator has system limitations. This will give distributors and operators that require technology improvements the motivation to enhance their current capabilities while rewarding those that have already made the investment to support supply chain efficiencies.
Time-bound: There is no time like the present. Electronic reporting must be in place before agreeing to the terms of a contract. Answers Systems clients will use ContractPro.