by John Nicholas
Todd is a CFO for a mid size foodservice manufacturer. He is frustrated! He just asked his Director of Finance to provide him with a report on the dollars and cents impact of raising the price on one of their SKU’s. He simply wanted to know, based on last year’s sales, what the price increase would mean for their bottom-line. It seemed like a simple request on the surface, but the Director of Finance explained to him, that before she could get the numbers to Todd, she needed to analyze what accounts that were selling that specific SKU. She had to then see where there was a guaranteed or fixed price contract in place. She then had to figure what percentage that fixed price business was to the whole and factor it out. She explained to Todd that she could do it, but with a year end audit coming up, it would take a lot of work and time to nail the numbers down. So Todd was left with the realization that significant potential dollars that this price increase represented needed to sit for at least several weeks!
That, of course, was just a piece of the puzzle. Todd also needed to get a feel for what price the market would bear. He needed to know what their major competitors were pricing at. Todd approached the VP of Sales. Who better to know what competitive pricing is? The VP explained “with over a hundred SKU’s in a very volatile market place, I just don’t have competitive pricing at my fingertips.” He told Todd that he could send out a query to the Regional Sales Managers and Brokers.” He went on to say, “however, the sales organization is focused on our quarterly sales promotion. I can get the information to you in a couple of weeks at the earliest.” So much for being a fast moving company in a very competitive environment as they discussed in the company planning meeting!
This is typical of the challenges we hear from the Finance Executives in foodservice manufacturers all over the country and Canada. Answers Systems solves this problem with capturing all the contract information and putting it in an electronic file cabinet. That contract information identifies whether it is a deviation off of list, or whether it is a fixed or guaranteed price. When the sales person or broker initiates the deal, the contract information also captures why the discount or guaranteed is being offered, including whether it is matching or beating competitive pricing. The process provides a place to capture this competitive pricing with every contract created. Answers Systems does not stop there. Our system, the ContractPro® solution, electronically bumps all the contract information, against sales into distribution, also comparing it to the billback information. (Answers is collecting from almost 2000 distributors). The Answers Systems reporting and analytics tool then gives visibility into a manufacturer’s business like never before. With a few keystrokes Todd, for instance, could have seen the very information he was needing to drive a profitable business. He could see detailed profitability reports, compliance reports, competitive pricing, etc. Bottomline… you don’t have to drive your business in the dark anymore!
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foodservice,
contract management,
competitive pricing,
ContractPro,
Answers Systems