By John Nicholas
There is a harsh truth for every food manufacturer. If you can’t see down into your business, eventually, you will lose your business! It might be a gradual loss, but you can’t manage something that you can’t see. Successful foodservice manufacturers must gain greater visibility into their supply chain.
This increased visibility can be a scary thing! If you have been bleeding for a long time, when you first expose the wound, it can look pretty ugly. One of the main obstacles to successfully managing trade spending is fear of the unknown. Many people are afraid to know what they don’t know. To have a good system and strategy for managing trade spending you must be willing to go where no one has gone before. These are the voyages of the starship…….. sorry, I got a bit distracted for a moment. Back to earth and managing trade spending or as we refer to it at Answers Systems, Trade Performance Management. As someone that speaks to foodservice manufacturers day in and day out about better managing their trade spending practices, I can tell you, this fear of the unknown, along with an unwillingness to change (which is in large part tied to that fear of the unknown), is the main obstacle in improving Trade Spend/ Trade Performance practices. It keeps manufacturers tied to antiquated processes and cripples their ability to improve their Trade practices.
Having some visibility to the response to a promotional activity is the foundation measuring Trade Performance. Successful manufacturers must gain a better understanding of the performance of their trade spending before they can even begin to think of managing it. It just makes sense, that knowing where you are getting your best bang for the buck allows you to fine tune your market strategies. You need to discover what works and what does not work.
Another great benefit of being able to track your trade spend performance, lies in the ability to predict likely future consumer behavior. Not only that, but when you have an integrated system that has all the parts talking to each other you can determine things like:
• Is the promotion likely to be financially feasible (before commitment to the promotion is made)?
• What is the profitability of the promotional program in one part of your business versus another?
• How effective are the promotions, i.e. which promotions worked or didn’t work?
• What is the most appropriate promotional program, including timing and length?
• Did the promotion increase volume and contribution, or only volume?
• What is the optimal price point to drive increased volume and contribution?
Answers Systems integrates all terms of an agreement, and then compares those terms with claim costs in one planning system. When promotions are implemented, all the proof of performance flows through the Answers Systems ContractPro® application, driving more efficient and accurate processing and improved reporting.
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trade promotion management,
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