Bud Hilton

FOODSERVICE OPERATOR BANKRUPTCIES . . . How can you avert one?

Answers Systems — Tue, 12 Jul 2011 16:15:20 GMT

by Bud Hilton

Our foodservice industry certainly has seen its share of business closings, due mainly to a poor performing economy that has redirected consumer dollars away from spending in our marketplace. Even in lesser volatile situations, many chain operators have had to at least revert to unit closings as a short-term cure to possible bankruptcy. What can you do?

There is an old adage that goes something like this . . . In times of prosperity you can hide a lot of your spend-sins; in tough economic times they meet you at your front door! Basically, your expenses have to be dealt with first in any business. So, why not work on reducing them? DUH! Now it is time for you to say . . . “Wow, Captian Obvious, what a great idea!” The problem is you did not start early enough worrying about certain controllable expenses that somehow got “out of control” because they seemed tooooo insignificant back when business was much better and big money was coming in. As obvious as this is, it has become far too common of a problem.

In our industry, foodservice operators get very busy in their normal, everyday business but I am sure most will admit that they “leave some bucks on the table.” Very few produce a good “discover and recapture” strategy as a daily discipline . . . until it is too late.

Much of the type of “bucks” I refer to are lost in normal transactions between operators and their suppliers, vendors, manufacturers in either accidental pricing errors or in poorly conveyed contract agreement information. These seem minor in nature but failing to deal with them one month can result in eleven more problems that year. The good news is . . . THERE IS HELP OUT THERE! Answers Systems ValuTrak^TM application provides a total contract management solution for Operators that concentrates on “exacting your contract disciplines to provide ultimate information and financial savings” for all your purchases. So, if you fit anywhere into the pattern I described, take a few minutes and talk with our company about our ValuTrak application. BUT do it sooner . . . rather than later!

Bud Hilton
Chairman & CEO
Genesis Group Inc/Answers Systems

Technorati tags: foodservice operators, restaurant bankruptcies 2011, ValuTrak

SKU Rationalization

Answers Systems — Thu, 21 Apr 2011 13:46:34 GMT

by Bud Hilton

Yesterday, I sat through a very well presented Webinar on “SKU Rationalization”. The subject matter was presented by a great professional in our industry who was basically right-on about a subject matter that has become a big issue across most manufacturers. The presentation dealt with SKU Rationalization from a position of “surgery rather than preventative medicine.” I certainly understood the presenter’s approach because SKU rationalization, for the most part in our foodservice industry, occurs after the cart-is-in-the-ditch and decisions then need to be made as to the “longevity of a SKU.” But how does a manufacturer get into this dilemma? Let’s look at some key points about SKU rationalization:

Rationalization is best exercised “before” a SKU goes into production, not after its failure
Most SKUs, tagged for potential elimination, were created as “tweaks” to an existing SKU
Many new SKUs are directly proportionate to industry “chain business growth”
It could be argued that over-indulgence in “SKU-birth” is directly proportionate to size and culture of a manufacturer:
- The bigger the Manufacturer . . . the greater the attitude to “make it and see if it sticks”
- Too many departments that can approve a new SKU
- Customer desires always trump production rationale
- We can afford the potential mistake(s)
- Smaller, entrepreneurial businesses cannot afford mistakes
Decisions to eliminate certain SKUs generally result for a few reasons:
- Miscalculated demand . . . did not need it in the first place!
- Cannibalization – product replacement
- Cost versus profit sensibility (cents-ability!)

Explore this topic in comparison to hiring new employees. The more time an organization spends in the selection process probably assures them of less time spent on replacing employees. Therefore, a true “Best Practice” concept is one that supports a “gatekeeper process” by which a Product Management committee exercises “rationalization to introduce a new product, rather than rationale to eliminate one.”

Bud Hilton

Chariman & CEO

Answers Systems

"EASY" sells...but does it Deliver?

Answers Systems — Wed, 08 Dec 2010 17:56:36 GMT

by Bud Hilton

Easy opening, Easy to dispense, Easy monthly payments, So Easy, a Caveman can do it . . . We are all suckers for “life made easy” sales pitches. However, we also know that in many cases the end result of the Easy promise is the failure to deliver to expectation. You probably don’t believe that the “cheapest” product can perform as good as a more expensive one? So, why would you believe that the easy message fulfills expectations comparable to something that may require a little more effort? Most people know better than this but still fall for “cheap and easy” because they say . . . let’s try it and if it does not work properly, we did not invest much and can move to an upgrade later. Someone said to me once – “Would you ride in spaceship built by the low-cost producer”?

Our company is in the business of selling applications and services to manufacturers who must identify and disburse proper financial reimbursements to contracted customers they sold products to. Sounds Easy but our industry has complicated processes to the point that it is anything but “Easy”. This process has become so complicated that most manufacturers now reach out to get help from outside providers, like our company, that specialize in “delivery” of these services. Sound like something that “Cheap and Easy” can solve? Nah-Nah!

But, but, but . . . Many manufacturers, in our foodservice industry, still initially take the “Cheap and Easy” route to jump start purchase decisions. Why? . . . because they can! But let’s don’t lay 100% of the responsibility on the buyer. Some software companies and service providers have made “poor decision purchasing” an excusable offense by simply offering inexpensive applications and systems; by urging customers to “sign-up”, “enroll today”; by playing to buyer egos and convincing them that “you can provide “any additional” sweat labor necessary to achieve optimum performance of my product”.

The selling streets are lined with many who try cheap and easy solutions and fail. Even to the point that many smart marketers could employ a sales division called the “I Told You So” Group Sales Specialists who aim straight at those who have tried and failed in the Cheap and Easy arena. This technique at least gets you past a lot of low-cost/low quality competitors.

This should go without saying but “solutions are generally directly proportionate to the problems they solve”. So, forget looking for Cheap and Easy to solve your very complicated areas such as deviated claim tracking and settlement. At least start eliminating from the Top of the Quality Mountain . . . not the bottom. This does not mean that the best provider is trying to get rich by charging more. On the contrary, it usually means that they have invested in best practices that require your equal investment for ultimate success. Just keep in mind – Cheap and Easy usually requires second, third, fourth . . . investments.

Technorati tags: foodservice industry,

Find the One Who Says "NO!"

Answers Systems — Tue, 24 Aug 2010 14:08:39 GMT
by Bud Hilton
I wish I had coined this phrase but I can’t take credit. My son, who has spent 16 years or so with our company and is now our President, made this statement one day when I said to him, “I wish we could get through the maze and find out who, at this particular company, can approve our project.” He simply directed me to not look for the one who can say “yes” . . . find the one that is saying “NO” and impeding the search. The more I thought of this the more I knew he was right (darn, that was hard to admit).

It’s true, but hard to swallow, that in most corporate structures you can find a lot of people that will agree to the need of many products and services that are presented. Their jobs are to take their well-researched recommendation to their bosses for approval. You have probably been caught in this triangle of “pending forward movement” many times. Most times the one carrying your story to their boss does not even want to tell you WHY they were unsuccessful; so knowledge of the real decision to decline “rests in that limbo world.” Really brash salespeople try to uncover the real decision maker by leading with that always-dangerous question . . . “who will make final decision on this project?” Right off, you are telling your first line of contact that you do not believe they have much power.

The best line of attack to determining the final “NO Chief” is to develop a series of questions to arrive at who possibly could “own” certain areas that are impediments to your success. Once you have identified corporate hurdles, you can fashion certain questions to gather your information and thus narrow down your winding paths. So, let’s look at some obvious things that create NO answers:

WE CAN’T AFFORD THIS! - First glance says this is a “Finance Department” issue. Not always true. Budgets for expenses are many times owned by other department heads in Sales, Marketing, Procurement, etc., and can be “swapped” internally if logic becomes a prevalent issue. Many large companies “budget for spend” but may not budget for ROI-oriented value. In other words, if your project comes with a potential Return-On-Investment that is greater than its expense, you may have a fighting chance to sell its value. Presentation of “more money” is always a good thing to arm your buyer with. At least you might get closer to finding out who is wielding the NO axe.

ISLAND GUARDS – Some companies are loaded with Island Guards (IGs) whose main goal in life is to maintain their island and all the report-ees that live there. If benefits, of your product or service, are at the expense of replacing what has become comfortable to the IG, then your chances are slim and you MUST seek a higher level of potential “NO Gods.” You will have to develop your own tricks to circumvent the IGs and retain your head.

STATUS QUO – This is a tough one. Why are these folks seeking a better solution if an SQ situation exists? Yeah! You are peeling back the onion, now. In many cases this area may bridge over from the IG situations, mentioned above. Some companies place responsible people in buying positions that simply believe OR are led to believe that they are not doing “too bad” now with their current way of doing things. Wow, that “too bad” area is usually broad and cloudy. The killer question(s) to explore is something like . . . “what is your current incidence of experience in qualified numbers?” Of course you will not get the right answer but may get some folks to thinking. Try to ask these kind of questions when the “bosses” are around. Quality managers do not normally like answers such as “pretty good,” “not too bad,” etc.

IT IS HARD TO HEAR THE NO PERSON – You can’t hear them because they are generally shielded by the YES folks and it is your job to uncover them. So, rather than taking you on too much deeper of a dive, I think you get the idea. Stop looking for yes people and make your plans to find the one that is saying NO.

Bud Hilton
Chairman/CEO Genesis Group Inc., Answers Systems

Return of the Foodservice "SPENDUSTRY"

Answers Systems — Mon, 19 Jul 2010 14:36:25 GMT

by Bud Hilton

Is spending in our foodservice industry on its way back? What could postpone the return of restaurant spending, once the economic conditions begin to loosen up? Can the really smart marketers help to promote the return of spending in foodservice locations? The answers lie in understanding what we did to initially promote spending in a more prosperous economy.

In much better times, when marketers pushed to redirect consumer dollars from retail grocery stores to eating out, we were successful to a large degree at holding industry wallets hostage! We did an outstanding job of convincing the consumer public to dedicate a larger portion of their discretionary income to eating out. Through some carefully orchestrated advertising strategy we built a SPENDUSTRY based on the following ideas:

With at least a two-member family income you can afford to eat out more often

The quality of “restaurant” food is superior to most cook-at-home opportunities

You have worked hard . . . you deserve to eat out

Eating out is a primary entertainment avenue

There is little time left to do home-prep meals

With the economic crunch over the past few years, consumers may have been trying very hard to cut-back on away-from-home meal consumption and it has not been easy for many reasons. Cooking and at home meal prep became a lost art in the years prior to the eco-crash; for many, eating at home has become unacceptable punishment; time and clean up, after a long day, is still a big issue; and, oh yeah . . . I like the food and friends combination so I will cut back on other entertainment spending.

It has been is very hard to give up the luxury of eating out. A large percent of this SPENDUSTRY can’t wait to return to the rewards of eating out and all indications are that improvement in economic conditions may get them there faster. What we can do as foodservice marketers is to do exactly what we did to get people in our units in the first place . . . when time were good. The 6 reasons for eat-out, mentioned above, still exist. So, the smart marketers will probably return to the same campaigns, and apply the same sound reasoning, to entice consumers to return to their restaurant habits and reward themselves NOW!

The challenge is to get behind campaigns to create “reactivity” in foodservice dine out situations . . . our industry depends on it!

V. Bud Hilton
Chairman & CEO
Genesis Group Inc., Answers Systems

The 4 Holy Grails . . . Who will be first-esss with the most-esss???

Answers Systems — Tue, 22 Jun 2010 15:20:08 GMT

Among many pieces of information that manufacturers absolutely covet are:

Unit level data

P&L information (by contract, category, SKU, etc.)

Price Optimization capability

Market Share realization

The race to get there fast with the most relative information has, for the most part, replaced shotgun cold-call techniques, dependency on partner agencies, various mass media opportunities, and pure HOPE. Today’s smart foodservice marketer realizes that HOPE is not a strategy; and they are spending time and dollars to retrieve, aggregate, analyze and construct strategy and tactics to cover all their bases in the above areas.

At one time, manufacturers would all but “froth-at-the-mouth” if they could get their hands on Unit Level Data complete with address, compliance, etc. For the longest they either did not have systems to capture and store such data or distributors were unlikely to part with this information (which was their Holy Grail) also. With the emergence of better technology to capture and provide ULD and vendor cooperation, many manufacturers are now faced with the problem of “What can I do with this info when I get it?”

Accurate Profit & Loss information depends on things like; a powerful retrieval system for acquiring data, good internal Cost Of Goods Sold (COGS) information, identification of various additional “waterfalls of cost” against initial revenue . . . such as promo money, sales commissions, incentives, distributor allowances, bill back costs, etc. Again, advances in technology have allowed new avenues of data visibility. It is now feasible to come very close to identifying “net P&L” in many cases. With some of the sophisticated trade management applications and tracking services, manufacturers can now view their shipments into distributors and compare sales and cost of every contracted piece of business to every category and SKU. It then becomes a rather simple matter of loading COGS info, along with other selling and promotional expenses to arrive at a closer estimate of actual SKU expense. Once contracted business has been identified, determining the “street” business fallout and the associated cost of that piece of business can be arrived at through some direct expense association and reasonable assumptions.

“How should I price my products in the marketplace? . . . This is a “charge” on every brand marketer’s agenda. For many years manufacturers may have arrived at pricing through a few less sophisticated techniques, i.e., What production restraints we might have; What the market will bear; What competition is doing; What our gross profit markups would suggest; What the customer has been paying . . . At best, much of this may have been a dart-throw!

Price Optimization is a dream of most manufacturers. Simply said . . . “PO is the practice of determining a specific price-point that the customer/market will accept and the producing company can obtain highest volume and profit yield.” Again, because of technology (I am beginning to think this Technology thing is here to stay!!!), today’s manufacturers are improving their position in this area. Many manufacturers are investing huge sums in ERP systems that can help them to gather and identify PO instances. The problem usually lies in their inability to obtain the correct data in the first place, to realize accurate interpretation into their ERP system. Available and sophisticated applications and better cooperation in the marketplace is improving the ability to assemble, aggregate and analyze a broader array of purchase and sales data and thus apply better understanding to current and future conditions for customer reach and price application.

What is my current and projected Market Share? WOW! Wouldn’t knowing even “half” of this equation be helpful? And I won’t overplay this because there are many great manufacturers that know quite a bit about their industry capacity and their market share. There are even more that do not! Truth is – MS is a moving target. One must have some sort of application and connectivity to data sources and electronic feeds that can continuously update customer activity and market fluctuations. Today there really is a lot of help available and much of the determining factors related to MS exist in a combination of understanding of all 4 of the Holy Grails we discussed.

So, although we looked at each of these Holy Grails separately and each can be obtained somewhat separately . . . in reality they are all best achieved and understood when they can be assembled, aggregated and interpreted from one large “funnel”. Collection and usage of information in all 4 areas is like a snowball rolling downhill; components of each area add to the collection of data necessary to best apply final interpretation. As you look for help to get-a-grip on these areas, make sure you work with a company that is involved in understanding all 4.

Answers Systems offers a complete system for managing the very complex trade promotion/contact management business in the foodservice industry. We provide the best ability to bring the ALL related data into one funnel for interpretation and use. Take some time to investigate your opportunities to realize market utopia.

Bud Hilton
Chairman & CEO
Genesis group Inc., Answers Systems
813-818-9299

Technorati tags: data acquisition

Foodservice and the Snowman

Answers Systems — Wed, 23 Dec 2009 14:30:10 GMT

Post by Bud Hilton

I recently watched a television show featuring a Snowman. My mind’s eye began to conjure up our foodservice industry in relation to the 3 parts of the Snowman. Go ahead and say it . . . I don’t have a real life!!! Maybe so, but let me tell you more about my vision.

As the Snowman becomes progressively larger from his head to the bottom portion, so does our foodservice industry in number of locations ranging from very large national chain operators such as Sodexo, Aramark, Compass, etc., through the balance of other multi-unit chains and finally down to street business.

Please allow this author the leeway to use the term “approximate” as we examine the information above. Exactness of interpretation of data in these categories would depend on who you push up or down into either of these categories. Studies show that our industry is made up of close to 1 million purchasing locations and if you follow the associated legends, in my graphs, you will see that the large national chains account for somewhere around 7% or so of the locations. Coupled with the remaining chain accounts, this multi-unit grouping makes up a little over one-third of the industry locations and account for almost three quarters of all purchases. This collective group holds power of purchase and thus the leverage to demand special pricing which generally lowers profitability for both manufacturers and distributors serving them.

Sales Deployment
1 (Low) to 5 (High) Cost to Reach/ Sell

Approximate % Profitability

Approximate % $ Purchases

Approximate % Units

Corp. National Account Personnel
2

10%

45%

7%

National Account Field Group
3

15%

30%

28%

Regional Managers

Regional Managers

Brokers
DSRs
Direct Sales

5

75%

25%

65%

As we address sales and reach possibilities, we note that the chain group is relatively accessible and offer huge potential with limited sales call activity. Depending on the size of your company, manufacturers service this group with specialized sales personnel ranging from top corporate people, for the large accounts, to national account reps for the remaining multi-units. This group is generally a lower cost to reach and potentially to sell . . . in relation to the “street” business which is serviced by multiple personnel, generally harder to identify, have marginal value versus call expense and require considerable funds and campaigns to reach and maintain connectivity.

Fortunately, spending on street business can be somewhat justified by the continuity and profitability of such business. In many cases, there are certain purchasing agencies that have become specialists in grouping street accounts to form a “near resemblance” to a chain channel of business. These buying entities could be instrumental in aggregating the largest and maybe most profitable group of operators in our industry.

Without a doubt, and from some of these volume and profit metrics we have observed, there is strong reason for a balanced mix of sales in manufacturer portfolios. The trick becomes reaching and measuring these different pieces of business. To learn more about how you can reach and measures your ultimate position in the market place, contact us at sales@answers-sys.com or call 800-225-6127 to arrange for this valuable consultation.

Technorati tags: snowman, reach, relative market position, marketing, national accounts, foodservice, street business

Greg Hilton Named President of Answers Systems

Answers Systems — Mon, 07 Dec 2009 13:32:39 GMT

Bud Hilton, Chairman and Chief Executive Officer of Genesis Group, Inc., dba Answers Systems, the leading provider of foodservice trade promotion management solutions, announced the promotion of Greg Hilton to President of Genesis Group, Inc., dba Answers Systems. Bud Hilton, founder of Answers Systems in 1986 and whose career spans over 46 years in the foodservice industry, will continue in his role as Chairman of the Board and CEO. Bud will become even more involved in foodservice industry initiatives and new visionary concepts for Genesis Group and Answers Systems.

Greg Hilton has been with Answers Systems since 1995 and has served the company in various capacities including the role of Vice President and CIO. Greg developed the Answers Systems' Information Technology department and the team responsible for the best-in-class software and systems applications available to manufacturers and operators in our industry. Prior to Answers Systems, Greg had deep experience in the financial industry, serving in several information and financial roles in the Mortgage Servicing segment for leaders such as ERA/Chase Manhattan Bank, Amsouth Bank, and Carteret Mortgage. Greg holds a Bachelor of Science Degree in Business Management from the University of Tampa.

"Greg spent most of his life preparing for this role and his strength in information systems, technology, his financial background and his overall foodservice experience places him in a unique position to lead and enhance our company's future," said Bud Hilton.

Additional executive staff promotions announcements:

Tom Tipps has been promoted from VP Sales & Marketing to VP & Chief Marketing Officer

Rhonda Harms has been promoted from VP Finance to VP & Chief Financial Officer

Brian Maloney has been promoted from VP Business Development to VP & Chief Development Officer

Roth Block will continue as the Senior VP& Chief Operating Officer

Kevin Hart has been promoted from Product Manager to Chief Information Officer

Since 1986, Answers Systems has been meeting the unique trade promotion management needs of the Foodservice industry. We stay on the leading edge of software development and service delivery with our ContractPro® solution for Foodservice manufacturers and ValuTrak® solution for multi-unit Foodservice operators. Our solutions provide real-time visibility into the performance of trading partner agreements and support quantifiable ROI improvements for our client base.

Technorati tags: announcements, staff promotions, foodservice

The Status Quo Safety Button

Answers Systems — Mon, 02 Nov 2009 21:52:03 GMT

Posted by Bud Hilton

I recently complimented one of our managers at Answers Systems for stepping out on the edge and challenging a client on changing some of the practices they were doing in favor of a proven “best practice” way of accomplishing a task within their contract management system. After covering relentless arguing points and hovering in the “no change-safe zone”, the client agreed to make certain concessions and change their position and practice. I can’t express strongly enough how rare this seemingly risky attitude is in today’s foodservice world. Many managers in the foodservice industry have an internal “Status Quo Safety Button.”

This safety position is fairly understandable because it is generally easier to make “no decision” than “a decision” . . . even on a widely proven best practice that has been successful for others. Most sales people want to deal with the buyer that makes the decision. The sales person usually needs to search and find the person in the organization who is saying NO! Let’s look at the difference in the two mentalities:

Remain Status Quo

Change Practice

I can dismiss this sales person

I need to understand this presentation

This may not work for our company

It has been proven successful with other companies

I can’t lose anything (maybe)

I might gain something

This won’t cost the company money (maybe)

This might save the company money

My boss will agree with “no change” (maybe

My boss will love the new process

I can retain ALL my current staff (Island Guard)

I could possibly reduce my personnel

Change might make me have to work harder

I might become more effective

So, again it is sometimes easier to say NO than to operate on the edge and take the challenge, even when success is predictable.

I told our account manager that they should be very proud; that they were out on the edge with their sales approach; challenging their client with proven facts and big ROI opportunities; and that they are helping to carve new paths of success in our company and our industry. Foremost, I let our account manager know that the real hero in this scenario will be their client . . . so help make them realize that their decision was right.

The reason that very few are willing to operate on the edge is that there is not much room out there!

Technorati tags: contract management, ROI opportnities, sales

DATELINE: Salesville, USA, somewhere in the 60s or 70’s

Answers Systems — Fri, 02 Oct 2009 20:59:04 GMT

Posted by Bud Hilton

Some of you may have been there calling on foodservice distributors and operators. If you were, you probably pulled on more “screen doors” than fancy glass or wood corporate doors. The business was basically in the streets. Chain accounts represented less than 30% of manufacturers and distributors volume. Most were even sensitive to that percent growing, out of concern that the potential loss of a big customer may harm their overall volume/profit structure. Distributors, with their blanket DSR coverage, owned the street and held the street operator cards close to their chest. Manufacturers were doing everything to reach and sell operators and create pull-through leverage with the distributor. Some of the methods we all explored were DSR ride-with, direct mail campaigns, coupon rebate programs, growth/loyalty incentives, and other tactics; most of which have diminished compared to today’s reach efforts.

Chain growth exploded and Manufacturers turned to large volume customers to grow their business; and why not? One could call on large entities (with fancy wood or glass doors) that could guarantee (be careful here) multiple unit usage, with far less selling effort and measurably less marketing and sales support money. Big volume . . . Big money . . . Less expense - right??? WRONG! It seemed that every other manufacturer also wanted this new volume therefore, competition for the business, coupled with chain operators’ understanding their leverage, created low margins for the distributor and the manufacturer.   It is estimated, by industry experts, that multi-unit contracted business today may account for as high as 65-70% of total foodservice operator purchases but represent less than 15% of the profits. Just about a 180 degree turnaround from our earlier “Salesville” days.

What to do, Oh, What to do? Lace up your boots and hit the streets! Easier said than done! Manufacturers are finding it very difficult, especially with today’s challenging economic conditions, to put enough assets in place to compete for this low margin/high profit business. On the other hand, street operators have found that, in order to compete against large chains across the street from them, they must “unionize” so to speak and become more like the large chains. . . become part of some “buying group” to achieve better pricing; act like a chain themselves. A lot of other profit seekers also got the message. Many formed GPOs (Group Purchasing Organizations) whose business, among other things, is to act as a chain headquarter purchasing agent for masses of operators. The concept started in healthcare and other non-commercial segments that combined smaller multi-unit groups together for leverage. This seems to have worked pretty well. Now these groups are simply another big “chain” demanding special attention and pricing.

The latest purchasing move appears to be in a handful of entrepreneurs that are putting together large purchasing organizations catering to the “less-than-multi-unit” independent operators (the street). Before - the “sacred cow” of the distributor . . . but now the operators are demanding pricing that the distributor does not want to give up from their margins; thus, manufacturers are asked to step up and support pricing concessions to gain this profitable business.

My company, Answers Systems, provides the tracking and administrative execution for manufacturer allowances to both chains and street business. We receive, verify and settle claims for manufacturers and operators on both sides of the equation; therefore, this unique position gives us the opportunity to speak with some authority because we see ALL the programs out there. If we move away from the rather large GPOs discussed earlier and concentrate on the ones aiming at the street operators, then we see that there are basically two kinds of purchasing groups; One type GPO will use rebates, that manufacturers provide, on basically ANY participating distributors’ operators that are not part of another contracted program. Many times the identity of these operators may be held by the GPO. It even gets “ugly” when some of the operator participants are also members of yet another purchasing entity and thus the purchase payments may become subject to “at least” double dipping, because the manufacturer has little or no way to track the units multiple-participation.

A second, and certainly more “palatable” organization actually makes the operator enroll, thus utilizing some leverage to create single purchase allegiance from the signing operator. They also identify these unit purchasers to their supporting manufacturers, along with new SKU gains, increase/ loss of business, etc. This progressive handful of entrepreneurs has become marketers for their manufacturer partners, who otherwise have difficulty reaching street operators themselves. The group usually has a very structured manner in which they disperse rebate funds of their participating manufacturers. Incentives are generally aimed at a combination of: The distributor house, Sales Managers, DSRs and the operator.   This formula of less-profits for the purchasing group, in lieu of spreading funds to the participants that create the sell, is appealing to the manufacturers and seems to have cemented some strong relationships with the local distributors. The last fitting piece identifiable with this group is that they make some strong efforts to work with their manufacturer partners in the “after-sell” arena of reporting necessary analytics and helping to identify opportunities for additional growth.

Reading between the lines, one would surmise that these type organizations might be on the cusp of creating collective street operators that will become the next “chain” buyers . . . and you are probably right. This is probably more the reason for the manufacturer to align themselves with the purchasing organization that is applying some of the more progressive marketing techniques to their proposition.

Answers Systems is simply the administrator for all of this type purchase business. It is not our business to point out WHO you should work with but rather to help participants to identify certain practices that are being used in the marketplace that might help you to identify WHO to align with.
Technorati tags: foodservice operators, restaurants, chain accounts, marketing, sales,  foodservice distributors, double dipping, Answers Systems, GPO, group purchasing organization

Sales Deployment	1 (Low) to 5 (High) Cost to Reach/ Sell	Approximate % Profitability	Approximate % $ Purchases	Approximate % Units
Corp. National Account Personnel	2	10%	45%	7%
National Account Field Group	3	15%	30%	28%
Regional Managers
Regional Managers Brokers DSRs Direct Sales	5	75%	25%	65%

Remain Status Quo	Change Practice
I can dismiss this sales person	I need to understand this presentation
This may not work for our company	It has been proven successful with other companies
I can’t lose anything (maybe)	I might gain something
This won’t cost the company money (maybe)	This might save the company money
My boss will agree with “no change” (maybe	My boss will love the new process
I can retain ALL my current staff (Island Guard)	I could possibly reduce my personnel
Change might make me have to work harder	I might become more effective