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1Copyright © 2015 Vistex, Inc. Proprietary and confidential. All rights reserved.
April2015
Foodserviceandthe“MissingLink”forTradeSpendOptimization
JimKlassTracyDelphia,Ph.D.
Flexible&Scalable
WhatDoYouBuy&Sell?
WhoDoYouBuy&SellTo?
HowDoYouPriceWhatYouBuy
&Sell?
HowDoYouDriveRevenue&
ControlSpend?
HowDoYouDriveBehavior?
ProductsServicesRights
CustomersVendors
ChannelPartners
PricingDeals
ContractsPromotionsRoyaltiesMDFs
RebatesIncentivesBrokerage
Commissions
Go-to-Market Suite™
3Copyright © 2015 Vistex, Inc. Proprietary and confidential. All rights reserved.
Agenda
Background
TradeEco-systemisChanging
TechnologySystemsandTrade
FutureofFoodserviceTrade
TradeInvestmentandTradeTeams
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Background
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TradeEco-system ContractedOperators surpassthestreetvolumeformostmanufacturers
GPOproliferationcreatesopportunitiesandchallenges formanufacturers
TradeInvestmentandTrade Teams
34%havededicatedTrade Teams
Tradespend=17%
38%havededicatedTradeTeams
Tradespend=18%
TechnologySystemsandTrade
Lackofsystemsmeanslackofinsight§ 60% unabletoevaluatepast
distributormarketingprogramsforeffectiveness
§ 85%don’tknowwhichTradepromotionsworked
Dataissuescontinuetoinhibitprogress§ Unabletomeasure
performanceduetolackoftechnologysolutiontocollect,aggregate,andanalyze data
Previous Foodservice Trade Survey Highlights
2011Survey2009Survey
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2014 Foodservice Trade Survey
§ResearchwasconductedinNovemberandDecember2014with36NorthAmericanFoodservicemanufacturers.
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Trends affecting Foodservice Industry
§IndustryconsolidationandcommoditiesareexpectedtohavethemostimpactontheFoodserviceindustrythrough2016.
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TradeEco-systemisChanging
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Broker Consolidation Hasn’t Achieved the Results Promised
§ In2009themajorityofManufacturerswereexclusivelyBroker
§ “Mega-brokers”justlookingforanumbertohithavelostlocalknowledge,disintermediatingManufacturersfromtheverygrouptheywanttobecloserto
ImplicationèManufacturersneedtoutilizetheirclaimsdatatodirectsalestothenextbestoperatoropportunities
“Motivatingbrokerstoexecutekeepsmeupatnight.”
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Dedicated Trade Team Now Table Stakes
§MostmanufacturersnowhavededicatedTradeTeams– asignificantchangefromjustafewyearsago.
34% 38% 84%2009 2011 2014
ImplicationèManufacturersareacknowledgingtheimportanceofTrade;respondentsdiscussthe“needfordisciplinetoinsurebalance.”
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Trade Team Organizational Home
§HomingofTradeTeamsinFinancesuggestsa“tacticalmindset.”
HomingofTradeTeamsoutsideFinancereflectsashifttoaStrategicTrademindset asTradeisusedinatargetedapproachtodrivenewbusinessstructureforTrade.
41%
Implicationè Tradeplanningneedstobemorecollaborative,evenwhileFinancemaintainsfiscaloversight
Note:“Other”respondentsindicateasharedreportingstructurethatincludesSalesand/orMarketingwithFinance
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Program Analysis
§AnalysisofprogramsistheBlindSpotinmanufacturerstradepractices:§Lessthan7%alwaysanalyzetradefor:
§ ROI(haveacommonmethodology)§ ImpactofmultipleprogramsonGrossto
Net§ Sharinginsightswitheitherdistributoror
operatorpartnerstodriveimprovedperformance
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Trade Process Evolving as a “Win-Win”
6%Distributor
44%Distributor+Operator
3%Operator
Aboutathird(31%)ofsurveyrespondentsstilluseasiloedapproachtoplanningTradespend.
ButsomenowjointlyplanTradewithdistributors,operatorsorboth.
Implicationè Planningformutualbenefit israpidlybecomingtablestakes.
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Trade Investment Spend: 2013 - 2015
§Athirdofmanufacturersanticipatespendingless onTradein2015.Efficienciesandstrategicinvestmentarethemostprobableexplanation.§ Only16%ofrespondents
increasedTradeinvestmentinboth2014and 2015
§ Manufacturersarealsoutilizing“recapture”toreduceEarnedIncomeforContractedAccounts
Implicationè TheamountspentforTradeinvestmentisstabilizing
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TradeOrganizationandInvestment
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Trade Spend Allocation
§ManufacturersvarygreatlyinhowTradeisallocatedtodistributorsvs.operators.Since2011,TradeisshiftingmoretowardtheoperatortoinfluencethedistributorpurchasesasCategoryManagementtakeshold§ Manufacturerswithstrong
BrandsorcontractedbusinesstendtohavehigherOperatorspend
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Overall Trade Investment
§AverageTradeinvestment§Upslightlyfrom2011paceofincreasehasslackenedandmayreversebasedupon2015projections
19%
RecaptureReduceearnedincomeforcontractedaccounts;thisisupsignificantlyfrom35%in2011.
Implicationè Traderatesneedtobescrutinizedforopportunitiestocapturemarginandredirecttotheoperator
91%
Whatyou spendonTradeshouldbe
determinedbasedon:
1. Competition2. Category3. MarketShare4. Margin
Contribution
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Distributor Trade is at an Inflection Point
§ManufacturersnowhaveadefinedstrategyforbothIndependent&CorporateDistributors
§(CorporateOpCoarereceivinglesslocalprogramsasfundsmovetoHQ)
§BuyinggroupsarereceivingmoreattentionandarebeingaskedtobestrategicpartnerswithmanufacturersduetotheSysco/USFandothercorporatedistributorconsolidation
§CategoryManagementisforcingManufacturerstochangehowtheyallocatetheirtradefunds:
§Lessornotradetothedistributorforrestrictedcategories
§MoretoOperatorsto“pull”casesthrough
88% 53% 60%
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Operator Trade
ImplicationèManufacturersneedbettervisibilitytohowoperatortradeisdrivingbothcomplianceandvelocity
ManufacturerswhoincreasedtheamountofOperatorSpendin2014
Manufacturerswhoincreasedoraddeddeviatedpricingin2014
56%
29%
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Overpayment on Operator Programs and Bids
§OverpaymentonOperatorprogramsisaseriousconcernwith94% ofmanufacturersbelievingthey(may)haveoverpaid!
Implicationè TakecontrolofyourTradeprogramandstopoverpaying!
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Group Purchasing Organizations
§WithsomeincreasesinGPOspend,manufacturersaremorelikelytodevelopchannelguidelinesforGPOs.
Implicationè GPOsarecrucialbutmembershipandchannelmustbemanaged
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DataandSystemsforManagingTrade
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Usable, Formatted Data is a Concern
§Themajorityofdata– 90%fromOperators,84%fromDistributors– requiresatleastsomecleansing.
Implicationè ConvertingClaimsdataabouttheoperator(unitlevel)intoactionableinsightsiscrucialformanufacturerstoengagewiththeoperatoranddrivecomplianceandvelocity
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(Not Much) Satisfaction with Current Systems
§ 40% ofmanufacturersarenot satisfiedwiththeircurrentsystemstomanageTrade.
§ Mostbelievesystemshandletactical contracts,claimsandpaymentswell…
§ Butfailtoprovidestrategicinsightlikeanalyticsanddashboardreporting
ImplicationèManufacturersmustrequiremorefromtheirsolutions;basicblockingandtacklingaren'tenough.Actionableinsightsonmarginandvelocitywilldifferentiatebest-in-classfoodservicemanufacturersfromthecrowd.
35%HomeGrown
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Administrative Cost for Trade
§TechnomicestimatestheadministrativecostforTradeas3.2%ofsalesbutathird(35%)ofmanufacturersreportlowercosts.
ImplicationèManufacturersmuststreamlineprocessandmanageexceptionsinanautomatedsystem
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Manufacturers Lack Critical Insights & Reporting
32% 39% 61% 40%
§Seldomornever…
§Evaluatepastdistributormarketingprogramsforeffectiveness.
§Seldomornever…
§Evaluatetheimpactofmultiplecontractsonadistributor,operator,unit,and/orproductlevel.
§Seldomornever…
§Shareanalyticaldataandinsightswithdistributorsandoperatorsinsupportoftheannualagreementprocess.
§Seldomornever…
§Analyzedistributordeviatedproof-of-performanceinformationattheunitlocationlevel.
%Manufacturersanswering“Always”
32% 10% 6% 7%
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Needed Enhancements to Current Systems
Mostitemsonmanufacturers’“wishlist”toimprovetheirsystemsarefeaturesconsideredtablestakesinotherindustries:§ Integrationwithothersystems§ Reporting,dashboards§ Democratizationofinformation§ Unitlevelvisibility§ Post-programanalysis§ Self-serviceanalytics§ Easeofuse
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FutureofFoodserviceTrade
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Strategic Approach to Foodservice
Concerns RequirementsManufacturersarefocusingontradetodrivemarginandincrementalsales§ Butitmustbemoreefficient
Compatibilitywithcurrentfinancials;numberneedstobeTHE numberforallreportingandanalytics
Resourcesarealreadystretchedthin;howtodomorewithless?Utilizeothers’capabilities
Easeofusebyfieldè CRMintegrationUnitlevelperformance
NeedtoprovidemoreprescriptiveguidanceonbothsellingaswellaspromotionalofferingsAnalyticsthatdriveaction
AbilitytomeasureeffectivenessClean,accurateandtimelydatafeeds
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The Missing Link in Foodservice Trade?
Dataandsystemstogenerateinsightsthatwilltakeyoufrom
tacticalTradeSpendtostrategicTradeinvestment.
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© Copyright 2015 Vistex, Inc. All rights reserved.
Vistex provides enterprise solutions that manage pricing, incentive, rebate, royalty andchannel programs to enhance business performance while reducing labor andinfrastructure costs. The industry-optimized Go-to-Market Suite® provides end-to-endsolutions for design, management and administration of the complete spectrum ofprograms. With an unparalleled offering of software and services, enterprises areempowered with unprecedented visibility into program performance, gaining deeperinsights to better enable fact-based decisions that drive revenue, control cost, minimizeleakage, and streamline processes.
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Copyright
JimKlass,IndustryPrincipal|[email protected]