‘Working Trade’ vs ‘Non-Working Trade’

Non-Working Trade

Essentially, by non-working trade, we refer to dollars that do not get to the consumer, do not drive targeted distribution, and do not drive repeat purchase.

Examples of Non-Working Trade

    • OI’s & the Resultant Forward Buying
    • Non-Targeted Slotting/Free Goods
    • Administrative Fees
    • Short Coded Buy Downs
    • Unauthorized Deductions That Need to be Repaid

Working Trade

Working Trade is targeted spending with retailers to drive growth, your brand franchise/equity, and represent dollars reflected at the consumer level.

How Can You Measure This?

While short-term results may be difficult to measure, retailer level case growth is a barometer. Longer-term consumption growth, reduced spending per case, and reduced slotting are key metrics. Also, spending can be evaluated and measured by ROI, ‘cost per incremental case’, and customer profitability longer term.

So When Do You Begin to Evaluate This?

It is important to note that these are not ‘big company’ approaches – companies under $10M address some or all of these areas.

On-Demand Webinar - Working Trade vs Non-Working TradeNatural-Specialty Trade Spending Webinar (On-Demand)

Would you like to learn more about ‘Working Trade’ vs. ‘Non-Working Trade’? We have developed an educational webinar for CPG manufacturers in the natural-specialty segment, and invite you to join us at your convenience for this on-demand webinar. 

Our Clients Relax About Trade Spending

Adesso-8WaysWeHelpOurClients

At Adesso we help our clients relax about managing their trade, when we begin to speak with a CPG company looking to improve the effectiveness of their trade spending and deduction management. A number of objectives for investing in a solution are consistent among them.  Adesso_2022-03-22 How We Help Clients Relax

In this fact sheet, we’ve outlined 8 specific ways in which our clients say we help them relax. Also, addressing their objectives about trade spending management.

To learn more on how our clients relax about trade spending, click the image to download your copy. Then, contact us if you would like to speak with any of our clients on how they have addressed the common opportunities that exist among CPG manufacturers. 

Case Study: Clients Reduce Deduction Resolution Time

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4 Differentiators Among Clients Who Dramatically Reduce Deduction Resolution Time

Rolling Meadows, IL. June 28, 2021 – Adesso Solutions announced today a case study demonstrating 4 differentiators among clients who reduce their deduction resolution time most significantly. As Days Sales Outstanding (DSO) for deduction resolution time remains one of CPG manufacturers’ top priorities, Adesso developed an in-depth analysis of those clients who are most successful, and found four distinct differentiators that were common among these clients.

While extremely important for all CPG manufacturers, this finding is especially critical to those in the Natural-Specialty segment where many lack a defined process and have little handle on their total trade budget at a customer level. In fact, Adesso’s analysis revealed that clients who leverage simple the process within Flamingo, along with these differentiators, reconcile all deductions within 60 days and over 85% within the first 30 days!

“Our brokers enter deals, clear our deductions, do our repay and the check requests – – they do it all and we currently have no deductions over 60 days,” said Karen Prophet, Promotions and Trade Spend Manager at Idahoan Foods. “My brokers tell me that Adesso is the most user-friendly system they have in their office. We have brokers recommend Adesso to other clients that they have.”

“Flamingo TPM is a great place to manage trade and deductions, all in one place,” said Diana Lester, Promotional Accountant at American Pop Corn Company. “Having all trade information in one system gives me complete visibility into our spending; I can log into the system to see what we are spending at every customer, view all of our plans in a Promotional Calendar, and click to drill down and see details and contracts associated with any deal.” 

To request your copy of the case study, or for more information about Adesso’s system and services, please contact Karin Souren, Director of Marketing, at ksouren@adesso-solutions.com

Adding a Resource Doesn’t Fix Your DEDUCTION CHALLENGE

Adding a Resource Doesn't Fix Your Deduction Challenge
Adesso - Adding a Resources Doesn't Fix Your Deduction Challenge
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Often, we get a call from an emerging Natural-Specialty-Organic (NSO) manufacturer telling us that they have added a new accounting resource to assist in reducing their deduction balance, and sorting out all of these trade spending issues. When we ask how it’s going with the new person, the reaction is typically underwhelming.

THE REASON IS SIMPLE: trade spending deductions are not the problem – they are a symptom of the problem.

An added resource will not address this.
The problem lies in not having a clear and accurate understanding of:
  • what you were planning to spend,
  • what was committed to by your sales team and the distributor or retailer,
  • and then not knowing what actually happened in the marketplace.
The deduction is simply a form of payment for the distributor or retailer.
When these areas are aligned within small or emerging NSO manufacturers, ‘matching’ the deductions to the spending is a rather simple process – typically addressed by your broker partners. And, yes, there may be a small percentage of these deductions that are not authorized, or someone made an error. But for manufacturers that have accurate plans and agreements documented, these issues typically begin to melt away.

We’d love to discuss this with you in more detail, and share client results.

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Face It, DEDUCTIONS Are a Form of Payment

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Adesso-Deductions Are a Form of Payment
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Deductions come across as evil to many in the industry. They go by a lot of different names: chargebacks, MCBs, short pays and a host of others, but the common name for decades is simply Deductions

And believe it or not, these were originally driven by CPG manufacturers! 

You see, when trade spending was in its infancy 30+ years ago, manufacturers moved from ‘off invoice’ payments to ‘bill back’ payments. Hence, the retailers had to ‘bill back’ the manufacturer to get reimbursed for the dollars they used to discount the manufacturers’ products. Yes, that’s what the dollars were used for back then.

The manufacturers (who had a lot more clout in those days…) would debate whether the dollars were worth it or drove enough cases, which delayed reimbursing the retailer. In this day and age, the retailer was out the money!

As manufacturers became increasingly dependent on this extra volume and revenue, retailers became rather impatient and realized they had more leverage, and soon the balance shifted. It was a lot quicker to take the dollars spent last week or the week before off of the next invoice.

That addressed 2 issues:  

1. The retailer got their money faster.

2. The retailer also shifted the proof and incremental volume responsibility to the manufacturer.

And as soon as one retailer did this, everyone followed!

This is how, somewhere in the 1980’s, deductions became a form of payment for trade spending.

Therefore, if you are a food manufacturer entering this arena, be prepared to address this in a logical, effective manner. Because, in addition to all of the legitimate deductions, retailers and distributors will assume they are always accurate, and place the burden of proof on the manufacturer. Though some are more effective than others in assuring accuracy.

The reality is this is a clear form of payment in this industry. Profitability and effectiveness are therefore dependent on your ability to address this quickly, accurately, and thoroughly.

DID YOU KNOW that many manufacturers – large, small & emerging – now address deductions in 30 days or less? And they account for everything at the same level of granularity as any other item in their P&L!

You Can Have Better Visibility Into Your Trade Spending in Just 1 Week!

 

What % of Your Budget is Trade Spending?

To know where your dollars are spent and to make them work harder,
here are 5 reasons to consider Adesso’s Flamingo TPM:

The new fees from Whole Foods will be another area of change – and increased spending.

The upcharge from distributors is not always known to you in advance, so your retail price isn’t what you thought it was set to be.

You’re unable to see exactly where your promotion dollars are being spent.

Deduction/MCB management is an accounting nightmare, and it is a challenge to hire someone who has the expertise.

You and your CFO are constantly wondering what you’ve spent at retailers through distributors, and would like accountability.

If you’re on QuickBooks, you’ll be up, running – and generating results – within a week, and it grows as you do.

And do not worry about complexity – it is simpler than spreadsheets for your team, and brokers love it, too!

To find out how YOU can be LIVE in Flamingo WITHIN A WEEK,
ask us to shop by your booth at Expo West!

Submit the quick form below: 

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Deductions came in on budget?

In early 2016, Idahoan Foods was fed up with their overall deduction/MCB situation and decided to do something about it. It was taking up too much of their time and their broker-partner’s time, and it was costing them money.

Partnering with Adesso, and their use of the industry leading Flamingo Trade Management system, they ended their fiscal year in 2017 with the following results:

  • Absolutely no open deductions/MCB’s ‘over 90 days’.
  • Their total ‘over 60 days’ balance was less than 6% of the open deductions/MCB’s.
  • Their total deductions/MCB’s were less than half of 2016!

To learn more in our recent white paper about how Idahoan and other clients have leveraged Adesso’s Flamingo TPM, as well as the Community and other Trade Effectiveness areas, fill out the quick form below, and we’ll get right back to you!

Request the white paper about Idahoan’s achievements:

Email Karin at ksouren@adesso-solutions.com

Idahoan Foods Leverages Flamingo TPM to End “Over 90 Day” Deductions & Reduce Overall Outstanding MCB’s

Rolling Meadows, IL (September 13, 2017) – Adesso Solutions announced today impressive results achieved by a leading client-partner, Idahoan Foods of Idaho Falls. As deductions and manufacturer charge-backs (MCB’s) continue to be a major area of concern for all CPG manufacturers, including those in the Natural-Specialty arena, Idahoan Foods leverages the power of Adesso Flamingo TPM to drive some impressive results for their 2017 fiscal year (ending August 2017).

Most significantly, Idahoan ended their 2017 fiscal with $0 in their ‘over 90 day’ column for deduction aging. In addition, their total ‘over 60 day’ column is <6% of the total outstanding deductions. Finally, their total deduction balance at the end of the year is 50% of where it was in 2016… they reduced their total deductions by over 50%!

“I would attribute these incredible results to Idahoan’s diligent planning within Flamingo. Specifically, their promotions are confirmed in advance, and promotional contracts, as well as all other key information, is stored within each promotion,” commented Fred Schroeder, President & CEO at Adesso. “Idahoan consistently makes use of the functionality within Flamingo – a system that continues to improve based on their input and discussions with others in the Adesso Client Community. Furthermore, ongoing training for both internal resources and their broker partners with Adesso ensures optimal usage, as well as more accurate information within the system.”

Keith Peers, Senior Vice President of Operations for Adesso said: “We listen to our clients, as it is ‘their system’ …we are simply the stewards of the system. Our TPE Community facilitates opportunities for our clients to stay involved in their solution, to share best practices, and to take advantage of a host of shared benefits. Having the depth of industry experience, however, allows our team to pinpoint the real functionality opportunities.”

The upcoming fall client conference, the ‘Trade Experts Council II’, taking place on October 17-18, is an example of Adesso’s collaborative client community events that bring together clients and select ‘not yet clients’ with a broad range of trade expertise. These attendees range from Executive Leadership to Senior Sales & Finance, Trade Marketing, Field Sales, Sales Finance, and this year with representation from Broker Partners.

About Idahoan Foods
For nearly 50 years, Idahoan Foods has been the gold standard in prepared potato products. Headquartered in the heart of America’s potato country, Idahoan Foods employs an extensive network of potato experts that oversee the potatoes from field to shelf. The company offers a full spectrum of convenient mashed, hash brown, and casserole products under the Idahoan®, Paradise Valley®, and all-natural Honest Earth™ brand names. For more information, visit http://www.idahoan.com.

About Adesso Solutions
Adesso Solutions is a leader in delivering Trade Promotion Effectiveness for small and medium sized Consumer Packaged Goods manufacturers. Adesso leverages a long history and deep expertise in the industry and a unique suite of solutions. It includes an all-encompassing Trade Promotion Management (TPM) system on a cloud-based SaaS common platform (.Net), unique System Effectiveness Services and Trade Analysis & Planning Services to maximize the trade promotion effectiveness for client partners, as well as an active TPE community for client collaboration.

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Are you drilling down to the weekly results by major SKU at each retailer or just reading the averages?

You should be drilling down because there’s gold in them hills! It’s easy to speak to averages because it requires less work. But averages hide important details.
For example, your average price doesn’t tell you how much of your volume is sold on deal, or that one major deep discount blowout sale drove so much volume in 2 weeks that it is impacting the entire year’s average. You could be too high or too low of your pricing goal vs your competition most of the year but the average hides that. What if you didn’t get that sale next year? Continue reading