Excellence in Retail Trade Deal Collaboration: Three Perspectives
Excellent performance in planning and managing trade deals crosses three key dimensions: (1) Efficiency, (2) Effectiveness, and (3) Timeliness. A trade fund collaboration platform satisfies all three.
This three-part series examines how each dimension is essential in today’s era of promotion- sensitive shoppers.
Part 1: Efficiency
Collaboration brings efficiency to trade promotion
Grocery retailers collaborate on funding trade promotions with their entire vendor community – encompassing brokers, distributors and direct CPG suppliers. The process is continual, high-stakes, and typically engages dozens of buyers or category managers at the retailer and thousands more individuals from their vendor communities.
Trade deals are complex, with many parties involved on both sides of the agreement. It is a constant challenge to keep track of both deal changes and negotiations over time and still end up with a deal that properly reflects the intent – with the right vendor, with the right products, assigned to the right events, and executed in a timely fashion. Relying on spreadsheets, emails, and faxes doesn’t get the job done. Chasing down and reconciling details requires manual steps that soak up time better used by the merchant on value-add activities.
Common errors like missed deals, missing items, incorrect locations, or improper deal structures and ultimately lead to reductions in trade funds available to the retailer. These preventable mistakes also result in commissions paid to third-party audit firms once the deal process is finally settled. This can cost hundreds of thousands of dollars annually. Trading partners generally agree on the critical importance of promotions in today’s grocery environment. The desire to make those promotions impactful puts pressure on merchants and the vendor community alike. All have a stake in making these processes streamlined, consistent, and error-free.
Common data-sharing solutions like portals, spreadsheets, or emails don’t fully address these challenges. They tend to be clumsy and time-consuming in practice, and most do not support Sarbanes-Oxley compliance, leaving the retail organization at risk for time-consuming and expensive financial audits.
Conquer decision intricacy
A singular feature of the grocery business is the sheer quantity of choices that must be made daily in merchandising, pricing, and promotions. These decisions are not especially hard in isolation, but taken at scale, they present a phenomenal degree of intricacy for merchants and their vendor partners.
Adding to the challenge is the interconnected nature of merchandising and promotion decisions. A deal intended to drive volume on one item within a category may have a secondary impact on competing or related products. Such interaction effects – “halo” and “cannibalization” – can be very challenging to incorporate into a deal forecast.
Users across the retail organization need an efficient and common way of working with thousands of suppliers, including the sometimes more complex requirements of broker and distributor networks, often spread across wide geographies.
What efficient collaboration should look like
Today’s vendor collaboration solution must support the retailer’s process, help manage the deal complexity, and set the right boundaries as deals flow through the system. Self-service vendor access and process transparency are crucial so that vendors can communicate available deals with minimal friction and in a timely fashion.
On the retailer side of the equation, always-on tracking and notifications are needed to ensure nothing slips through the cracks. A coherent, single shared view of deals in the process makes evaluating and selecting the best options a routine that all parties can understand. Negotiations and counteroffers are communicated and confirmed within the same platform, eliminating the paperwork exchanges and manual review, which can slow the process.
Built-in item authorization helps ensure the right vendors are supplying the right products. A top-notch collaboration system should eliminate most potential errors before they are created. These features should streamline the entire collaboration process while also providing an unambiguous, common view of the status of any offer to the submitting vendors and the retail buyers.
Keep costs and complexity in line
Trade promotion efficiency is also about eliminating excess and inaccurate activities that tend to add friction without creating value. A well-conceived trade promotion collaboration platform will help retailers trim administration costs, reduce audits and ensure compliance.
Trade promotion efficiency in today’s changing world requires more automation and greater accuracy to deliver the best possible set of promotions to today’s hyper-aware consumers.
Up next in this series: How retailers and vendors gain mastery of their Trade Promotion effectiveness.
Collaboration by DemandTec
Trade Promotion Collaboration by DemandTec is built to provide real-time trade funding negotiation for a faster, more efficient process. Move seamlessly from making the right deal to promotion planning to promotion execution.
Ensure every deal is captured and tracked correctly
Reduce third-party audit fees (up to 100%) annually
Cut administration costs by 85%
Arrange an in-depth conversation with one of our experts.
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