Consumer Goods (CG) manufacturers rely heavily on trade funds to proactively shape demand, influence retailers and to collaborate on marketing programs that help drive consumer behavior.  While the average shopper may not be aware of it, virtually every product placement, price reduction, and end cap has been funded by the manufacturer.  For the average CG manufacturer, trade spending ranks second only to the cost of goods on the balance sheet and regardless of the recent recession trade spending has not decreased in most companies. 

As a result, most consumer goods companies have implemented trade promotion management (TPM) solutions with the idea of improving trade spend, automating antiquated spreadsheets or creating a better planning and forecasting process.  For Sunny Delight Beverages Co. (Sunny D), a leading producer of juice-based drinks in North America and Western Europe , it was all about customer profitability.

A Sunny New Direction

After spinning off from CG giant Proctor & Gamble, Sunny D suddenly found themselves a small fish in a big pond.  As a new small-to-medium-sized business (SMB), it was imperative that Sunny D not only implement new technologies, but rather use them in a way that could exploit their position as a smaller CG manufacturer and help them to better compete with their much larger competitors. 

The first step in the process for Sunny D was to integrate its TPM system with its broker’s network.  In order to make this happen as quickly and as seamlessly as possible, Sunny D knew they needed to adopt the right trade promotion management solution – one that would tie into the broker network while improving synergies between TradeLync and Sunny D’s financial system.  Sunny D also realized, like many other CG companies, that Excel spreadsheets were not the optimum way to communicate trade promotion and/or sales and reporting activities between the Company and its broker, Acosta.  Consequently, and on the recommendation of Acosta who already uses MEI for trade promotion management, Sunny D began an intensive look at this TPM solution.

Customer Profitability Will Quench Your Thirst

After a fast implementation, Sunny D’s order management and ERP systems were feeding data to the new TPM application. However, they soon began to realize that there was a lot more to trade promotion management than improving and tracking overall trade spend, so they quickly shifted their overarching goal to improving customer profitability.  If they could map revenue, trade promotions, cost of goods sold, logistics and any other variable customer-related costs to finance, they could also improve the overall efficiency and revenue of the Company.  To do so, this model would require them to extend the use of the TPM solution throughout all of finance, product supply and logistics.

“By gaining small wins with the MEI trade system and then multiplying those wins on an enterprise-wide level, we could really drive change across the company,” commented Chris Miller, Sales Finance Manager.  “We knew that combining various data and customer touch points would allow us to identify spend by customer and see how effective we are at driving specific financial contributions at the customer level.”

Managing cash is always a priority for SMBs and Sunny D is no exception.  They needed to be specific when it came to incremental trade and be able to analyze which programs could be more profitable to the business.  Miller stated, “When allocating incremental trade funding, we can analyze the data to determine the appropriate investment.  We recently analyzed two very similar customers with slightly different profitability to determine why there was a delta.  Using the MEI TPM suite across internal groups, we identified the difference in profitability was due to logistics; not necessarily in shipping costs, but in ‘lumper’ fees and late fees.  After some discussions, the customer now picks up their orders saving both Sunny D and the customer a significant amount of budget.  Being able to see trade spend and revenue per customer enabled the groups to perform an accurate analysis of the situation.  This resulted in a win for Sunny D and the customer.”

The TPM solution helped in other ways too.  For example, the Company sells to the Military though government approved distributors; consequently, they wouldn’t normally be able to track the end customer’s profitability.  By leveraging the functionality of the MEI TPM solution,    Sunny D is able to drill down and see how the distributors are loading their data, which – in turn – enables Miller to gain valuable insight into how the end user is buying the Company’s products.

Sunny D also uses the TPM solution to help analyze a company after an acquisition.  During its recent acquisition of Veryfine, some of the product lines were considered unprofitable.  However, using the MEI system, Sunny D was able to analyze the “spend per pack size” data and determine that trade spend was a lot more efficient than they initially realized.  “The ability to see the details enables us to act faster to market conditions and make the best choices for the Company.”

Sunny D’s sales force is also using the TPM application.  In fact, Miller stated they use contribution to maximize the efficient use of their customer’s trade funding by analyzing top-line revenue down to cost of goods sold.  ”Our goal is to make our funds work as hard as possible to grow revenue for Sunny D and our retail partners.” 

Since the implementation, Sunny D has seen a higher level of efficiencies across the board, and has enlisted the help of various departments to help strengthen profits.  In fact, the trade promotion management application has already helped the company exceed initial goals for the implementation.  Although Sunny D concentrates on customer profitability, they also reap the more standard rewards from trade promotion management technology including simplified budgeting, planning, accruals and volume- and spend forecasting.  But it’s the smaller business mentality that Miller claims is the crux behind the Company’s successful use of its TPM technology.  By fully utilizing all of the functionality of its TPM suite, Sunny D has successfully managed its business through a detailed view of customer profitability and by continuing to create wholesome beverages that meet the needs of their target audiences.

This BeyeNETWORK news item contains information from a recent press release by the company mentioned.