Sunsweet Growers describes its system of managing trade funds as rudimentary. After all, the manufacturer currently relies on Excel spreadsheets, which leaves its brokers without access.
The Yuba City, Calif., manufacturer of dried tree fruits realizes it needs an integrated and automated system in place. But as a small manufacturer -- its North American sales are under $200 million -- the company is limited in what it can do.
Trade funds management systems have been quoted at $700,000 and up -- which is cost-prohibitive for the company, according to Fred Bruggeman, Sunsweet's director of trade promotion.
"Those kinds of numbers scare us to death," Bruggeman told SN.
They're just as frightening for consumer packaged goods manufacturers which are similar in size to Sunsweet. While the brand marketing community is moving toward automated trade funds management solutions, doing so is costly, especially for mid-size and smaller companies.
But smaller manufacturers need to resolve invoice and promotion-related deductions just like their larger counterparts. Sunsweet, for example, needs to have a better idea of how its promotional dollars are being spent. It wants an automated trade funds management system that will provide its broker partners will much more access to data and information.
"Right now, we can see gaping holes in terms of knowing what we spent and what we got for it," Bruggeman said.
Sunsweet is considering using VeriSync Trade Solutions, a new provider of outsourced technology solutions for small to midsized manufacturers in the consumer packaged goods industry. Along with helping CPG manufacturers with data integrity and category management, VeriSync provides an integrated technology solution to assist manufacturers with promotion/deduction management. It enables the tracking and analysis of trade spending budgets, while managing both trade promotions and deductions. The solution is said to reduce overspends and resolve uncertainty around spending status.
VeriSync involves a lease or application service provider model. This makes software available at prices that are considerably lower than if the software was purchased independently, according to officials at VeriSync.
Spearheaded by Acosta, Jacksonville, Fla., a food and CPG sales agency, VeriSync uses software from three vendors: Montreal-based MEI; Franklin, Mass.-based Integrated Software Systems; and Greenwich, Conn.-based Sudden Impact.
"Being at the center of this industry and dealing daily with manufacturers and retailers of all sizes, we were compelled, in the absence of an affordable and linked solution in each area, to develop an integrated software offering," Gary Chartrand, chairman and chief executive officer, Acosta, said in a statement. "Our focus is to enable small and midsized CPG companies to realize the advantages of true e-commerce and product and category management, while benefiting from the same technical advantages used by today's largest manufacturers."
Added Paul Price, president and chief operating officer, VeriSync: "VeriSync's solution is uniquely positioned to allow our subscribers to benefit from an outsourced solution that performs all the vital functions of promotion/deduction management, UCCnet connectivity and category management. While other solutions are available, it is necessary to purchase them individually and the costs for each one, coupled with the low efficiency, can significantly impact a company's bottom line."
MEI, Montreal, is the provider of VeriSync's promotion and deduction management solution.
"VeriSync enables manufacturers, particularly smaller ones, to have the same technological platform that tier-one manufacturers typically have, without spending millions of dollars to do it," said Fred Schroeder, vice president, sales, MEI North America, Basking Ridge, N.J.
He cited that smaller manufacturers are typically limited to spreadsheet solutions. Some don't have any method at all. VeriSync will give them a robust platform to manage trade funds, including an operating plan, deduction management, account planning, deduction and payment management.
"VeriSync takes a big-guy solution and makes it cost effective," he said. "It lets smaller manufacturers have much of the functionality that exists with our overall tool."
John Watkins, chief executive officer of VeriSync Trade Solutions, describes VeriSync as an integrated software offering that's both comprehensive and affordable.
"VeriSync puts small and large companies on a level playing field," Watkins said.
Such solutions are especially important nowadays, when the number of deductions continues to accelerate. Though most deductions are legitimate, it's important to know the money was spent, he said. Companies that don't have a system in place to do this can under-promote their brands, which can result in lost market share.
Along with VeriSync, other options are available for small to midsize companies. Candy manufacturer Perfetti Van Melle is in the process of implementing a trade promotion and deduction solution from I-many, Portland, Maine, a provider of enterprise contract management and trade management solutions. Based in Lainate, Italy, Perfetti Van Melle's brands include Mentos, Fruitella, Meller and Airheads. Its U.S. headquarters are in Erlanger, Ky.
The trade solution is an Internet-enabled software system that lets sales and marketing departments and remote sales agents create, distribute, manage, monitor and track simultaneous campaigns and promotions across products, categories, accounts and regions -- all via the Internet. I-many's deductions solution streamlines the business-to-business settlement process by solving the ongoing problems surrounding the settlement of invoice disputes and deductions, thus allowing trading partners to more easily reach mutually satisfactory agreements.
I-many/Trade Promotions will give the company the ability to manage and execute trade programs while I-many/Deductions allows it to quickly offset promotions with deductions. "The objective is to track who we're spending funds with and what we're spending on," said Mike Grindstaff, Perfetti Van Melle's director of trade marketing.
I-many/Trade Promotions and I-many/Deductions will enable Perfetti Van Melle not only to plan successful promotions, but also to link promotions and deductions and compress the resolution cycle. As a result, days deductions outstanding (DDO) will be reduced, a common industry measure of performance.
Before implementing the I-many system, Perfetti Van Melle's manually managed its trade spending. Its brokers would have to investigate a deduction and fill out various forms to resolve it. By automating, Perfetti's field force will have an IT solution to clearing deductions.
"It's a paperless transfer related to clearing a deduction," he said.
Tom Denk, I-many's marketing communications manager, said trade fund management has grown in importance -- both to small and large manufacturers - in light of the new accounting rules from the Financial Accounting Standards Board and Emerging Issues Task Force.
Under the rules, key expenditures in advertising and promotion -- including slotting allowances, bill backs, off-invoice allowances, coupon redemption, discounts, rebates, free products, co-op advertising and price reductions -- have been reclassified to a reduction in net sales or revenue.
While the reclassifications don't affect the bottom line, they could impact price/earnings ratios and stock price valuations. For most manufacturers, this has placed more emphasis on trade promotion effectiveness.
"It doesn't matter if you're a small or large company, you need to know the marketing return on investment," he said.