Two efficiency-driven "single-count" coupon processing tests getting under way in coming weeks promise to accelerate retailer reimbursement and manufacturer access to marketing data.
The industry's two largest manufacturer coupon redemption agents, Carolina Manufacturer Services, Winston-Salem, N.C., and NCH Promotional Services, Lincolnshire, Ill., each will participate in separate test programs that represent a new cooperative relationship with retailers and the clearinghouses that process their coupons.
The CMS test involves Supervalu, Minneapolis, and its clearinghouse, North American Data Processors, El Paso, Texas, and Kimberly-Clark, Irving, Texas. The NCH test also involves Supervalu and NADP plus a second retailer and five unnamed manufacturers.
Collectively, CMS and NCH process an estimated 85% of all coupons handled by manufacturer redemption agents in North America.
What distinguishes both test programs -- NCH's, which will begin later this month, and CMS' on April 1 -- is that coupon data supplied by the manufacturer will be integrated with retail clearinghouses' data bases. Unlike the traditional redemption process, which calls for separate coupon counts by agents representing the retailer and manufacturer, the tests call for a single count of coupons at the retail clearinghouse.
"We have a process that has the ability to remove a lot of the inefficiencies [of coupon processing] and resolve the contentious feelings between the retailer, wholesaler, manufacturer and agents," said Ken Judson, corporate director of retail accounting
services at Supervalu.
"We're very excited about it," he added, noting that both tests will lead to an accelerated payment cycle and virtually eliminate invoice deductions.
The CMS test could involve some 2,950 Supervalu retail locations whose eligibility will be determined based on individual coupon misredemption history. The test will continue until June 1 and would cover an estimated 3,000 to 4,000 different product offers from Kimberly-Clark.
In both tests, coupon reim-bursement payments to the retailer will be based on a single count of paper coupons, rather than the traditional process, which calls for two separate counts.
The traditional dual counting of coupons by different parties results in coupon value discrepancies, which stall payment to retailers and allow marketing data to grow cold before manufacturers receive it.
If successful, the CMS program would enable Supervalu to receive coupon payments from Kimberly-Clark within seven to 10 days rather than the current 26- to 30-day period, Judson said.
In addition, the manufacturer would gain access to marketing reports faster, according to Gary Trainor, president of CMS.
"In a traditional, two-step process, manufacturers' marketing data could be posted to a reporting system as late as 35 to 40 days; now [under the test], it will be posted in 15 to 20 days," he said. Paper coupons will still be shipped to CMS for auditing purposes, Trainor noted, "but it will not slow down the payment cycle at all. Electronic data and the paper will flow at different rates."
The test calls for CMS to electronically transmit a master file of Kimberly-Clark's coupon offer data to NADP, Supervalu's clearinghouse. NADP will conduct a single coupon count and use the manufacturer-supplied data to determine coupon values and prepare an invoice.
NADP will capture coupon dollar value as well as marketing information in both test programs.
"So it will bypass this step at the CMS plant and go directly into the CMS computer so they can do the marketing data and forecasting reports," for the manufacturer, said Chris Balsinger, president of NADP.
Balsinger noted that the NCH test will provide for similar benefits: "NCH has created [personal-computer]-based technology which, when combined with a one-count process, ensures both manufacturers' and retailers' needs are met," he said.
As part of the CMS test, NADP will remove expired coupons and so-called "foreign" coupons before shipping them to CMS, which should all but eliminate the incidence of deductions.
"It's an issue seen by Supervalu to address the Efficient Consumer Response initiative," said Supervalu's Judson. "We have a considerable number of deductions that this process would eliminate."
He noted the test will not affect procedures at the stores, which will continue to bundle coupons and send them weekly to a divisional Supervalu office, which forwards them to NADP.
"I think the main reason we are so enthused about this [test] is because of our past track record with Consumer Response Corp., a smaller [manufacturer] redemption agent, and with Quaker Oats, so we know that both sides win," Judson said.
About a year ago, Supervalu and its coupon processor first tested a one-step process on a smaller scale, first with CRC, Delran, N.J., and later with Quaker Oats, Chicago, which at the time handled its own coupon redemption directly.
Though one-step coupon processing is gaining industry attention with the upcoming test programs, the concept is not altogether new.
"One-step processing is picking up momentum at a very rapid rate," said Richard McNally, who this week concludes his two-year term as president of the Association of Coupon Processors, Chicago.
"Most retail processors are experimenting cooperatively with manufacturers or manufacturers' agents to do accelerated [coupon] processing, where the retail processor gets the coupons from the store and, under tight quality control, does count value and gets all the marketing information.
"I would guess you would have a difficult time finding a major retail processor today who isn't doing something in that area," added McNally, vice president of operations at Pennsylvania Food Merchants Association, Camp Hill, Pa.
One of those major retailer processors is Indiana Data, Bloomington, Ind., which this week is expected to begin providing Food Lion, Salisbury, N.C., with one-step coupon processing for Kimberly-Clark coupons.
Late last month, Indiana Data launched a similar test with Kroger Co., Cincinnati, for coupons issued by Procter & Gamble, Cincinnati.
Indiana Data, which represents 35 to 40 retailers, introduced one-step coupon processing in 1992, in a test initiated by Kroger, according to Kari Costello, director of sales at Indiana Data.
"We are live [with the program] with several manufacturers and retailers and in a testing environment with several others," she said. Other manufacturers involved in the program include Pillsbury, Minneapolis; Nestle Foods, Purchase, N.Y.; Quaker Oats; Lever Bros., New York, and Colgate-Palmolive, New York.
McNally said one-step coupon processing has "huge significance" for the industry.
"It's really a watershed because the retail processor is saying to the manufacturer, 'C'mon into our plant. See what we're doing and then you don't have to go through this second [counting] operation. So not only do you save cost, but you get your [marketing] data sooner,' " he said.