Using Deductions Insights to Drive Business Improvement
Traditionally, CPG and natural products manufacturers see deductions as an expense that is erroneous and out of their control. I’d like to share another perspective.
We like to say, “Deductions tell a story.” Ok, lots of little nuanced stories. Stories that help the whole organization in many ways. They’re a story of your team’s success with new distribution; a story of the highs and lows of running a business – major spikes in demand, which in some cases caused major shortages; successful promotions that blew the doors off (stack it high and watch it fly) to promotions that didn’t move the needle...
We want to challenge you to look at deductions from another perspective - one that can improve your business. Deductions are a unique source of intelligence about your business that can be used to improve everything from warehouse processes to sales to promotional schedules.
How? Here are some examples:
Know your true trade rate. Deductions are made up of all activities within the supply chain. Shortages, late fees, promotions, advertising, spoils, etc. To truly understand your trade rate with a distributor you must peel back the shortages, spoils, fines and fees. From there, you need to drill into the spend by retailer as it relates to your sales.
Identify logistics issues to address: The opposite of incentivizing is to discourage. Retailers and distributors discourage suppliers from shorting orders and/or delivering late by fining them. [Keep in mind, this is to keep the end consumer happy by preventing out of stocks]. Nevertheless, this is an expense that a brand can influence. Having clear visibility and insight into how big your exposure is, knowing where to “hunt”, and the ability to measure progress is critical to the success of a supplier.
Identify mistakes: These issues don’t just sit with the suppliers. Retailers, distributors, and carriers also make mistakes. Part of reviewing your deductions to drive down expenses and improve processes include reviewing deductions taken in error. We don’t think there’s anything nefarious going on here, but there are human mistakes, and nobody wants to pay for another brands promotion.
So, what is new about this perspective?
Before now, accessing this rich deduction information has been buried in hundreds of invoice formats on thousands of PDFs across platforms and mediums. It has been extremely difficult and prohibitively costly to mine that information. Outsourcing, hiring large teams, or burying our heads in the sand have all been used – and understandably so...
After spending years on the manufacturing side and dealing with this pain firsthand, our founders built TrewUp, an online platform that uses technology to extract this critical information and data to provide manufacturers with powerful insights needed to save money and time, and to run their business with clarity and confidence.
For startups to established multinationals, controlling deduction information is vital for CPGs to control costs and investments during uncertain economic time. Helping companies succeed is part of TrewUp’s mission.
