J.R. Simplot Improves Trade Spend Process with TPM Software
Learn how this foodservice team reduced redundant points of entry and gained visibility into distributor programs ⤵️
Customer since 2007
Headquarters: Boise, Idaho
Known for: Plant-forward menu options, fries, vegetables, fruits, grains.
BUSINESS SITUATION
The J.R. Simplot Company needed a holistic pricing and trade solution to manage pricing, contracts and trade programs with its distributor and operator customers.
The foodservice manufacturer wanted new processes to improve the accuracy and ease of capturing freight allowances, reduce redundant points of data entry, make trade-related processes more efficient and replace an existing rebate and contract processing system that was becoming too expensive to maintain. And its management team wanted visibility to profitability and pricing metrics.
RESULTS
Simplot identified more than $4M of potential annual savings, stemming from the Blacksmith TPM implementation and best-in-class processes.
The Goal: Gain Value from Trade Spend
Simplot knew their trade promotion and price management processes were time-consuming and prevented them from being as responsive to customers as desired.
And limited visibility meant less analysis for profitable decisions.
To support growth objectives and continue to surpass competitors, Simplot was ready to better manage trade promotion and pricing. The organization needed new processes to improve accuracy and to capture freight allowances associated with their forward distribution centers, or internal warehouses that stock inventory, and delivered pricing transactions.
One of Simplot’s goals was to reduce redundant points of data entry, make trade-related processes more efficient and replace an existing rebate and contract processing system that was becoming too expensive to maintain.
“We were missing insight into profitability of new discount and trade requests, particularly when the customer already gets other discounts and trade funds,” explained Rick Wold, Senior Director of Customer Service for the J.R. Simplot Company.
“To be competitive, we had to ensure the discounts we offered still allowed us to be profitable. Our prior system was difficult for field sales and brokers to use and didn’t provide insight into profitability of deals and discounts in order for field sales to make good decisions about spending. The prior system didn’t incorporate a wholistic view of the financials across deals the customer already received, so analysis was either very manual or incomplete. Corporate also needed insight into all the deals that had been offered in order to better accrue for commitments.”
Recognizing these challenges, the Simplot foodservice team decided to transform how they handled trade spending. The first step – roadmap current versus ideal processes. This enabled a stronger solution evaluation.
The Solution: Blacksmith TPM
Simplot selected Blacksmith’s trade software because of the profit margin visibility functionality.
“At a glance, we can tell if a request is profitable or not, inclusive of all other deals the customer already receives. The margin screen is simple to understand, even for those not in finance – you can quickly and easily tell if a request is profitable or not. The approval process is faster and more accurate,“ noted Jim Hoyt, Sales Director for the West Region.
Amy Clark, IT Business Relationship Manager added, “We also selected Blacksmith Applications because of their foodservice expertise. Their knowledge of our business is critical. Blacksmith had the components we needed – support for pricing, deductions and a user interface for sales to enter deals. And, they recognized the terminology we used and the types of deals and discounts common to foodservice. That made the implementation process easier.”
Simplot assigned a dedicated, cross-functional team to implement the foodservice trade promotion management software.
Learning from a prior trade solution implementation, they realized that they needed to dedicate people to the project in order to make it a success. The team met their target go-live date. They also successfully trained 200 brokers and 100 internal users. Implementation took around 8 months. Go-live was problem-free as a result of careful planning and testing done in advance.
Blacksmith integrates 25 master and transactional data files with Simplot’s implementation of JD Edwards on a nightly basis and also provides a reporting feed to Simplot’s data warehouse, enabling Simplot to handle all reporting in one system. “We liked that Blacksmith understood what we needed and gave feedback based on their industry knowledge. They brought considerations to our attention that we hadn’t even thought of,” continued Amy Clark.
The Results: $4M in Potential Annual Savings
All goals identified in the original product charter were achieved:
• One-page screen for field sales to review profitability of request
• Process and data integrity of all pricing
• Accurate payment processing and billback claim validation and calculation
• Accurate and systematic calculation of all rebates including those with freight
• A process that enables the team to keep up with deductions
Simplot’s sales, marketing, and finance teams now use Blacksmith TPM to automatically evaluate the profitability of each price agreement and promotion and route deals based on approval
thresholds and hierarchy. Finance uses the system to process payments and deductions related to trade spending.
Ultimately, Simplot improved insight into product and customer profitability, added control over their processes and regularly communicates with customers.
The system has received high ratings from users for ease of use, access to data and quicker and improved decisions. Furthermore, the application delivered these benefits without the upfront investment in hardware required by other solutions. Field sales likes having visibility into their deals and profitability before approval. They were like kids in a candy store with margin screens -seeing the detail behind the price,” said Rick Wold.
Simplot estimates that approval time has been reduced by 50-75%, and is significantly more accurate. With their legacy system, they could approve requests quickly but they didn’t know what they were approving since profitability wasn’t calculated and other deals and discounts weren’t readily identified.
Broker Benefits:
• Ease of Use: Blacksmith TPM is simple for brokers to use.
• Workflow & Routing: Routing, communication and notification reduce ineffective time spent tracking status, freeing resources to focus on value-added activities.
Field Sales Benefits:
• Economic Decision-Making: Field sales has greater visibility to the economic impact of each proposed expense, and can make more strategic decisions with this insight into key profit metrics.
• Accessibility: Access to broader and deeper data than in the past, enabling field sales to become more insightful and strategic relative to pricing and promotion decisions.
Settlements Group Benefits:
• Process Automation: Process claims with insignificant deviations with little or no human involvement. Reduces workload and eliminates time spent validating claims.
• Deduction Auto-Matching: Processes credit transactions against existing approved claims based on a set of configurable rules; reducing the overall workload.
• Cycle Time: With just a few clicks, you can complete an end-to-end transaction, cutting down cycle times.
• Auto-Pay: Reports are system-generated, so no need for Microsoft Access to manually create payment detail for distributor auto-pay programs.
Benefits for Simplot’s Customers:
• Process Consistency: Common processes and standard policies are in place, ensuring consistency on expectations.
• Communication: All customers receive each pricing and trade offer in a standard communication format and from a consistent platform.
• Pricing Accuracy: More accurate pricing to customers means less process management expenses and transaction complexity.
As a result of the Blacksmith TPM implementation and best-in-class processes to leverage the new software, Simplot identified more than $4M of potential annual savings, stemming from:
• Increased accuracy of freight components for pricing
• Eliminating and recapturing pricing deviations
• Reducing unauthorized deduction write-offs
• Savings on system investment and maintenance
“We expected a lot from our implementation with Blacksmith and we got even more than we expected. We can quickly evaluate requests based on profitability, inclusive of product costs and
other deals with the customer. Field sales and our broker partners have visibility into deals and we’ve improved the accuracy and ease of capturing freight allowances. We’ve reduced our deductions significantly. Blacksmith’s industry expertise made the implementation process easier – we didn’t have to explain our terminology or the types of deals we do. And most importantly, we saw a substantial return on our investment quickly,” commented Rick Wold.
