Small distributors carry a small share of volume. Here is why one manufacturer connected them anyway, and what it got back.
Why Operator Location Level Data Matters
Tibersoft trade implementations for FAFH manufacturers utilize operator-level data to manage claims, measure trade performance, and verify the ROI of their investments. The operator-level data is sourced from tier-1 and tier-2 distributors and GPOs as these data sources often represent the majority of a manufacturer’s sales volume. The organizations that provide the data have established the infrastructure to submit electronic files and have a consistent file format that is at the operator location level.
Operator location level is an important requirement as it can reveal where double dips and leakage are occurring, facilitate visibility to whitespace identification for Sales enablement, and show manufacturers who their end customers are within industry segments.
Why Small Foodservice Distributors Get Overlooked
The volume from these distributors is lower for a manufacturer so why would they want to take the time and effort to establish an automated connection of the billback claims for something like 5% of their business?
Five Questions Worth Asking About Your Manual Claims
If any of these is hard to answer, take a closer look before your next trade review.
1. Which markets do we reach only through smaller distributors?
Beyond the large distributors and GPOs, smaller regional or specialty foodservice distributors play a role for the FAFH manufacturers to reach markets or geographic areas that may not necessarily be serviced by the larger distribution networks or organizations. Correctional facilities, non-profit organizations and geographic areas like the northeast corner of the United States are some examples.
2. Can our sales team develop business it can’t see?
For one manufacturer, heavy in K-12, the simple answer is if the Sales team does not have visibility to the business, they are at a loss to develop it because they don’t know where the products are going. For this manufacturer, understanding which schools are buying helps sales with their conversations and understanding of the K-12 footprint they represent.
3. What does clearing manual claims cost us?
The cost of clearing claims is generally measured in the manpower involved to collect the claims and manually enter the data into a Trade Promotion Management system.
4. What value are we losing in summary-level claims?
The manual claims may be processed at the summary level which omits any future business value that could be gleaned from this purchasing activity.
5. How accurate is our manually entered claim data?
Since the claim entry is manual, the accuracy of the data is at risk. No matter how many checks and balances are in place or if they even exist, errors occur.
How One Manufacturer Connected Its Smallest Data Sources
The manufacturer already has a mature pool of customers with automated claim processing in their implementation. Having the goals to acquire better data, get closer to a fully automated claim pipeline, and increase visibility for the sales team, they decided to evaluate the cost of the work to process the smaller distributor claims against the cost of automation.
1. Rank the Candidates
The approach taken was to first make a list of the candidates based on an understanding of the systems these potential distributors used and the type of file they could submit. Any customers with 1. better file types such as Excel, PDF text, tab, or delimited and 2. displayed a significant percentage of the required content were assigned a higher ranking. Customers with other file types like PDF image or those that could provide an acceptable file type yet lacked the data set required were moved to the bottom of the list.
2. Set the Expectations Up Front
In addition to the file format, the manufacturer set the expectations up front that the customers had to have the capability and willingness to augment the files to meet the minimal requirements to support electronic claim processing and would commit to keep the file format consistent, adhere to the delivery method and schedule.
3. Give Value Back
In return, for payment customers, the manufacturer would provide faster, accurate and auditable payments. For deduction customers, the manufacturer realizes lower costs as deductions are a cleaner process provided the distributor has submitted the data correctly.
On the whole, the goal was data and process improvement so there was no promise of financial incentives or improved contract terms. That said, requests between business entities come with give and take. Sometimes the manufacturer may ask the distributor to bring in more slots and an incentive may be given in return. With this use case, both parties benefit. The manufacturer gets more products sold through a distributor and the distributor has more products to sell.
What 5% of Volume Returned
As a result of this project, the manufacturer implemented 10 additional data sources whose volume represents 5% of the total. 5% of the total volume is perhaps not an overly compelling number but the perspective of this manufacturer is that the value realized is:
- Greater sales visibility in the areas the distributors cover.
- Efficiency and accuracy through automated claims processing.
- Productivity improvements by adding all of the additional data sources, no matter their size, users had one place to go to and see the whole picture. Users saved time as they did not have to go back and forth to different systems for data points or piecemeal reports together.
- The amount of errors eliminated through automation are well worth the setup cost. The users have visibility to all of the data and can make adjustments to inform an accurate claim process.
- Trade analysts can be redeployed to work on other value-add activities.
- Reduction of manual effort in business operations.
- Double Dip analysis in Explore Audit is enabled.
Small volume, full picture. Talk to our Professional Services team about what connecting your smallest data sources would take, and what it would return.
Frequently Asked Questions
How many distributors does a manufacturer typically need to connect?
It varies, but the manufacturer in this article connected ten regional and specialty distributors that together carried 5% of total volume. The number matters less than the markets those distributors represent. Even a handful of connections can close the gap on an entire segment like K-12, corrections, or non-profit foodservice.
Do small distributors need special technology to send data?
No. The case study distributors submitted standard file types like Excel, PDF text, tab-delimited, or other delimited formats. The bar is a workable file type with the required data fields, a consistent format, and a commitment to a steady delivery schedule. The manufacturer set those expectations up front and found that most partners said yes.
What is the difference between summary-level and location-level trade data?
Summary-level data tells you total dollars through a distributor. Location-level data tells you which operators bought what, where, and when. That distinction matters because double dip analysis, sales intelligence, and audit checks all depend on seeing the operator behind the transaction. When claims are entered manually at the summary level, the dollars come through but the detail that makes trade governance possible gets stripped out.
What results did the manufacturer in this case study see after connecting small distributors?
The sales team gained purchasing data in the K-12 markets those distributors cover. Claims that were keyed by hand now process automatically with fewer errors. Trade analysts were redeployed to higher-value work. Double dip analysis through Explore Audit reached volume it had never covered before. And users had one place to see the whole picture rather than piecing together reports from different systems.
