Keep Your Foodservice Trade Dollars without a Double Dip Lawsuit
The lawsuit against Foodbuy, LLC that recently awarded Gregory Packaging $9.2M has reignited trade audit discussions in the foodservice industry.
‘Do we have this problem, and if so, how big is it?’ ‘What’s the fix?’ ‘Where do I start?’
Take the Double Dipping Sniff Test
Even without a system to find double dipping, there are manual ‘sniff checks’ that can be done. Here are 2 steps that can provide immediate insights:
First, is non-commercial important to your business? Do you have GPO contracts? If either answer is yes, then continue.
- Get a current Member List from all your GPO customers. In addition to the actual member names, these lists also contain the organization structure that can go as deep as four levels. They’re called divisions, sectors, etc. Now scan this list and compare it to the direct deals in your trade management system. Any hits? That is probably volume getting double dipped.
- Here is another place to look. If you have bids or blanket bids in K-12, look at a few of the billback claims for these bids. They usually contain the school name and also may contain the school district name in the program name. Again, compare those school district names with GPO School segment in the Member List or the GPO claims in your trade management system. Any hits? That volume is probably getting double dipped.
Starting On a Fix
If you’ve found customer names in both places and think you have a problem, here are four low tech ways you can begin to solve this issue:
- Don’t sign any new operator or GPO trade agreements without requiring trade claim submissions to be at the Member Operator Ship-To Level. Aggregated claim volume (say…sum of volume by item from the distributor) is not auditable. And don’t let a renewal go by without adding this to the renewed agreement.
- Make sure all Operator and GPO contracts include language, making it clear that you’ll only pay on one promotion during any given claim period.
- The Gregory Packaging case firms up a legal precedent for clawbacks. Instead of just stopping a specific double dip situation from the point of discovery forward, consider adding clawback language to recoup lost trade dollars going back to the start of the dip activity.
- Make sure you have on-demand access to the most updated GPO Member List.