Each day brings a shifting set of circumstances that requires us to rethink many things, including how we conduct business in the wake of the spread of COVID-19. When it comes to the U.S. food supply chain, seeing empty grocery store shelves is eerie, but rest assured, perception is not reality. Out-of-stock items are due to panic shopping, not a lack of food itself. Consumer Goods manufacturers have stocked warehouses and they continue to produce and transport food to retailers.
This does not mean all food business is status quo. Consumer Goods companies are responding to today’s unique supply and demand scenario with new strategies. Manufacturers of hot dogs, for example, have started shipping inventory originally earmarked for Memorial Day weekend out to retailers. Consumer goods items contracted for restaurants, cafeterias, and college campuses that are now closed are being diverted to grocery stores.
These shifting business strategies are forcing Consumer Goods organizations to adjust their forecasting, planning, promotional activities, and trade spend budgets faster than the speed of business. While non-perishable, frozen, and health-related products are experiencing an increase in sales, fresh produce sales are declining. It’s hardly business as usual for anyone right now, but paying close attention to spending, profits, and revenue is extremely critical because we will eventually resume to some kind of ‘normal.’
And even if promotional selling isn’t top of mind right now, it remains a necessity to have a good handle on data, trade spending, and long-term contracts. Despite so much uncertainty, Consumer Goods companies need to know where every trade spend dollar is going and that every trade spend dollar is being used effectively. The process of ensuring that every deduction has been budgeted for and approved is also more important than ever.
Maximizing every dollar spent in a risky economy affecting consumer demand and buying habits is a challenge – but there is a solution.
For Consumer Goods companies to drive business and remain in the best market position possible, visibility throughout the trade spend process is a must. With offices closed, travel suspended and employees working from home, your organization needs a centralized hub of real-time business information to work from. Consumer Goods manufacturers should also be taking all necessary steps to ensure they have operational and financial auditability of their trade spend budgets. Efforts that can be made now to streamline the process of reconciling deductions will help improve speed to cash.
Consumer Goods companies who have successfully transitioned to integrated digital solutions, such as CPGToolBox, to ensure transparency, financial auditability, and a controlled settlements process typically see an improvement of trade spend effectiveness of anywhere from six to 10 percent, but it’s sometimes more, depending on your current situation.
Finally, we want to tip our hat to the hero companies that are ensuring a supply of products continue to be available to consumers in the midst of the COVID-19 crisis.
Stay healthy everyone.
Rick Pensa, President & CEO of CPGToolBox