Blacksmith Applications, Inc.

There's no question that today's economic environment is difficult and affecting everyone in the industry. Customers and prospects tell us that operators are scrutinizing costs more closely and requesting better deals across all product categories. Distributors are being squeezed and requesting more trade dollars to help support and promote your products. Some customers are experiencing four times the deal activity of last fall's levels.

This economy is difficult - Blacksmith can help. We offer software that enables you to quickly evaluate the profitability of a deal, with approval routing based on your company's rules. We've gleaned best practices from our industry-leading customers to pave your way to a more profitable future. And we're monitoring and evaluating the impact of industry events and trends, such as the recent Michael Foods-Feeser's ruling (see right for our interpretation).

We can help you can navigate today's economy. Contact us today for a business assessment to identify savings opportunities and ROI and leverage best practices we've identified with our customers.

Paul

In This Issue

Blacksmith Forging Ahead

What is Trade Spending?

What Could You Save?

Blacksmith Forging Ahead

This economy is difficult - Blacksmith can help. You need a solution to evaluate and manage the increased volume of deals but more importantly, you need to put your money to good use. What's the point of spending a dollar that doesn't bring in profitable volume? If you're like most companies, you need to:

Manage the volume of deal activity and make decisions quickly, without letting any opportunity fall through the cracks.
Make the best decisions - profitable decisions - about how to spend your trade dollars.
Automate billback validation during the settlement process. Read on about how Blacksmith can help.

What is Trade Spending?

If you ask five people how they define trade spending, you're likely to get at least five answers. At Blacksmith, we have a broad definition:

National and regional price lists
Distributor allowances and trade - including distributor-specific pricing, rebates, lump sum and growth programs
Operator deviated prices, both FOB and delivered, and rebates
Broker commissions Read more about why it's imperative to have all your deals in one system.

What Could You Save?

For most manufacturers, addressing trade spending provides significant savings opportunities. A manufacturer with $100M in gross sales can save about $2M. See how this breaks out.

With trade the second largest budget item and the potential for savings so substantial, why aren't you looking at a trade solution? Contact us today for a business assessment to identify areas for savings and ROI for your organization.

We'll talk more about protecting your organization, making better decisions and aligning your trade and pricing strategy with your business strategy in future articles. If you have any comments or specific topics you'd like to discuss, drop me a line at twefer@bigredflame.com or call me at 312-961-4501.

Sincerely,

Tina Wefer

Blacksmith Applications

Convenience is Expensive

By now, you've heard about the Michael Foods-Feeser's ruling. What's our take? Manufacturers need to protect themselves.

Convenience is expensive ... blankets, extendibility, etc. make it easy to offer a deal, but at what risk?

Deviated pricing should not be private. Communicate the deal to the operator and have a clause that says you'll share with all distributors.

Justify and document rationale for discounts - valid reasons include volume, competition, and cost justification.

Put guidelines in place that categorize pricing by depth with rationale. Distributor and operator segmentation and standard offers by segment based on criteria like exclusivity, penetration and loyalty are more defensible.

Your process should insure that deviated price offers do not convert your own business from one distributor to another.