Distributor Trade Loading - The Cocaine Of The Grocery Industry
President of the Arena Consulting Group
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•White Paper: Distributor Trade Loading -The Cocaine Of The Grocery Industry
I guess we kept hoping that after Enron, Ahold, and U.S. Foodservice that these accounting issues would go away. I think that we're just getting started. We can wring our hands about it, but my belief is that this is just part of the ebb and flow that keeps our overall financial system in balance and our economy the strongest in the world.
Today the issue is Trade Loading. Here's the truth. Almost every food manufacturer and distributor (retailer or wholesaler) in the United States does it today. Who's impacted by it? We all are. We see it in the forms of higher prices and lower quality for the goods we buy, stores flooded with products we don't need, and financial results that we can't trust. You can't find anyone in the Grocery Industry who didn't know this was an issue or ever felt truly good about the practice. However, this is a very complex issue to understand. Without placing judgment on the many good firms that follow this practice, or companies that are currently wrestling with the issue, this article is meant to describe what trade loading is, why it started, how it continues, its impacts on the supply chain and, just maybe, to suggest a way out of it.
Trade loading is a plague on the largest industry in the United States – the manufacturing, distribution and sale of food products. It's over $350 Billion in yearly revenue and comprises all the brands that we've come to know and love – Kraft, General Mills, Target, Safeway, Kroger, SuperValu, Wal-Mart, Nestle, Coca-Cola, and the like.
Jack Haedicke bears the distinction of having built more activity based costing (ABC) systems than any other single individual. As controller of manufacturing at Hughes Aircraft, he developed customer profitability models. He led the US efficient customer response (ECR) initiative while serving as director of cost accounting at Coca-Cola, and he later held the position of vice president of finance and supply chain at Kraft Foods, With consulting firm Arena CG, Haedicke has built customer profitability-focused activity based costing systems for Miller Brewing, Wegman's, Wal-Mart and Target.Arena Consulting specializes on the interaction of cost accounting and supply chain in the areas of (ROI) Return on Investment, Pricing, CPFR (Collaborative Planning, Forecasting and Replenishment), ABC (Activity Based Costing), and Consolidation Warehousing. Click Here To Download:
•White Paper: Distributor Trade Loading -The Cocaine Of The Grocery Industry