About the Trade Terms "Navigator" System

PROGRAMME BACKGROUND AND CHALLENGES

• Increasing bargaining power of customers
• Sophistication in information technology and transparency (end of  geo-blocking in Dec 2018)
• Additional pressure from buying groups (e.g. COOPERNIC, AgeCore)
• Customer consolidations and retail buying alliances (e.g.: Carrefour Provera-Système U, Auchan-Metro Casino, etc.) 
• Fixed amounts (lump sums) leading to higher rebates over the years 
• Net-net-prices alignment demands across all markets 
• New legislation forcing suppliers (and retailers) to install clear counterparts for retro-payments, e.g. Germany (9. Amendment GWB § 20a), Switzerland (StGB 322), Romania (EGO 39), Czech Republic (Act No. 50/2017), France (LME - Loi de Modernisation de l’Economie) 

DEFINED PROGRAMME OBJECTIVES

• Create internal Total Trade Spends (TTS) and pricing structure transparency (incl. nature of price corridors)
• Establish a common pricing and trade terms “language” across markets 
• Re-model the given local trade terms structure and deduction schemes to guarantee a balanced rational between the substantial price increases and the net-net landings
• Develop a local/global TTS policy based on principles and guidelines reflecting the specific category & business environment 
• Optimize existing local trade spends and future investments based on performance, derived from the global/local business driver architecture
• Make retro-payments conditional (or shift on-invoice)
• Build a solid and consistent framework across channels and customers
• Enhance the commercial power vs. customers
• Evaluate and carry-out shifting, re-allocation, transformation and folding opportunities 
• Reduce complexity and harmonize Total Trade Spends (as far as possible) 
• Enable the Key Account Management to deliver sustainable growth
• Test and implement the “Trade Terms Navigator” in pilot markets

Benefits of a new Trade Terms System

Performance Orientation

• New detailed defined terms based on a global framework
• Channel specific
• For relevant performances only
• Clear separation of performance terms vs. non-performance terms
• Remaining non-performance terms transparent/manageable

Profit Orientation

• Cutback of “moon prices” via “shifting” and “folding” 
• Reduced terms & allowances volume 
• Elimination of non-performance terms (folded into list-prices)
• Higher net-effect from list price increases
• Future launches with less terms & allowances burden 

Transparency / Administration

• Less terms
• Clear definitions and rules
• Reduced complexity 
• Simplified administration
• Improved terms & allowances management/-transparency

Reduce Future Risk

• Uniform terms & allowances structure 
• Reduced playground for T&A negotiations
• Less “costs” from further investments based on the reduced base
• Total T&A spreads better manageable