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Transforming the Deductions Management Process for Real Value

For many consumer products manufacturers, the complex deductions management process represents an opportunity for potentially millions in cost savings and substantial efficiencies. While the industry continues to evolve in e-commerce and direct-to-consumer capabilities, the need to better manage traditional business processes, such as deductions management, has only become more critical in order to free up constrained resources.

With evident gaps and opportunities within their deductions management process, this global salty snack maker engaged Clarkston Consulting in an assessment to report findings on practices across multiple divisions and develop recommendations for improved efficiencies. As a leader in trade promotion, Clarkston leveraged unparalleled industry expertise to ensure the client used industry-leading practices to optimize their approach to the deductions management process and create a foundation for future growth.

Following extensive analyses and recommendations addressing departmental structure, process design, and performance measurement and reporting capabilities, the snack manufacturer is now positioned for success in managing ongoing deductions effectively while improving relationships with its customers.

Primary Objectives 

  • Drive revenue growth, through brand equity-building consumer marketing and volume-building trade promotions
  • Improve operating performance to confront price competition and industry consolidation
  • Align the deductions management organization, process, and system foundations to support the primary business objectives and efficiently scale with new growth

Resolution

Clarkston Consulting was engaged to conduct a deductions assessment, which included a comprehensive maturity assessment, business case, and process design analysis focused on a new way to look at deductions management. The assessment results were then used to address the following:

Deductions provide data about your customers

  • Not all deductions are equal. The different categories of deductions have a different impact on profitability and require custom strategies to process efficiently.
  • Designed a single AR team with analysts handling end-to-end deductions specific to accounts to establish true customer experts

Deductions cost money to process

  • Costly to incur, time-consuming to process, and hard to recover, deductions, on average, costs companies roughly $97 to process, research, validate, dispute, and clear
  • Proposed increase in automatic write-off threshold that would reduce overall volume by 37% with only a 1% impact to dollars

Cross-functional visibility is a priority

  • A good mirror for overall company performance, deduction management requires data-driven collaborative decision-making
  • Developed cross-functional processes across multiple business units and offices, introduced KPIs with industry benchmarks, and reporting for insightful ongoing collaboration

To learn more about the benefits the client realized in this deductions management process assessment, download the full case study below. 

Download the full case study here

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Tags: Trade Promotion, Services, Case Study
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