Cooperative Membership & Negotiations           May 2, 2011      Presenter: Bobbi Howard
Progress MeterCoop Review   Financials   Show Benefits Maximize Return   Takeaways                                        ...
Agenda• Review of Coop      o What is Coop      o Why do we Partner with Coop      o What are our Results and Financial Tr...
What is Coop?    Definition• Coop is a nonprofit cooperative that creates  buying leverage for independent distributor  me...
Why Does Partner with Coop?                         2009 Sales in Billions                             IBA, $13           ...
Coop Earnings  TIP: refer to                                             MDA definitions for                       Best   ...
What Control Do We Have Through Coop? Consistent Rebates                                    Incentive Rebates= Coop negoti...
Coop Review   Financials Show Benefits Maximize Return   Takeaways                                                        ...
2010 % Coop Earnings Compared to                                            Total Coop Income              Productivity   ...
Overall Purchases                                                                  vs.                                    ...
Exclusions, exclusions, exclusions…Some of the reasons include: (list is not comprehensive) Exclusions have increased per...
Goal: Stop Losses, Minimize Missed                                                Opportunity                     Even tho...
Trends: EDA, SPA, and Buying Show                                                       as a % to Coop Purchases$415,000,0...
Coop Rebate Income                                                                  as a % to Coop Purchases$600,000,000  ...
Coop Review   Financials   Show Benefits Maximize Return   Takeaways                                                      ...
Targeting Results Together                                                 Exploring                                      ...
Core Partner Buying Show Example                                         OtherVendors Buying                            Di...
Additional Buying Show Deals                                        with Core Partners           Goal: receive a larger ba...
Coop Review   Financials   Show Benefits Maximize Return Takeaways                                                        ...
What is GRASP?      •         Understanding the Goals of all parties, beyond the            immediate deal      •         ...
Goals: GRASP Method      • YOUR Goals- What do I really want to achieve or avoid?              Ex. Buying show: benchmark ...
Routes: GRASP Method        • Routes- How can I achieve my goal by supporting theirs?        Tips        - Always focus on...
Arguments: GRASP Method        • Arguments – What reasons support my/their routes?        Tips:        - Arguments are not...
Arguments = Hard Differentiators                          Continuously Educating our Vendor Reps“There is nothing more une...
Substitutes: GRASP Method      • Substitutes- How else could I/they accomplish the goal?      Tips:      -You may not have...
Persuasion: GRASP Method      • Persuasion- What’s in it for them? Use these techniques throughout          negotiation   ...
ExerciseDiscuss your own example         of GRASP                           27
Thinking Outside the Box                                                                     Routes          Barriers     ...
Ex. Paper & Plastics Fall 2009Situation       • Paper and Plastics offered allowances only on Coop labeled items          ...
Ex. Bakery Spring 2011                 • Bakery appointment, our COGS was flat and trending negativeSituation          yea...
Always Ask the Question                 • Asked for inventory they are long on as a result we drastically                 ...
Coop Review   Financials   Show Benefits Maximize Return   Takeaways                                                      ...
Takeaways• We are stronger with Coop than without Coop as a collective  purchasing group.• We earned $15,249,773 from Coop...
Takeaways      Use the GRASP method to prepare for negotiations      • Goals - What do I/they want to achieve or avoid?   ...
Appendix Menu    Definitions    Peak Results Example    Exercise & ReadingCoop Review   Financials   Show Benefits Maximiz...
Questions?Coop Review   Financials   Show Benefits Maximize Return   Takeaways                                            ...
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Coop Department Training

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Negotiation Training to Increase Profits

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  • Ask the Question what does Coop mean to you?
  • Thomas EXAMPLE- if you want portion control Tyson chicken breast they quote us a specific Coop price.
  • Ask the audience first for solutions.
  • Ask the audience first for solutions.
  • Stay positive end positive, focus on new sales, new focus areas (bids, D8, Online, service level, customer satisfaction in their products)
  • Coop Department Training

    1. 1. Cooperative Membership & Negotiations May 2, 2011 Presenter: Bobbi Howard
    2. 2. Progress MeterCoop Review Financials Show Benefits Maximize Return Takeaways 2
    3. 3. Agenda• Review of Coop o What is Coop o Why do we Partner with Coop o What are our Results and Financial Trends• Coop Buying Show o What is the Objective o GRASP method for Negotiation o Takeaways Coop Review Financials Show Benefits Maximize Return Takeaways 3
    4. 4. What is Coop? Definition• Coop is a nonprofit cooperative that creates buying leverage for independent distributor members across the nation while providing volume and pricing advantages. Coop Review Financials Show Benefits Maximize Return Takeaways 4
    5. 5. Why Does Partner with Coop? 2009 Sales in Billions IBA, $13 UF, $17 Coop, $58 SY, $38 Us, $1 Coop includes 652 Distributor MembersCoop Review Financials Show Benefits Maximize Return Takeaways 5
    6. 6. Coop Earnings TIP: refer to MDA definitions for Best BPAmore allowance Sellers details Tour Incentive Points Programs Coop Earnings Productivity Buying Show Enhancer Allowances Committed Peak Volume Results Block Broadline Buys Logistics Coop Review Financials Show Benefits Maximize Return Takeaways 6
    7. 7. What Control Do We Have Through Coop? Consistent Rebates Incentive Rebates= Coop negotiates rates = MAXIMIZES Earnings Broadline MDA BPA Logistics Productivity Incentive Block Committed Tour Programs Buys Volume Enhancer Points Buying Peak Best Show Results Sellers Coop Review Financials Show Benefits Maximize Return Takeaways 7
    8. 8. Coop Review Financials Show Benefits Maximize Return Takeaways 8
    9. 9. 2010 % Coop Earnings Compared to Total Coop Income Productivity Tour Points Best Seller Enhancer 1% 0% 4%Buying Show 9% BPA Logistics 13% 40% MDA 33% Grand Total: $ 15,249,773 Coop Review Financials Show Benefits Maximize Return Takeaways 9
    10. 10. Overall Purchases vs. Coop Purchases $900,000,000 $851,723,568 $800,000,000 $700,000,000 $600,000,000 37% $500,000,000 $400,000,000 $300,000,000 $354,797,221 $200,000,000 48% $100,000,000 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total UniPro Purchases: Total Labatt Cost of Goods We are purchasing more product overall, yet we are purchasing less Coop eligibleitems each year (48% in 1999 vs. 37% currently). There is a diverging trend betweenboth purchase groups. Coop Review Financials Show Benefits Maximize Return Takeaways 10
    11. 11. Exclusions, exclusions, exclusions…Some of the reasons include: (list is not comprehensive) Exclusions have increased per vendor Our % of business has large exclusion potential(National Accounts, Quick Serve, and Bid equal 80+% of our volume) 1. Customer Exclusions 2. Item Exclusion 3. Manufacturer moving guaranteed programs to incentives 4. Programs not indexed to sales (% vs. $/case or lbs) It is the Coop Liaison’s role to work with Coop & vendors. We should work together to always capitalize on benefits. Coop Review Financials Show Benefits Maximize Return Takeaways 11
    12. 12. Goal: Stop Losses, Minimize Missed Opportunity Even though we are growing, Coop is not rewarding us for our growth.Takeaways: We are buying less Coop eligible items, and we are earning less rebate income per Coop Eligible item.Coop Problem Coop negotiates each vendor’s program, incentive, and item rates Statement Root Cause ’s Earning are based on Coop’s negotiated items and rates 1. Identify Missed Opportunity Strategies 2. Negotiate Direct Programs or have Coop negotiate on our behalf 3. Maximize Coop Incentives Coop Review Financials Show Benefits Maximize Return Takeaways 12
    13. 13. Trends: EDA, SPA, and Buying Show as a % to Coop Purchases$415,000,000 2.20%$365,000,000 1.70%$315,000,000 Total UniPro Purchases: Total Coop Purchases$265,000,000 Linear (EDA% Line MDA Trend to UniPro Purchase 1.20% $)$215,000,000 Linear (Buying Show Income % to Buying Show Trend Line$165,000,000 UniPro Purchases) 0.70% LinearTrend Line Trendline(2003- BPA (Data SPA$115,000,000 2010)) $65,000,000 0.20% 2001 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 Coop Review Financials Show Benefits Maximize Return Takeaways 13
    14. 14. Coop Rebate Income as a % to Coop Purchases$600,000,000 4.00% 3.50%$500,000,000 $8,734,003 Coop Income 3.00%$400,000,000 Opportunity Loss 2.50%$300,000,000 2.00% 1.50%$200,000,000 1.00%$100,000,000 0.50% $- 0.00% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total UniPro Purchases: % to UniPro Purchase $ Data Linear (Data) Coop Review Financials Show Benefits Maximize Return Takeaways 14
    15. 15. Coop Review Financials Show Benefits Maximize Return Takeaways 15
    16. 16. Targeting Results Together Exploring Opportunities Increase Increase Rebate & Buying Show Lower COGS Income Increase Build profitability Relationship Buyers Marketing to grow future allowances LegendMarketingBuyersBothObjective Result MaximizeGoals Partnership Coop Review Financials Show Benefits Maximize Return Takeaways 16
    17. 17. Core Partner Buying Show Example OtherVendors Buying Distributor’s ShowBudget portion of budget Buying Show Income Coop Review Financials Show Benefits Maximize Return Takeaways 17
    18. 18. Additional Buying Show Deals with Core Partners Goal: receive a larger base as well as larger discretionary deals than other distributors.DiscretionaryBuying Show Budget $ . $ Other Distributors Coop Review Financials Show Benefits Maximize Return Takeaways 18
    19. 19. Coop Review Financials Show Benefits Maximize Return Takeaways 19
    20. 20. What is GRASP? • Understanding the Goals of all parties, beyond the immediate deal • Developing Routes to those goals that will maximize the benefit of all parties • Promoting fairness, trust, and common understanding through valid Arguments • Benchmarking your current relationships for possible Substitutes • Increasing your Persuasion through open and empathetic communicationBillings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print Coop Review Financials Show Benefits Maximize Return Takeaways 20
    21. 21. Goals: GRASP Method • YOUR Goals- What do I really want to achieve or avoid? Ex. Buying show: benchmark $ earned last year’s show and build on it Tips: -Don’t just make a list of demands; each goal should have a reason Ex. COGS in item segment is up, long-term partner, new items were just brought in, we are buying more efficiently… • THEIR Goals: -Understand enough about their goals to come up with high-value trade offs Ex. Ask current/past buyer about vendor, talk to bids, freight, and any other department that can help you understand more about the vendor -Show through your words and efforts, that you recognize and respect their goals -Tap into their aspirations (may not be initially part of negotiation, but could result in greater results for all)Billings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print Coop Review Financials Show Benefits Maximize Return Takeaways 21
    22. 22. Routes: GRASP Method • Routes- How can I achieve my goal by supporting theirs? Tips - Always focus on “Expanding the Pie” Ex. Focus on “What is in it for the vendor?” is not a one time shopper, we are a long term customer - Trade off don’t concede Ex. Their goal is to get in front of our sales reps more often, so educate them on the sales meeting process - Ask Open Questions to find their true objections & goals - Have a list of several routes This controls the discussion and avoids panic-driven concessions (organize by least acceptable to most desirable)Billings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print Coop Review Financials Show Benefits Maximize Return Takeaways 22
    23. 23. Arguments: GRASP Method • Arguments – What reasons support my/their routes? Tips: - Arguments are not Persuasions Arguments validate the fairness of your request, and challenge the fairness of the terms proposed by the other party - Your “Why” Arguments show respect & builds trust The bigger the request the more respect and trust is needed on other parties side to grant request - “Because” is powerful Offering a simple explanation is a good start, and sometimes is all you need to break through -Ex. is different than any other distributor, how we do business should always be reiteratedBillings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print Coop Review Financials Show Benefits Maximize Return Takeaways 23
    24. 24. Arguments = Hard Differentiators Continuously Educating our Vendor Reps“There is nothing more unequal than the equal treatment of unequal people”– Thomas Jefferson NO Private Labels Long Term Partnerships Always sell based on Quality, not just Price Technologically Customized/ Systems built in house One Buying System Unique Bid System Unique Promotions/Food Shows/Specialists Target consistent EBIT, while growing sales Coop Review Financials Show Benefits Maximize Return Takeaways 24
    25. 25. Substitutes: GRASP Method • Substitutes- How else could I/they accomplish the goal? Tips: -You may not have to use your substitute if your routes and arguments are successful -Without a substitute there is strong temptation to lose sight of your goals and blindly offer anything to get the deal. -Know your “Walk away Line”- meaning your minimum requirements for a good deal (reveal only as a final warning, as your goal should be higher) Ex. Buying Show: $ earned in last year’s show -The other party has substitutes as wellBillings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print Coop Review Financials Show Benefits Maximize Return Takeaways 25
    26. 26. Persuasion: GRASP Method • Persuasion- What’s in it for them? Use these techniques throughout negotiation -Tips: - Be Positive - Say yes instead of no. Be less threatening. “If we don’t get this agreement by Friday, we can no longer guarantee the sale.” OR “ We can guarantee these terms for you until Friday” - Don’t ask for the Problem, Seek the Solution Ex. They say, “I won’t agree to this”, DON’T SAY, “What is the problem with it?” INSTEAD SAY, “What would you agree to?” - Focus on aligned interests rather than where they conflict Ex. Instead of attacking them for giving allowances on private labels, re-affirm their brand equity and growing knowledge of that brand to our customers. - Ask about their goals - Stop talking and start listeningBillings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print Coop Review Financials Show Benefits Maximize Return Takeaways 26
    27. 27. ExerciseDiscuss your own example of GRASP 27
    28. 28. Thinking Outside the Box Routes Barriers  Focus on new sales opportunities &•Current volume has educate them on differentiatorsbid/national account-exclusions  Backtrack allowance pre-show period•No Inventory BookingOpportunity  Ask for future booking opportunities, PO or item level allowancesOnly offer Coop Label  Ask for the branded equivalent sinceAllowances we want to sell their value-added items•Key Decision Maker isn’t at  Contact decision maker at the showshow (text, phone, email)•Not allowed to give additional  Ask the question back to them/ask fordeals their goal•Can’t give allowances without  Agree to look at new items& ensurebringing in new items product guarantee, get approval and backtrack allowances Maximize Return Coop Review Financials Show Benefits Takeaways 28
    29. 29. Ex. Paper & Plastics Fall 2009Situation • Paper and Plastics offered allowances only on Coop labeled items • wants to sell your branded items. • …..What items are they currently focused on? Will you help usAnswer buy your product by offering additional allowances on those items? • We received all the branded equivalent allowances, and Result we received extra allowances on cutlery and napkins. Coop Review Financials Show Benefits Maximize Return Takeaways 29
    30. 30. Ex. Bakery Spring 2011 • Bakery appointment, our COGS was flat and trending negativeSituation year to date • We gave them targeted informationAnswer • Showed them the past 4 week history with top 10 customers. We just picked up a new C-store chain, and a few other customers. • In the end we were able to enhance the vendor’s focus to Result strategically grow our sales, and increased allowances on all high moving items. Coop Review Financials Show Benefits Maximize Return Takeaways 30
    31. 31. Always Ask the Question • Asked for inventory they are long on as a result we drastically increased buying show income Tyson: • Start: 60K, End:100K Win-Win • Guaranteed level 3 payout for each product group. Knouse: Peak • All other distributors ended up with payout level 1 for pie fillings and Performer puddings • Start: $4,477, End: $14,700 • Created a unique relationship with direct repSeneca: Vendor • Vendor is our long term partner Partnership • Start: 10K, End: 162K Coop Review Financials Show Benefits Maximize Return Takeaways 31
    32. 32. Coop Review Financials Show Benefits Maximize Return Takeaways 32
    33. 33. Takeaways• We are stronger with Coop than without Coop as a collective purchasing group.• We earned $15,249,773 from Coop in 2010• Our Coop purchases now make up 37% of our total purchases, but they used to make up more.• We have lost over 8 million dollars in Coop income due to vendor exclusions, rate changes, and programs not indexed to sales since 2003.• We must work together to successfully partner with Coop to increase our eligible items and increase our rate received per item. Coop Review Financials Show Benefits Maximize Return Takeaways 33
    34. 34. Takeaways Use the GRASP method to prepare for negotiations • Goals - What do I/they want to achieve or avoid? • Routes - How can I best achieve my goals by supporting theirs? • Arguments - What reasons support my/their goals? • Substitutes - How else could I/they accomplish this? • Persuasion – What’s in it for them? • Every negotiation is complex; multiple barriers may come up during the conversation. Planning multiple routes will increase your effectiveness of achieving your goal while helping to discover theirs.Billings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print Coop Review Financials Show Benefits Maximize Return Takeaways 34
    35. 35. Appendix Menu Definitions Peak Results Example Exercise & ReadingCoop Review Financials Show Benefits Maximize Return Takeaways 35
    36. 36. Questions?Coop Review Financials Show Benefits Maximize Return Takeaways 36

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