Ruiz Foods searched for trade promotion management solutions. With the help of MEI, they were able to succeed.
As consumers look to stretch their food dollars, it’s easy to see how ready-to-eat frozen foods are high in demand for price-conscious shoppers. Aside from quality ingredients and value, Ruiz Foods began investing in a technology that would improve and automate business processes. To continue to win the hearts and palates of both retailers and consumers, the frozen Mexican food manufacturer needed to better understand its promotional spending dollars.
In 2001, Paul Eveland, director of trade marketing at the Dinuba, Calif.-based company, had a objective, which was to give up Excel spreadsheets and replace with controls that would provide an accurate view of trade promotional spending. With complete buy-in from field sales, Ruiz Foods selected a TPM solution provided by MEI, based in Morristown, N.J.
“Our field sales group realized the benefits of the MEI solution and was in favor of its immediate adoption for our use. They also saw the value of extending the technology to our broker community,” Eveland says. “The fact that we had buy-in from the onset -- from brokers, sales reps, finance, IT and even the advertising support staff -- was a major key to our overall success.”
Similar to other food manufacturers and brokers, Ruiz Foods addresses key market drivers, such as earmarking dollars for new items, allocating promotional dollars to drive sales and reducing costs to meet advertised price points. Seasonality and competitive pricing influences impact the company’s ability to be successful, as well as products outside the frozen Mexican foods category, as other producers compete for a share of the consumer’s grocery budget.
Consumer packaged goods (CPG) manufacturers must understand what’s happening throughout the store and rely on third-party assistance to determine the likelihood of printing into the store’s advertisement, obtaining the desired lift based on the lowered price point, getting prominently displayed and ultimately getting purchased, according to MEI. Considering these factors, Ruiz puts a high priority on helping its retailers be successful.
From an economic standpoint, Ruiz Foods’ goal was to assist retailers by helping the frozen Mexican foods category grow. Since the market for frozen Mexican foods rakes in more than $750 million, Ruiz Foods did just that.
“A specific price point reduction doesn’t always drive demand. You need to be able to correlate TPM data back to IRI [Chicago-based Information Resource, Inc.] data and then sit down with the sales force to see what they are going to do and discuss the likelihood of them meeting their forecast,” Eveland says. “MEI’s solution has enabled us to get our hands on the right data at the right time and map it to IRI information so we can intelligently interact with regional managers on a product-by-product and region-by-region basis.”
After rolling out the solution to the company’s grocery division in three months, Ruiz expanded the TPM rollout throughout its other divisions. Later, the company’s broker network, regional managers and sales and finance teams jumped on the new system, and it helped other departments in the company.
“The audit team can now come in and know that everything is accounted for. The application just makes it more efficient for them when conducting the audit,” Eveland notes. “Further, we have been able to achieve what every CPG organization strives for -- the perfect invoice. Now, if an order comes in and the price point doesn’t seem right, we can settle the issue quickly and accurately so the invoice is corrected before it ever leaves the plant, which speeds the order-to-cash process and helps with deduction clearing.”
Since the implementation, Ruiz Foods has improved its understanding of which price points drive the most profitable volume and when the best timing is for a promotion based on consumer demand. As a result, they receive increased forecasting accuracy.
“With a bigger base, your spending automatically decreases, which played a part in our profitability,” Eveland says. “Obviously, our goal was to reduce trade spend, but having an accurate account of where the spending is going, where and for what product, has been the most valuable data we could have acquired. If you can grow your profitability through volume, then you can spend more, which makes retailers, brokers and of course the Ruiz management team happy. For us, it was just a matter of finding the right TPM application to help us to be as efficient as possible.”
Ruiz Foods is a frozen Mexican food manufacturer with three manufacturing plants, two distribution centers and more than 2,500 employees.
Editor’s Note: Lorne Schwartz, chief executive officer of Morristown, N.J.-based MEI Computer Technology Group, Inc., provided information for this article. MEI provides trade promotion management solutions for consumer packaged goods companies. For more information, visit www.meicpg.com.