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
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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.
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5. Why Does Partner with Coop?
2009 Sales in Billions
IBA, $13
UF, $17
Coop, $58
SY, $38
Us, $1
Coop includes 652 Distributor Members
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6. Coop Earnings
TIP: refer to MDA
definitions for Best
BPA
more allowance Sellers
details
Tour Incentive
Points Programs
Coop Earnings
Productivity
Buying Show
Enhancer
Allowances
Committed
Peak Volume
Results
Block
Broadline Buys
Logistics
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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
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8. Coop Review Financials Show Benefits Maximize Return Takeaways
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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
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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 eligible
items each year (48% in 1999 vs. 37% currently). There is a diverging trend between
both purchase groups.
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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.
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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
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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
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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)
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15. Coop Review Financials Show Benefits Maximize Return Takeaways
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16. Targeting Results Together
Exploring
Opportunities
Increase
Increase Rebate &
Buying Show Lower COGS
Income
Increase
Build profitability
Relationship Buyers Marketing
to grow future
allowances
Legend
Marketing
Buyers
Both
Objective
Result
Maximize
Goals
Partnership
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17. Core Partner Buying Show Example
Other
Vendors
Buying Distributor’s
Show
Budget portion of budget
Buying Show
Income
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18. Additional Buying Show Deals
with Core Partners
Goal: receive a larger base as well as larger discretionary
deals than other distributors.
Discretionary
Buying Show
Budget $ . $ Other
Distributors
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19. Coop Review Financials Show Benefits Maximize Return Takeaways
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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
communication
Billings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print
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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
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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
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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
reiterated
Billings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print
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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
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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 well
Billings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print
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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 listening
Billings-Yun, Melanie. Beyond Dealmaking. San Francisco, 2010. Print
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28. Thinking Outside the Box
Routes
Barriers
Focus on new sales opportunities &
•Current volume has educate them on differentiators
bid/national account-exclusions
Backtrack allowance pre-show period
•No Inventory Booking
Opportunity Ask for future booking opportunities,
PO or item level allowances
Only offer Coop Label Ask for the branded equivalent since
Allowances we want to sell their value-added items
•Key Decision Maker isn’t at Contact decision maker at the show
show (text, phone, email)
•Not allowed to give additional Ask the question back to them/ask for
deals their goal
•Can’t give allowances without Agree to look at new items& ensure
bringing in new items product guarantee, get approval and
backtrack allowances
Maximize Return
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29. Ex. Paper & Plastics Fall 2009
Situation • 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 us
Answer 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.
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30. Ex. Bakery Spring 2011
• Bakery appointment, our COGS was flat and trending negative
Situation year to date
• We gave them targeted information
Answer • 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.
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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 rep
Seneca: Vendor • Vendor is our long term partner
Partnership • Start: 10K, End: 162K
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32. Coop Review Financials Show Benefits Maximize Return Takeaways
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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.
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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
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35. Appendix Menu
Definitions
Peak Results Example
Exercise & Reading
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