Ruiz Foods Builds Market Share through TPM

As consumers look to stretch their food dollars, it's easy to see how ready-to-eat frozen foods that offer the consumer quality ingredients combined with value are now in high demand for more price-conscious shoppers.

As a result of significant market growth and the doubling of its sales force, California-based Ruiz Foods, the nation's largest frozen Mexican food manufacturer with three manufacturing plants, two distribution centers and more than 2,500 employees, recognized that it needed to invest in a technology that would ultimately improve and automate business processes and help capture more value from promotions.

If the company was to continue to win the hearts and palates of both retailers and consumers alike in this highly competitive food category, it first needed to better understand its promotional spend. 

In 2001, Paul Eveland, director of Trade Marketing at Ruiz Foods, had a simple objective in mind; give up unreliable, non-integrated spreadsheets and put in place controls that would provide an enterprise-wide view of accurate trade promotion spend. After abandoning an earlier trade promotion management (TPM) product that wasn't received well by the field sales group, the company began to search for another solution. This time, Eveland and his team sought an application that would be a better fit with all corporate-wide users and external brokers. With complete buy-in from field sales, Ruiz selected MEI's TPM solution. 

"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," says Eveland. "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 in replacing our existing TPM solution with MEI."


Market Drivers and Economics

Similar to other food manufacturers and brokers, Ruiz Foods must know and address key market drivers, each demanding a considerable investment. These include earmarking dollars for new items, allocating promotional dollars to drive sales and reducing costs to meet advertised price points. Seasonality and competitive pricing influences certainly impact the company's ability to be successful, but products outside the frozen Mexican foods category also impact the degree of success behind any promotional activity as everybody in the store is competing for a share of the consumer's grocery budget. Consumer goods manufacturers must understand what's happening throughout the store and rely on the assistance of third parties to determine the likelihood of getting into the store's advertisement, getting the desired lift based on the lowered price point, getting prominently displayed and ultimately getting purchased. Considering these factors, Ruiz Foods puts a high priority on helping its retailers to become successful.

From an economic standpoint, Ruiz Foods' ultimate goal was to assist retailers by first helping to grow the specific frozen Mexican foods category that has now reached in excess of $750 million.

"A specific price point reduction doesn't always drive demand," claims Eveland.  "You need to be able to correlate TPM data back to IRI 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.  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."


The Perfect Invoice

After successfully rolling out the solution to the company's Grocery division in three months and measuring the results over time, Ruiz Foods decided to expand the TPM rollout throughout other divisions. These groups, which now reap the same benefits as other areas of the company, initially did not present the same trade promotion challenges of the Grocery group; consequently, they were scheduled for slightly later implementations.

Currently, the company's entire broker network, its regional managers, the sales and the finance teams are on the new system, which has enabled each group to access the most up-to-date information within a single source system. However, the most significant recognition and endorsement of the TPM implementation came from an unlikely source; Ruiz Foods' audit team. 

Paul Eveland says, "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. 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 been extremely satisfied with the control and the transparency it now has regarding spending. It has seen a higher level of efficiencies across the board, especially overall volume, which is a direct result of being able to better understand what promotions work effectively and what promotions don't, then shifting those dollars accordingly.

Also, Ruiz Foods has been able to improve its understanding of which price points drive the most profitable volume and what's the best timing for a promotion based on consumer demand, resulting in increased forecasting accuracy based on timing, price point, etc. In fact, the trade promotion management application has helped the company exceed initial goals for the implementation.  

"With a bigger base, spending automatically decreases which played a part in our profitability," adds Eveland. "Obviously, our goal was to reduce trade spend, but having an accurate account of where spend is going 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 Foods 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."