Retailers' Supply Chain Control, trade spend, distributors, wholesalers

Trade spend represents a significant portion of the food industry, amounting to $200 billion and plays a crucial role in funding various aspects like promotions, shelf deals, and back-of-the-house costs. It includes expenses such as slotting fees, ad fees, billbacks, and deductions to wholesalers. The supply chain involves third-party wholesalers and retailers' warehouses before reaching the retailer. The highly consolidated distribution processes are extremely efficient with 15 cents of a dollar typically used for distribution. Larger retailers like Kroger enjoy even more efficient operations with only a 5% markup. Lean manufacturing and just-in-time processing are exemplified in this stage of the food industry supply chain. Walmart transformed wholesale with its cross-stock process, reducing pallet holding time to under 48 hours, and just-in-time practices have led to smaller, more frequent inventory loads to quickly move products through the facility. This places pressure on retailers and suppliers, with suppliers having to underwrite the profitability of wholesale through various financial programs to offset the low markups faced by distributors.