TPM + ERP = Vastly Improved ROI
Over the last few years, consumer packaged goods (CPG) companies spent an average of 20 percent of their revenues on trade promotions—more than $500 billion a year, according to a new Forrester report. That’s quite a number. But the real shock is Forrester’s estimate that one-third of that spend—approximately $167 billion—is worse than ineffective: It actually generates negative returns, cannibalizing high-margin lines and encouraging pantry loading. The report goes on to state, “CPG firms need trade promotion suites that support the whole cycle from pre-promotion planning through execution and integration with supply chain, to settlement and post-promotion analysis, and integration with finance to capture, validate and settle promotion claims.”
That’s why any trade promotion management (TPM) solution worth having should support inclusion and awareness of promotions across the company and its partners, greater ease of investigation, and real-time updates to promotions. Such a solution makes it easier to dig deep and find out why write-offs are happening, and put an end to the many small losses that can quickly add up to a negative return on a promotion.
What’s more, integrating TPM with ERP or supply chain systems at multiple touch points—such as pricing processes, billing and shipping, financials and claims, baseline forecast, allocation and replenishment—can maximize the impact of promotions and enable real-time visibility into sales volumes and other key metrics, thus making or breaking the effectiveness of a promotion. Organizations can centralize fund management and set baselines, specify promotion periods, define tactics, and generate reports by plan, account and region, while managing and tracking achievement against sales quota.
Integrating trade promotion management with ERP – whether cloud ERP or traditional ERP – can enable CPG companies to regularly achieve positive results from their investments in trade promotions—and repurpose the billions of dollars spent on ineffective promotions.
For more details, see my article in Supply & Demand Chain Executive.