Trade Promotion Management: a key enabler for Supply Chain Optimisation

April 8, 2021

Article Courtesy of Exceedra

How Trade Promotion Management (TPM) systems build and enable best practice supply chains and create business value

Let me start with answering possibly your first question. What is a Trade Promotion Management or TPM? It is the system that captures the business process by which manufacturers spend trade dollars with retail partners to place and promote products in offline and online retail stores and platforms. TPM software solutions and technologies enable manufacturers the leverage to plan, manage and execute all the investment activities that require collaborative promotional activity from their customers.

Why is this important? In many cases we see, customer facing trade spend, including cost of trading terms, discounts, promotional costs including product, giveaways, Point of Sale Materials (POSM), permanent and temporary display materials, is the highest cost in a consumer goods manufacturer’s P&L. From a global study conducted by the Promotions Optimisation Institute (POI) conducted in 2020, 40% of the top 65 global consumers goods manufacturers spend over 30% of total revenue on trade spend and promotions.

So where does a TPM sit in the planning process? Think of it as a sub-set of an organisation’s financial reporting, demand and supply planning processes and ways of working. It enables full visibility of the product and customer segmentation, for planning of baseline and promotional volumes, trading terms, promotional mechanics of all types, which is then aggregated up into the organisation’s overall financial reporting, demand and supply and production planning requirements. This means fully integrated commercial planning providing enhanced revenue and margin opportunities. With channel shifting continuing from retail disruptions in 2020, understanding spend drivers and its relationship to supply chain optimisation remains a core industry burning platform.

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