When is it Time for a Trade Promotion Systemhttp://www.tradeinsight.com/blog/5-signs-it%E2%80%99s-time-for-a-trade-promotion-systemProblem:You have trouble managing charge-backs and deductions. Sifting through chargebacks and trying to determine if deductions are valid or simply unexpected is a time-consuming challenge.

Sol: Automating the settlement process

Benefit :will help clear deductions faster and easier allowing you to determine if there are unused dollars to spend or add to the bottom line.

Prob: don’t know the exact amount of sales lift you’re getting from trade spendAt the end of a trade promotion lifecycle, accurate baseline sales and post-promotion analytics are essential

Sol: Having a sophisticated TPM measurement tool to assess the promotional lift received from trade spending

Benefit: will ensure different promotion scenarios are developed and also allows for ROI predictions and meaningful post-program analysis.

Mastering this step is critical if you truly wish to take trade promotion management to the next level.

What is TPO:Trade Planning and Optimization provides consumer goods organizations with robust trade promotion and account planning, sales forecasting, and promotion optimization capabilities.BENEFITS

Automated baseline forecasting and incremental lift projections—allows account managers to easily and quickly predict the impact of individual trade promotions

Promotion analytics—compares scenarios and provides detailed predictions on expected lift and trade fund spending

Multipanel worksheets—manage daily sales forecasting and account planning activities from a single screen

Collaborative planning platform—ensures that sales forecasts and event plans are synchronized across marketing, finance, manufacturing, and supply chain

Workflow-driven exception management—automatically identifies plan or demand changes that may create problems

Multiple sources of internal, agency, syndicated, and point-of-sale data—reveal which marketing tactics work best

Promotion optimization—automatically determines which marketing tactics will yield the maximum return on investment, produce the highest volume or maximize profitability

The SAP Trade Promotion Optimisation (TPO) FAQ23 Aug 2012 Consumer Business, Consumer Products, CRM, Data Quality, Trade Promotion Optimisation, Trade Promotions Management 

Having been involved in the UKs first live Proof of Concept (PoC) for SAP TPO  I've been asked a number of  questions by Business people about the use of SAP TPO as a normal part of pricing and promotion business processes. I've collated some of them here and will add to them as we continue to learn how to get the most value from this tool.

I'm a business person not a technical expert. What is SAP TPO in language I can understand?

In very simple terms it is a clever black box that uses statistical algorithms to analyse actual sales and promotion data to identify patterns and predict the outcome of future promotions.

Is it standalone or do I need a huge IT project to implement lots of other 'stuff' before I can use it?

SAP TPO can be used standalone, either as a PoC to validate its accuracy by feeding it with your own real data, or in a productive scenario to deliver value in shorter timescales. In the long term, full benefits are likely to be realised when it is integrated with the systems that process your sales transactions, manage your customer and product data and execute your promotions.

Will SAP TPO to be 100% accurate in its predictions?

SAP TPO is a tool based on statistical analysis and not a crystal ball. . As a result you can expect to get 60% to 90% forecast accuracy. On average, after the tool is properly set up you should be able to achieve 70% forecast accuracy. This may well be higher for product groups more naturally suited to accurate forecasting, or that you have spent some time fine tuning the model for.

However, let's put this into context - It is not uncommon for Consumer Products organisations to struggle to achieve 50% forecast accuracy with existing tools and processes.

So, I can take it easy whilst it  makes me rich?

Not exactly!  Once its use is embedded in regular promotion planning cycle you can choose where to focus the efforts of your team. This will include fine tuning the tool to give the most accurate forecasts where you stand to make the greatest volume and/or profit uplift or efficiency saving, and empowering sales teams to use the tool to best effect. See Dan Hawker's   blog What's the priority in trade spend - Effectiveness or Efficiency? Time previously spent modelling unsuccessful promotions can now be used to collaboratively shape scenarios that you have statistical evidence will work.

Should my pricing and promotions team feel threatened by a tool like SAP TPO?

Not if they're any good. A tool is only as good as the data it uses as an input and how the results from its output are executed as real promotions. In short, to make SAP TPO deliver on its potential you need a small team of pricing and promotion experts to fine tune it for your SKUs, mechanics and competitive environment, to model 'what-if' promotions and provide first line support to the NAMs joint planning with their customers.

Should SAP TPO be used to define all my promotions?

Probably not. As a statistical model it will work best where patterns and trends can be identified in your historic data and where similar promotional conditions will occur in the future. Some SKUs will be more unpredictable than others by their nature and may not yield the same forecast accuracy increase you obtained for others. Other product lines may be harder to obtain complete POS or syndicated data for which will likely reduce SAP TPO's accuracy.

What can I do to make the most of the tool?

The more SAP TPO is fed with historic data and is used to propose the best promotions the more accurate it will get. Naturally there are limits but

the more complete and consistent the actual data you feed it, the greater the chance it has of producing 80-90% accuracy.

Can it predict the effect of promotional activity from my competitors?

Many promotions are seasonal or based around large sporting events and competitor products will frequently be promoted alongside yours in multi-buy deals. Your sales history will contain the net effect of this activity on your promotional uplift. In other words, if the trends are there, SAP TPO will be able to predict the effect. What it won't know is that your competitors are all now part of a retailer multi-buy deal that just kicked in for your new product introduction. To see the discrete cannibalisation effect, which is really only a secondary, qualitative measure, you'll need to spend some time modelling some of the competitor promotions too.

This SAP TPO FAQ is a work in progress which I'll be updating regularly. If there is anything you think I haven't covered or would be useful to the wider community, let me know so I can be sure to include it.

http://www.bluefinsolutions.com/insights/blog/the_sap_trade_promotion_optimisation_faq/What trade promotion trends will impact the CG industry going forward?Hagemeyer: There is tremendous interest in TPO. I believe it has huge upside for the industry. I also believe that as more data sets are used in optimization — like point-of-sale data — there could be better integration of this data for monitoring promotional compliance. Has TPO become a major focus for most companies? Are these initiatives living up to the hype?Hagemeyer: TPO is not yet a major focus, but like TPM before it, the focus is initially strong with Tier 1 companies. Many smaller companies are still switching from Excel or need to do so. TPO needs to build upon solid TPM business processes. But I do think that a POI/Accenture survey from earlier this year clearly demonstrated that TPO is delivering significant value. If TPO is not the priority/end goal for some CG companies, what is?Hagemeyer: The real priority is to improve promotional outcomes. It is a journey. TPM is a big component of that and TPO will be as well. But, the endgame is better promotions and that should be kept clearly in mind because it isn’t about the technology. It is about the business process. 

Back to your earlier statement about Tier 1 versus smaller companies, is TPO appropriate for companies all of sizes?Hagemeyer: It is appropriate for all. Every promotion spins off data. Having the right data and having it clean are critical to the TPO engines making better predictions. But even with sketchy and somewhat dirty data — that only improves accuracy from 50 percent to 65 percent — isn’t that still a benefit? Over time the TPO solutions have come down in price and complexity. It is just a matter of time before it will make sense for the broader market. Breakout Favorites Customer Experience Leader: SAP"Our goals were to enhance our insights for planning, improve our budget management, and give ourselves the ability for integrated analysis and reporting. The key takeaways: We did it. It works. And, a week after we deployed it our users said, ‘we like it and it’s easy to use.'"— Jeff Dahl, Enterprise Planning & Delivery, Pepsico SMB Market Leader: Oracle"We have realized tangible results from our implementation of Oracle’s Demantra application. It’s like the Swiss army knife of software; we get a world-class forecasting tool, a deduction management tool and a trade promotion management tool all from one vendor."

— Bob Ashford, Vice President IT & SIOP, Massimo Zanetti Beverage USA— http://consumergoods.edgl.com/2012-readers-choice/trade-promotion-

managementywhat is TPM? http://www.promaxtpo.com/solutions/trade-promotion-management/what-is-trade-promotions-management/

http://www.youtube.com/watch?v=egGBxkO-T0USAP BO TPE---------------------

http://www.lek.com/sites/default/files/l.e.k._4_steps_to_optimizing_trade_promotion_effectiveness.pdf

http://www.booz.com/media/file/Boosting_the_Bottom_Line_v2.pdf

http://www.cptech.com/trade-promotion-effectiveness-analysis

http://www.trade-promotion.com/trade-promotion-consulting-services.aspx

http://www.in.capgemini.com/m/in/tl/tl_A_Winning_Strategy_for_Trade_Promotion_Management.pdf

http://www.infosys.com/industries/consumer-packaged-goods/white-papers/documents/trade-promotions-management-pov.pdf

http://members.pricingsociety.com/articles/edlp_and_trade_promotion_roi.pdfhttp://www.slgroup.com/Portals/0/docs/sample_docs/mf_tpm_wp.pdf TPM technology brief Java with Business objects