Trade Promotions Management - Information flow - Business and IT contributors

A Trade Promotions Management (TPM) tool is a cross functional tool and hence impacts systems / tools and processes cutting across many functional areas of an organization.

The below picture (Fig-1) highlights the position of a TPM tool in an enterprise.

The nature of the above interactions varies from event to event, based on the nature of activities being planned. For example, if the stock of a promoted product is already in the store, then the procurement and supply chain interactions will be minimal. In case the goods have to be shipped from the manufacturer’s warehouse to the store, then the lead times come into play. This is dictated by the supply chain and procurement departments.

The detailed nature of information flow for a TPM system to succeed is detailed below.

Master Data Management	Information Flow	TPM
Customers (Accounts) Attributes Hierarchy relationship Products Attributes Hierarchy relationship	à
		Information usage in TPM
		Customer attributes – helps business create events based on varied planning needs. For example: 1.       Plan a national promotion for all Convenience stores 2.       Plan an event for a Key Customer (Carrefour / Spar) + Format (Supermarket / Hypermarket) Product Attributes – help in planning for an event from a product dimension (category promotions / brand / Pack Size)

 

Supply Chain / Demand Planning	Information Flow	TPM
Baseline	à
	ß	Event planning dates (Sell in / Sell out)
		List of planned events in a planning cycle
		Account details
		Product details
Adjusted promotion volume / Uplift	ßà	Planned promotion volume
Stock availability	à
Information usage in Supply Chain		Information usage in TPM
The list of planned events will help the demand planners to apply constraints in demand planning systems and arrive at a near close projected promotional volume (input for uplift)		Baseline is used for pre evaluation of promotional events and is used to calculate the uplift that a promotional event can bring in
		The adjusted promotion volume post applying constraints will help in recalculating investments in the promotion and arriving at a more accurate planned ROI
		Stock availability is an important input for the sales team to go ahead with the promotion or not

Sales	Information flow	TPM
Planned Events	à
	ß	Approved events
	ß	Pricing
Participation of customers in events	à
Compliance
Settlement method
Validation / Approval of claims
Information usage in Sales		Information usage in TPM
Approved events provide a promotional calendar for the team		Compliance – Information of actual execution on the ground. Can be used for a qualitative evaluation of an event; in addition this information can be used for calculating the bonus payouts to customers and claims calculation
Approved events update the pricing details for a product and customer based on the access sequence defined (on invoice, rebates are few examples)		The settlement method is a very critical component in the overall promotion planning life cycle. This closes the communication loop between the customer and manufacturer --  if deductions / on invoice or any other settlement method will be used
Get a list of claims for approval from customers		Trigger inputs to the payment systems for processing of payments to customers or settling open books

Marketing	Information flow	TPM
Focus list of products that can be promoted	à
Structured templates for promotion
Assign funds to sales teams for promotions
Define events around tactical and strategic objectives
Information usage in Marketing		Information usage in TPM
		Focus lists can be used for either for a hard stop or as inputs for promo planners
Structured templates can be built around approved nature of activities for a product or customer to meet the planned objectives		Structured templates help the promo planners to create promotions only for approved nature of activities.

Finance	Information flow	TPM
Budget structure	à
Funds and Limits
	ß	Fund spend status
	ß	Approved events (budget)
Actual spend details	à
	ß	Under spend / over spend
		Accruals
	ß	Claims
Spend bucketing per FASB	à
Information usage in Finance		Information usage in TPM
Approved events in TPM create budgets in the ERP system, which can be used for putting controls on overspend		Budget structure helps build logical groups of funds for promotion consumption. It will drive how different users can access the funds
Approved claims for making payments, deduction management		The actual spend details give an insight into the actual performance of the event in the market. This information is used for doing the post evaluation of events

Fig-2 below depicts the representation of IT landscape when we super impose the business functional areas with the IT systems used by the respective teams.

Some of the critical information flow and transformation happens between the TPM system and the ERP application.  The nature and level of integration drives which information is sent to and what is received from the ERP.

ERP		TPM
Access sequence Cost center, chart of accounts Price master Actual spends and volumes		Promotion details: 1.       Buying start and end date; sell out and sell in dates 2.       Account details 3.       Product details 4.       Nature of investments (rebate, on invoice) 5.       Investment details – percentage discount, value of investment

Fig-3 below summarizes the interaction between TPM and IT systems in an enterprise.

The next article will speak on Trade Funds Management and it's role in Trade Promotion planning.