TPM Systems: Connect Corporate Planning and Business Intelligence to Event-Level Planning

Many companies today perform high level corporate planning (customer P&L planning) and tactical Trade Promotion Management (TPM) event level planning in two different systems. This is a major factor in the ‘disconnect’ between original budgets, revised planning, and the detailed planning that exists within the TPM system. In most cases, once the detailed plan is created, there are no controls or processes to ensure that it is connected to your overall corporate plan. The breakdown between these two systems can often result in TPM overspends and plan shortfalls. Guiding Principles to Planning One of the keys to effective planning is to have a system that permits you to establish goals, and then set the related tactical event plans to execute your plan objectives. This would include goals such as market share by brand, customer profit margin, and other similar metrics. Another critical key is to connect the corporate plan to the tactical event plan, which requires that you first decide on the level of planning for both corporate and the event level planning. Typically, your corporate plan is performed at a customer and product summary level. This allows for more of a macro planning approach, in which you can perform ‘what ifs’ and quickly determine the changes in pricing, costs, and the impact to overall profit. This permits users to set goals, and then create tactical event plans to meet these goals. Top down planning using allocation methods are essential to create quick directional views that subsequently provide for an iterative process. Clearly, setting your customer and brand-level tactics is not something you want to first perform at an...

Why Finance Departments are the New Driving Force of TPM Projects

Finance departments are responsible, in part, for knowing how much money is being spent on the trade spending line for each product for each week, or at least for each month or fiscal period. In addition, more and more companies are creating sales finance departments to do more return on invest analyses, and to determine whether each SKU is paying its way. But wait! Your company’s trade promotion process has always just done trade spending at the brand level, and depended on Excel formulas to estimate how much is being spent for each SKU. That process has not even allowed for an understanding of what actually happened financially versus what was planned. The level of financial understanding is greatly enhanced by a good trade promotion management solution that stores good financial data down to the account, SKU and week level. Measures such as manufacturer profit, retailer profit, total OI spend, and total BB spend all provide great line of sight to important analyses such as assortment optimization, trade promotion post analyses as well as the financial fundamentals like accruing the right amounts to the general ledger. So why is there such a fuss coming from the sales department? Perhaps, there are conflicting objectives. When sales finance is held accountable for getting the right trade spending accrued to the right month and SKU, and to determine whether trade spending has been profitable; sales may have a different agenda. Sales may want to be able to go spend their trade funds at the account without the onus of being profitable held over their head, and they may be concerned that not...