Programme profitability: trade promotion management vs. ERP systems for consumer goods companies
Table of contents
Enterprise resource planning systems
Trade promotion management solutions
Balancing business needs for market success
The ideal solution for companies
Making the right choice for your business
Key takeaways for platform selection success
The management of long-term discount contracts is integral to determining customer profitability and maintaining strong relationships with retail partners across Australia and internationally. But where should these critical elements be managed? Which platform delivers better results for CPG companies: enterprise resource planning (ERP) systems or specialist trade promotion management (TPM) solutions? Or can responsibilities be effectively split across both platforms? We explore the pros and cons of various scenarios to help businesses determine the ideal platform for understanding total profitability by customer in today's competitive domestic and global marketplace.
Enterprise resource planning systems
ERP systems are designed to integrate various business processes and data sources, including finance, human resources and procurement, into a single unified system. A number of ERP solutions have components that can manage promotions and discounts, making them attractive options for companies seeking comprehensive business management platforms across domestic operations and their international subsidiaries.
Advantages
Holistic business view: Provides a more comprehensive view of business operations across multiple departments and functions, essential for companies managing complex operations nationwide and internationally.
Financial integration: Enables the ability to correlate promotion spending with other financial metrics, crucial for companies needing to demonstrate ROI to stakeholders and comply with Australian financial reporting requirements and international regulatory standards.
Data consistency: Less chance of data discrepancies and reporting errors, particularly important for businesses operating across multiple regions and international markets with diverse retail partnerships.
Global scalability: Supports multi-currency operations and international compliance requirements essential for companies with global operations.
Disadvantages
Limited specialisation: Centrality means ERPs may not have specialised tools for nuanced TPM tasks required by Australian CPG companies managing complex promotional strategies with major retailers like Woolworths, Coles, and IGA, as well as international retail partners.
Reduced customisation: May be less customisable, making it challenging to adapt to changing promotional strategies in the dynamic retail landscape and varying international market requirements.
User experience limitations: An ERP is typically not as intuitive, user-friendly, or widely accessible as dedicated TPM solutions, potentially impacting adoption across domestic and international sales teams.
Implementation complexity: Managing ERP systems across multiple countries and regulatory environments can create additional complexity for global operations.
Trade promotion management solutions
Trade promotion management (TPM) solutions are designed specifically for managing trade promotions in the consumer goods industry. They provide tools tailored for the intricacies of promotions, rebates and discounts in the CPG space and overall trade management, making them particularly valuable for companies navigating complex domestic and international retail relationships.
Advantages
Specialised functionality: Because TPM systems are designed with CPG promotions in mind, they can offer advanced analytics, forecasting tools and other features that an ERP may lack for both domestic operations and international market management.
Strategic flexibility: Enables the flexibility to adapt to evolving and changing trade promotion strategies across different markets and regulatory environments.
Advanced analytics: Provides sophisticated promotional performance insights and predictive capabilities essential for optimising trade spend across multiple markets.
Rapid deployment: Faster implementation compared to comprehensive ERP systems, enabling quicker time-to-value for promotional optimisation.
Disadvantages
Data integration challenges: If not integrated properly, TPM solutions can result in segmented data, making it challenging to get a complete picture of the business or retail customer across domestic and international operations.
Limited business scope: May not provide comprehensive business insights beyond promotional activities, requiring integration with other systems for complete operational visibility
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Balancing business needs for Australian marketsuccess
When considering total profitability by customer in the Australian market and Asia-Pacific expansion, there is a critical need to integrate data from various sources – sales, promotions, rebates, returns and more. From this standpoint, ERPs have an inherent advantage for companies managing complex, multi-channel operations across domestic and global markets. If the trade promotion management (TPM) component of an ERP is robust, businesses can easily track profitability by customer without needing to integrate disparate data sources. However, this effectiveness is contingent upon the ERP's TPM capabilities meeting the sophisticated demands of the consumer goods market and international operational requirements.
Conversely, the effectiveness of a trade promotion management (TPM) solution in providing a comprehensive view of customer profitability hinges on its integration with other data sources and business systems commonly used by companies with global operations.
For companies with international operations, additional considerations include:
Multi-currency transaction management
Cross-border regulatory compliance
International tax and reporting requirements
Global supply chain coordination
The ideal solution for companies
In an ideal scenario, businesses would leverage the best of both worlds by implementing a specialised TPM system that is seamlessly integrated with an ERP. This approach would provide:
Deep promotional insights with specialised tools designed for the complexity of Australian retail relationships
Comprehensive business view of overall customer health and profitability
Compliance capabilities to meet Australian financial reporting and regulatory requirements including Australian Competition and Consumer Commission (ACCC) guidelines
Global coordination enabling centralised strategy management from headquarters with regional market flexibility
Making the right choice for your business
Choosing between an ERP and trade promotion management (TPM) solution for long-term discount contract management and customer profitability is not a black-and-white decision for Australian companies with global ambitions. The choice should be driven by the organisation's specific needs, available resources, and long-term strategic goals in the marketplace and international expansion plans.
When to choose trade promotion management (TPM) solutions:
Need for detailed, nuanced understanding of trade promotions and their impact on profitability across multiple markets
Complex promotional strategies with major domestic retailers and international partners
Requirement for advanced analytics and forecasting capabilities supporting both domestic and global operations
Focus on maximising trade promotion ROI across diverse market conditions
Rapid deployment needs for competitive advantage
When ERP may suffice:
Broader business view is prioritised over promotional intricacies
Limited promotional complexity
Strong existing ERP infrastructure with adequate TPM capabilities
Resource constraints limiting additional system implementations
Key success factors for Australian implementation:
Regardless of the chosen platform, companies should ensure:
Data consistency across all business functions and international markets
Accessibility for relevant team members nationwide and internationally
Accuracy in reporting and analytics across multiple currencies and regulatory environments
Integration capabilities with existing business systems and international operational requirements
Scalability to support business growth across domestic and global markets
Compliance management for both domestic regulations and international requirements
Key takeaways for platform selection success
Effective platform selection for trade promotion management requires strategic evaluation of business needs, operational complexity, and growth objectives. Essential considerations include:
Comprehensive needs assessment that evaluates promotional complexity, business integration requirements, and global operational scope for Australian companies with international ambitions
Technology evaluation comparing ERP and TPM solutions based on specialised functionality, scalability, and ability to support both domestic operations and international expansion**
Integration planning ensuring seamless data flow between systems while supporting multi-currency operations, cross-border compliance, and global coordination requirements
Implementation strategy that accounts for both domestic headquarters coordination and international market requirements while maintaining operational efficiency
Success metrics definition establishing clear ROI measurements and performance indicators that account for both domestic market performance and international growth potential
Success requires strategic platform selection that balances specialised promotional capabilities with comprehensive business integration, particularly for companies leveraging domestic market leadership to drive international expansion and global competitive advantage.
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