Program profitability: trade promotion management vs. ERP systems for consumer goods companies

Table of contents:

The management of long-term discount contracts is integral to determining customer profitability and maintaining strong relationships with retail partners across the United States and international markets. But where should these critical elements be managed? 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 the United States and their international operations.

Pros

• Holistic business view: Provides a more comprehensive view of business operations across multiple departments and functions, essential for companies managing complex operations nationwide.

• 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 financial reporting requirements.

• Data consistency: Less chance of data discrepancies and reporting errors, particularly important for businesses operating across multiple states and retail partnerships.

Cons

• Limited specialization: Centrality means ERPs may not have specialized tools for nuanced TPM tasks required by US CPG companies managing complex promotional strategies with major retailers like Walmart, Target, and Kroger.

• Reduced customization: May be less customizable, making it challenging to adapt to changing promotional strategies in the dynamic American retail landscape.

• User experience limitations: An ERP is typically not as intuitive, user-friendly, or widely accessible as dedicated TPM solutions, potentially impacting adoption across sales teams.

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.

Pros

• 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

• Enables the flexibility to adapt to evolving and changing trade promotion strategies

Cons

• 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

Boost your trade promotion profitability

Achieve better results with TELUS Trade Promotion Management

Balancing business needs for US market success

When considering total profitability by customer in the American market and international 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 US 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 American companies with global operations.

The ideal solution for companies

In an ideal scenario, businesses would leverage the best of both worlds by implementing a specialized trade promotion management (TPM) system that is seamlessly integrated with an ERP. This approach would provide:

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 companies with global ambitions. The choice should be driven by the organization's specific needs, available resources, and long-term strategic goals in the American marketplace and international expansion plans.

When to choose trade promotion management (TPM) solutions:

When ERP may suffice:

Key success factors for US implementation:

Regardless of the chosen platform, companies with global operations should ensure:

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:

Transform your trade promotion strategy with solutions designed for the complexity and scale of retail operations.

Boost your trade promotion profitability

Achieve better results with TELUS Trade Promotion Management