Retailer Collaboration Lead
Bluefin Solutions
SAP Trade Promotion Optimisation - The Trade Promotion Sat Nav?
15 Nov 2011
Consumer Products, CRM, Trade Promotions Management, Consumer Business, Trade Promotion Optimisation
When following a Sat Nav step-by-step without thinking, the driver may end up trying to park somewhere really random like a Tube station or in the Thames. If a driver had updated their Sat Nav recently or if they'd carefully looked at the screen and then looked outside if where they was going made sense, then they may have actually found the right car park instead of making a fool of him- or herself.
The same applies to SAP TPO...it can only suggest which way to go, but it can't take all revenue or volume driving factors that have changed or may not be available in data form into account.
So what is SAP TPO?
SAP TPO allows you to...
- Predict and suggest optimal price and merchandising decisions based on goals and objectives
- Assess revenue, volume & profitability for promotional period, vehicles, products, price points and other factors
- Answer "what happened?" questions by utilizing historical sales data to quantify and qualify the impact of different marketing activities.
So the same way that the SatNav has limitations in factors it can take into account if it for example has not been updated recently, TPO can also only suggest which way to go based on the latest data load. Regular data loads can ensure that the outputs from TPO are as close to reality as possible, as new data variables change the results of calculations and therefore help the system suggest the correct way forward.
But do the automated calculations and suggestions by TPO allow the Account Managers to just stop thinking and blindly copy the promotions that the system suggests if regular data loads are ensured?
No! TPO is meant to support Account Managers in their decision making process, but cannot replace the experience and knowledge that Account Managers have when executing promotions.
Some external factors to consider along the way
So does this mean that a company with very knowledgeable Account Managers does not require TPO?
Well, just because we know our way around the South-East or North-West of England, it doesn't necessarily mean we've have uncovered the best routes or know all the ways to avoid traffic jams - and even if we do know most, with construction sites showing up all over the place, we may actually need our Sat Nav to guide us through.
Conclusion
SAP TPO is only as good as the data loaded and configuration setup. It can support a new Account Manager in understanding the optimal promotions for his/her customer as well as reduce the workload of an experienced Account Manager whilst giving him insights into data analysis he/she might not have had available before. Nevertheless, there is still need for a Human to drive value from the tool rather than blindly following each recommendation.
Comments
Timo Wagenblatt 06 Dec 2011
Hello Natalie,
Great blog about trade promotion optimisation not being a substitute, but a support and guidance tool for account managers, trade marketing and business analysts.
It's not about always being 100% right, it is about being more often right, it's about decision guidance and not about taking accountability away from people.
Thanks,
Timo
Emre Bayıksel 16 Nov 2011
Very good article Nat. Thanks!