So, you've implemented CRM Trade Promotions Management and your sales force is happy - they can plan activities, run reports, manage disputes, collaborate effectively with retailers, and analyse promotion activity...all in one system. As a result, trade investment is being managed better and you're achieving better financial results on your promotions. Fantastic...right?
However, its quickly approaching that time of year when the budget process kicks off and the sales force are kicking up a stink. They've been given targets, as usual, by commercial finance, but are being requested to perform their bottom-up plans in the TPM solution by creating promotional activities whose derived P&Ls should roll up to match their targets.
This is a real pain because (a) it means cluttering SAP TPM with a bunch of 'dummy' activities and (b) it takes a long time to create a year's worth of activities in the TPM solution! Additionally, how is new product development (NPD) to be handled in SAP TPM? To illustrate the point, one of the national account managers (NAM) has drawn up the graph below. It shows that, for their account:
Their baseline is available in the demand planning and TPM solutions and shows a baseline for the full year ahead (what they expect to sell without any promotions at SKU level).
The TPM solution also holds their agreed or confirmed promotions. These are fairly comprehensive in the short term, but drop off after about 3 months as they rarely agree on promotions with retailers beyond that point. These too are held at SKU level.
They know that sales volume must grow this year to meet targets and this will be made up of uplift from promotional activities as well as volume from NPD. The graph shows the sheer amount of volume that needs to be planned over and above what is already held in SAP TPM.
The NAM explains that the budget is an exercise in goal-seeking and requires a lot of 'what-if' tweaking of the parameters; it is not feasible to do this activity by activity in the TPM solution. The NAMs are really stressed out by this and want to revert back to spreadsheets, which would allow them to model the combined effects of many activities on a single sheet. However, they can't because their spreadsheets aren't sophisticated enough to handle the clever P&L calculation logic that's built into the TPM solution. If only they had an solution that was, on the one hand integrated with TPM and able to harness its inherent cleverness and, on the other, enables them to flexibly model promotional and NPD volume, NSV etc.
The new concept of 'middle-up' planning
We recently presented the concept of middle-up planning to a client. This requires entering the unconfirmed promotional data at a higher level in the product hierarchy (eg. key brand) into a planning tool that is able to capture without SKU level detail. The sales force can easily enter a full years worth of promotions without knowing much of the detail required to do the same in TPM. Middle up planning is more detailed than top down planning and allows for flexible forecasting without the need for SKU level detail of bottom up planning. The sales force would be able to see a more accurate 12 month view of what was required in order to achieve the necessary uplift to meet the targets set for them. Instead of blindly goal seeking, they would be goal setting.
So what kind of solution is required to achieve middle-up planning? Well, you could use a spreadsheet with a lot of fancy formulas in it, but if you wanted to report on your confirmed and unconfirmed promotions together to see what you need to be doing to achieve your target, then a solution which integrates with TPM and APO can reap the most benefits. And the obvious choice then, is SAP BPC. The same master data is used across the solution for a truly integrated enterprise wide solution and ownership is retained by the sales force.
How does this help in effective trade promotions planning?
By consolidating the TPM, APO and BPC data into BW, we can report on the confirmed Vs unconfirmed promotions at key brand level - a kind of actual Vs plan. An important point to note is that we wouldn't want to report on confirmed and unconfirmed promotions without some form of logic to prevent double counting. This can be easily achieved by offsetting one against the other as they are loaded into BW for reporting.
The end result? A happy sales force spending less time planning and more time selling!