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SAP Trade Promotion Management

SAP Trade Promotion Management

As the need to serve the consumers with the best-in-class-products at the most cost-effective price points becomes highly competitive, the trade promotions are often the most effective formats in building brand awareness, nurturing customer loyalty and improving sales in today’s globally networked organizations with complex distribution channels – especially in retail and consumer packaged goods industry.

The IT processes and systems supporting trade promotions are the backbone and are the integral components, however can’t exist in isolation. With the SAP Trade Promotion Management, companies can streamline their trade promotions by establishing systems with completely integrated value chain processes. The integrated processes and systems are those that connect business units, bind together different functions and departments to create a unified ecosystem.

The following illustrates (See Figure 1) a connected SAP Trade Promotion Management ecosystem. The central component SAP TPM provides key capabilities to plan, create, optimize and execute complex trade promotions and all the relevant integral components shown around support with vital yet indispensable functions in order to create a sustainable process flow.

Figure 1 Integrated SAP TPM Ecosystem - FINAL.jpg

To illustrate how, the-sum-is-greater-than-the-parts, here is a distinctive business scenario designed along the time lines of a characteristic trade promotion. It essentially summarizes the life-cycle of a trade promotion right from planning to execution to analysis (See Figure 2).

  • Trade funds are planned at the headquarter level and are then allotted to business units to spend on trade promotions. The integration of Funds Management with the SAP TPM strengthens the functionality. The key account Managers, product managers and the brand managers at these individual business units can then create funds plan and link to various trade promotional activities.
  • The funds can be grouped and planned for accounts, products, trade spends, target group, combination of trade spend and product included in the trade promotion. When planning a specific trade promotion, the managers use the funds to budget for the planning expenses. It allows respective line managers to manage administration, distribution, and consumption of funds.
  • With the central component SAP TPM, a trade promotion can be planned for a specific time period with the objectives to increase sales, launch a new product, create brand awareness, and market share. The trade promotions are integrated with trade deals and agreements. The deals and agreements in SAP TPM are used as a basis for creating trade promotions – they serve as reference points and guidelines. The trade deals and agreements comprise information such as accounts, products, dates and trade spends.
  • The trade promotions encompass information such as intended key account, planning basis, objective, funds plan, and status. In addition to this, all the relevant promotion details like dates, products, planning, and casuals are delivered within the overview of the trade promotion for easy access. If the business scenario requires to work with large number of trade promotions with common attributes, templates provides an effective way to manage and can be used as a basis for trade promotions.
  • SAP TPM has the capability to optimize the trade promotions to increase its effectiveness by predicting and simulating the trade promotions for the best possible scenarios. Trade promotions are mapped to SEM-BPS key figures in trade promotion planning layouts. It enables the key account managers to assess optimal combinations of price and merchandising decisions for subsequent detailed promotion planning.
  • Here one can define different parameters such as the optimization goal and the assessment time as well as tactics and price range. The system will then create all possible combinations of tactics, price points and timing. Based on the combinations presented by the system, we can choose the scenario(s) we would like to realize.
  • Integration of SAP APO with TPM can be very effective in demand planning to ensure that adequate availability of the products during promotional periods.
  • In an integrated scenario, pricing condition and rebates are maintained in SAP ECC and are then downloaded to SAP TPM for further processing. The trade promotion’s subsequent processes like billing, logistics and claims settlement can be handled in SAP ECC. It provides a definitive platform for financial integration for SAP TPM.
  • SAP BW/BPS is altogether integrated with SAP TPM and provides the most effective and comprehensive analytics solution for the trade promotions. Pre and post trade promotion analytics provide truly delightful insights one can count on. With this information we can effectively plan, design and launch successive trade promotions.

Figure 2 SAP Trade Promotion Timeline - FINAL.jpg

The time line representation of the trade promotion connects every functional unit with the close integration of business processes along the way till successful realization of it through the system.

With the increased pace of change, it’s never been more important to understand how to make these transformations succeed. A system is as good as the integrity of its value chain processes. SAP Trade Promotion Management provides real insights to plan, create, execute and analyse trade promotions with the capabilities to optimize the promotions by predicting and simulating the best possible scenarios.

For consumer packaged goods companies, trade promotions hold strategic as well as tactic significance and solutions like these – SAP Trade Promotion Management – are phenomenally effective and such well-built systems can make a long-lasting impact in managing trade promotions with the meaningful contributions to the sales along with additional defined objectives.

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      Author's profile photo Former Member
      Former Member

      it's helpful.

      Author's profile photo Former Member
      Former Member
      Blog Post Author

      Thanks Bo Liu!

      Author's profile photo Former Member
      Former Member

      good explanation !

      Author's profile photo Former Member
      Former Member

      Surjeet Bhati : check this

      Author's profile photo Arjun Pawar
      Arjun Pawar

      Thanks Dinesh CG Dinesh  for sharing and it's very useful blog. 🙂

      Author's profile photo Sudheer Ellath
      Sudheer Ellath

      Thanks Dinesh for sharing this information, this is very useful

      Author's profile photo Former Member
      Former Member

      Hi Dinesh,

      I have a query. The discounts/rebates maintained while creating TP are applicable during the mentioned period on all the sales orders those are applicable for that specific TP/Campaign in ECC. My question is, the retailer gets his inventory well ahead of these promotion dates. (assuming stock replenishment during promo period would take time)

      Now that the discounts are applicable only on sales occurred during promo period, in this case how is the retailer seeing an advantage? What about the purchases done before the promo period?

      Could you please throw some light !