What is TPO ?
TPO assists CPG manufacturer strategically to optimize the trade spending across their total product portfolio. Trade Promotion Optimization is an approach that uses business rules, constraints, and goals to mathematically create a trade calendar that can meet all of these requirements. Optimization is helpful for strategic questions, such as “what combination of promotional events (feature price, frequency, timing & depth of deal allowances) will meet or beat my revenue and/or profit goals and still stay within my trade promotion budget?” Right TPO models can also solve for ratio mix of revenue, volume and/or profitability, as well as profit contribution for both the manufacturer and retailer.
SAP TPO enables trade marketing and sales teams to leverage advanced predictive modeling to suggest optimal price and merchandising decisions based on goals and objectives, or to assess revenue, volume and profitability.
SAP DMF: Demand Management Foundation provides predictive demand driven forecasts and optimization simulations for all promotion planning across channels and customer segments. In DMF you can do model and forecast for set of customers, channels and markets. By using demand data, DMF systems help to forecast and optimize the predictions as per the requirement. It’s a science engine, which transforms historical demand data into models for generating forecasting & optimization. SAP TPO uses ‘Bayesian ‘science techniques. A forecast run is created for each call of science system (DMF). The forecast run can be used to see the parameters and results of each prediction that adds to the what-if scenario.
The following settings are few important ones for TPO:
1) Defining Model Hierarchy
2) Maintaining Model profiles
3) Maintaining Forecast profiles
4) Maintain RFC settings between CRM, BW and DMF system
Upload the data in DMF system and with above settings, you can perform forecasting or simulation from CRM system.