How PepsiCo Boosted Profitability with TPM

Managing trade promotions efficiently and effectively can have a significant impact on the bottom line. On Nov. 3, 2011, John Lennon, senior manager, Business and Information Solutions at PepsiCo Inc., and Simon Ellis, practice director, Supply Chain Strategies at IDC Manufacturing Insights, engaged in a lively discussion on this hot topic.

 

During this session, Lennon revealed how PepsiCo is leveraging Trade Promotion Management (TPM), including integration with Trade Funds, Trade Claims and Dispute Management, to improve cross-functional processes, improve coordination with key partners and most importantly, improve revenue, volume and profitability of its trade promotions. Below are some highlights from the web event:

 

--Ellis kicked off the event by going over the top 10 challenges of TPM, including spend effectiveness and ability to measure ROI, lack of a good TPM/TPO tool and baseline problems, just to name a few. “Although some companies remain focused on pure cost reduction when it comes to their trade promotion goals, most recognize the importance of driving improved TPM performance,” said Ellis. He also revealed other trends. For example, did you know only about 18 percent of companies are able to assess comprehensively? And that many impediments to promotion assessments reported are persistent? Finally, Ellis discussed what leading companies are doing in this space. He closed with some advice: “Embrace people, process and technology — in that order!”

 

-- PepsiCo’s Lennon next took the mic to discuss the company’s journey to “Thinking as one; Working as one; Winning as one”. He started by going over the company’s trade spending basics. “Trade spending is fundamental to the CPG industry, and you see it every day,” he explained. PepsiCo’s business requirements for a trade promotion solution included enhanced insights for planning, provide basis for optimization; improved trade accruals; improved budget management; integrated claims based settlement process; and integrated analysis and reporting. Lennon also talked about the many benefits of integration. On the customer side, there are better promotional plans to drive their businesses, quicker collection of trade funds to improve cash flow, more accurate invoicing to reduce claims, and improved product availability.

 

--E. J. Kenney, vice president - Consumer, Distribution & Life Sciences Business Sector for SAP Americas, rounded out the web event by explaining what an integrated TPM solution can do for companies like PepsiCo. Headquarter planning, field account planning and sell-in and negotiation are just some of the areas that can “turn insight into action”. Others include retail execution, validation and settlement; and pre and post evaluation and analysis. Kenney believes that “consumer products information is exploding — big data will be a competitive advantage for those who harness it!”

 

To listen to this web event in its entirety, click here.