Wealth Of Knowledge

This issue highlights various consumer goods (CG) companies that implemented best practices and processes to manage their trade promotional spend. To expand on the topic, CGT sat down with Jim Suddendorf, president, Gelco Trade Management Group, one of the industry's leading trade promotion management (TPM) solution providers. Jim taps more than 16 years of industry experience with Johnson & Johnson and Schering-Plough to provide insight about the challenges facing the market, what consumer goods executives should look for in a TPM solution and the first steps that need to be taken for a successful implementation.

 

 

Sarbanes-Oxley (SOX) is probably the biggest issue facing executives today. SOX has required public companies to implement documented policies and procedures to insure proper controls, however we are seeing more private companies following suit. CG companies look for a TPM solution to help them implement these accounting and financial controls. It is important to select a TPM solution that is SAS - 70 type II certified. Having a SAS 70 type II certified solution eliminates the need for CG manufacturer to perform audits of their TPM provider.

 

For more than four years, CG companies have also been dealing with compliance issues with FASB laws. These laws require more diligence about properly accounting for trade spending as an expense or a reduction of revenue. Again, a good TPM solution can help them implement the proper accounting procedures.

 

 

CG executives are constantly looking for a better mousetrap. They want to be able to utilize the wealth of data they have at their disposal to help them manage and plan trade activities. They may be looking at price optimization, customer and product profitability; proper product mix and introduction to get the most benefit from their trade spend dollars. We are finding that integrating syndicated data into their TPM solution helps CG executives find that better mousetrap.

 

 

CG companies need to better understand and leverage their retail partner's customer acquisition strategies. Which consumer segments each retailer is attempting to attract to their stores is the key to maximizing promotional spending. Retailers spend a lot of money marketing to specific targeted audiences to grow their market share.

 

Retailers that are leveraging important point-of-sale data are in the control seat of your consumers. They understand the importance of segmentation better than most CG companies and they are leveraging the data to make critical decisions about what they promote, where to promote and who to promote too.

 

CG companies are spending a lot of money on syndicated data and consumer segmentation research to understand their brand categories and their consumers. Retailers are looking for help. They are looking for successful promotions too. Leveraging data and research about the category and consumer will improve CG companies' promotional spend. Again, helping to grow your retailer's market share will help grow your brand. So don't be afraid to offer category knowledge to build a successful promotion plan with your retail partners.

 

 

We find that many of our customers are looking for the combination of a TPM solution (such as Gelco's TMS Enterprise) and documented policies and procedures to implement best practices.

 

It's interesting to say that implementing a TPM solution is a best practice, but it is. Configuring a solution to meet a client's business needs requires a thorough understanding of their current policies and procedures around managing trade funds. Often times we find that clients really don't have a complete understanding of the management of these monies. That's why the implementation of a solution is often the time when CG companies establish key policies and procedures within their organization.

 

Workflow management is what we hear most often from our clients. Having the ability for brokers and sales reps to enter their plans and manage the approval and settlement process into one tool is a big win for CG companies. Eliminating double keying of the same information and leveraging the value of centralized tools are key to achieving accurate results.

 

Companies can now plan at levels (customer and product) and do roll-up analysis of the organization for corporate, regional and brand, or customer management reports. Even without syndicated data, some of the manufacturers are doing some high level analysis on the cost of promotions and some profitability analysis. We see many of our customers integrating all types of spend into their TPM solution. They can bring in non-promotional spends (for example, deductions for shortages, damages and administrative fees) into their TPM solution, which allows CG companies to get a better look at complete product and/or customer profitability. Gelco's promotion evaluation solution provides a comprehensive look at all of the variables to perform timely ROI analysis.

 

 

CG companies need to understand and assess the "organizational readiness" of making a change. Executive sponsorship is key, but it doesn't always ensure a successful transformation to a TPM solution. Take time to understand all of the stakeholders needs for a solution. This can help with change management.

 

Secondly, CG companies need to understand current processes and procedures. Building out the requirements in advance of looking as solutions is critical to understand how Excel spreadsheets are being used. Some helpful questions to understand include:

• How much time are sales reps spending creating the spreadsheets?
• How is the spreadsheet information entered into their ERP system?
• How many different versions of a spreadsheet could be out in the field (version control)?
• Are all regions of the country planning on the same spreadsheet?
• Does the broker manage the spreadsheet or does the CG manager (are the managers actually managing or doing the process?)?

 

Establishing the budget, resources and timelines are important considerations to ensure a successful transformation to a TPM solution. CG companies often begin the selection process with very little understanding of the internal time, talent and money needed to implement a solution of this nature. Find providers that can implement a configurable solution such as Gelco's TMS Enterprise, which offers on-demand software solution as a service. CG