Seven Reasons Why TPM is Worth a Serious Look
By Dale Hagemeyer, Research VP, Manufacturing - Life Sciences and Consumer Goods, Gartner Industry Advisory Services, Gartner Inc.
Attitudes in the consumer goods industry on predictive capabilities in trade promotions range from "totally skeptical" to "it will cure world hunger." Here is an industry analyst's take on why being more predictive in Trade Promotion Management (TPM) has merit.
1. It can reduce complexity. Think of it like a prediction of whether or not it will rain. Rather than looking out the window and trying to sort through multiple indicators of inclement weather from clouds to temperature to recent weather patterns, a predictive forecast cuts down the information and allows the consumer of the information to make an informed choice based on available information.
2. Simulation is a great way to redirect spending and increase ROI on promotional spend. Being able to do scenarios based predictive modeling can turn to conversation to more of "what can be generated or achieved" instead of how much will be spent. It can also frame up the scenarios as to how both manufacturer and retailer will benefit.
Attitudes in the consumer goods industry on predictive capabilities in trade promotions range from "totally skeptical" to "it will cure world hunger." Here is an industry analyst's take on why being more predictive in Trade Promotion Management (TPM) has merit.
1. It can reduce complexity. Think of it like a prediction of whether or not it will rain. Rather than looking out the window and trying to sort through multiple indicators of inclement weather from clouds to temperature to recent weather patterns, a predictive forecast cuts down the information and allows the consumer of the information to make an informed choice based on available information.
2. Simulation is a great way to redirect spending and increase ROI on promotional spend. Being able to do scenarios based predictive modeling can turn to conversation to more of "what can be generated or achieved" instead of how much will be spent. It can also frame up the scenarios as to how both manufacturer and retailer will benefit.
3. It can improve operational efficiencies. So it isn't just about ascending the pinnacle of fact-based selling but actually modeling and improving outcomes. Knowing about product mix and volume beforehand can help to reconcile two opposing forces: Sales optimism and supply chain skittishness.
4. It can ease the analytical burden of the sales force. Rather then making post-event analysis a manual, drawn out process with all thoughts for the future a matter of "guessing and hoping," the technology can create a base scenario.
5. It can make sales people more effective. High sales performers can better quantify the scenarios that make sense to them intuitively and the less intuitive can benefit from having some insights that they couldn't have otherwise.
6. This may be the way to take sales agents to a new level. Predictive tools can help broker organizations with decision making and can even be used to help them simulate their commissions instead of all the time they spend tracking orders.
7. It will keep manufacturers relevant with retailers. With the right investments manufacturers can come up to speed quickly and using largely the same data as retailers (like point-of-sale data) increase both their credibility and indispensability with retailers.
The journey goes from randomness and chaos to basic analytical competence to being predictive to actually influencing outcomes. See where you are in the journey and how you might be able to increase your competitive advantage by becoming more predictive in your promotions. But, most importantly -- remember that it is a journey.
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