Too Small for TPM?

Fred Schroeder, president, Adesso Solutions (www.adessosolutions.com), offers realistic tips for small to mid-sized (SMB) consumer goods (CG) manufacturers who want to conquer the seemingly impossible task of achieving trade promotion effectiveness.


What unique challenges do SMBs face in managing trade promotion spending?

Schroeder: The SMB manufacturer, and there are thousands of them, is in a very difficult situation. Their IT departments, if they have one, are limited to a person or two. Many have homegrown or old ERP systems. They typically don’t have trade marketing departments, and importantly, their sales team is often just a handful of executives, working through sales agents or brokers who are developing and managing trade plans for every account, not just one like the Tier 1 manufacturer’s account teams. Adding to this burden is the fact that many of these SMBs have brands that are at best No. 3 or lower in the category, with limited to no marketing support, so they have a weak consumer franchise. Therefore, they are often “price brands” that rely heavily on trade deals to generate sales revenue.

The result is that SMBs often rely on a “cut and paste” approach to trade spending. They take last year’s deals and just paste them into next year’s plan without a thorough analysis of what worked, what didn’t, why, and what other approaches can be considered on an account by account basis by promoted group. They are simply too busy and don’t have the resources, tools and often the expertise to develop a more effective approach that could improve business dramatically.
 
So, what should an SMB look for when searching for a TPM provider?

Schroeder: Obviously, having a TPM solution that is both robust and easy to use is important. That’s not new news. But, an overlooked component in purchasing a TPM solution is the provider’s trade promotion experience and best practice expertise from a CG manufacturing perspective. Too often the focus of the SMB is solely on the product “demo” when investigating which solution to purchase. That’s because most TPM providers are founded by and still run by “software/IT” people, not executives with manufacturer-side experience in managing trade spending. Given limited resources and, for some, limited trade promotion expertise of SMBs, the provider with an easy-to-use, robust solution supported by expertise to economically and efficiently help provide trade analysis, planning and even administrative oversight services to maximize the solution can pay huge dividends.
 
What can SMBs do to maximize TPM technology?

Schroeder: One of the major ways to maximize TPM technology is “compliance” in using the technology properly to its fullest potential. Due to limited resources, many of these manufacturers do not make inputting all the important data into the solution properly a major priority. For example, plans for volume and trade spending are input at the beginning of the year, but there isn’t the time or staff or focus to update the solution with actual data every month. Or, some SMBs just use it to track deductions. There is so much more that TPM solutions can accomplish if used properly.