Foodservice 101: Why a Retail TPM isn’t Enough for Your Foodservice Business

Posted on May 24, 2017 by Caitlin Orosz under Foodservice 101

Having a purpose-built software for trade management in the CPG and foodservice industries increases visibility and profitability, but there’s more to trade spend automation than technology; companies need a system of people, policies and procedures to discover the best results. Many CPG companies have deployed trade spend software to support their retail business, but not as many have actively sought out a solution for their foodservice business.

Trade promotion management (TPM) has grown in prevalence and reporting on trade spend dollars has become more important to the business model of a manufacturer and its partners. The types of program structures are multifaceted, especially in the foodservice industry, where operator programs are designed to pull volume overlap with existing distributor push programs.

There are two fundamental mistakes made when addressing trade promotion and trade spend in foodservice.

  1. People (wrongly) assume that the dynamics, processes and problems are no different than retail. However, the two lines of business have different methods and complexities. For example, many businesses manage sales and marketing for two separate lines of business.
  2. Some businesses have trade spend technologies for retail and figure that the same technology will work in foodservice. This assumption has some merit, after all it would be great to have the same processes and scenarios applied in all lines of business from a common technology solution. But the challenge lies in repurposing or customizing a specific tool, such as TPM for retail, for new purposes, like foodservice trade spend.

Organizations have tested these assumptions and failed. For this reason, the foodservice business in many of the largest companies has yet to successfully adopt the same technology solution that was originally deployed in the retail side of the business. (Note figure below.)

Retail Vs Foodservice

Trade spend software is critical in foodservice; it simultaneously impacts the top and bottom lines of business. Trade spending should be viewed as a holistic system, not just a technology. With comprehensive capabilities like auto-approval settings, accurate margin calculation and highly secure data, FORGE continues to lead customers to control, profitability and efficiency.

Check out this infographic, The Real Value of TPM Software: 6 facts about trade spending.