Trade promotion management (TPM) is quickly becoming one of the highest priorities within CPG organizations since it’s the second-largest item on the P&L. Manufacturers assess operator and distributor trade programs and processes due to concerns about the value and return on investment of trade dollars. An HPM survey says that trade spending has tripled in the past two decades globally.
We can all agree that managing trade dollars is complex; generating exact monetary figures, attaining approvals, sharing information across your organization isn’t easy. Efficiently managing trade spend is a shared challenge among foodservice and CPG organizations. According to Booz & Company, trade spend accounts for as much as 25% of gross sales. This, a significant amount of revenue, is spent on promotions with operators and distributors and is designed to boost revenue and increase product and market share.
Using foodservice TPM technology to create trade programs enables companies to contain costs, gain visibility and report accurately on profitability. Many companies are finding success with TPM SaaS applications that include functionality to control and examine your trade dollars.
Each department within a company prioritizes different TPM system capabilities:
- The sales team needs software that calculates P&L with the exact trade program rates
- IT resources demand secure software that integrates with the company’s other applications
- The finance group wants visibility into workflows and prices
- Leadership looks for software with straightforward RFAs and easy-to-use search features
And all departments within a company prioritize actionable insights from analytics and reporting. With visual and innovative reporting, users can route transactions and review spending versus commitment among programs.
Increasing trade spend effectiveness and automating operator and distributor trade programs means creating profitable opportunities for your organization.
When you implement the right foodservice trade spend software, everyone feels the benefits: sales gain the tools they need to forecast profitability, IT sees successful data integration, and finance can process payments and credits with tools to manage deductions.