Why is TPM inside the ERP better?

Some ERPs have trade promotion management functionality inside the ERP.  The alternative to this approach is to use a third-party TPM solution and integrate it to your ERP.     If you are in the process of interviewing TPM vendors, consider the following to help evaluate TPM software solutions:

What data is needed for trade promotion management?  True closed-loop trade promotion requires access to all of the following data elements that are managed and maintained by an ERP:

  • Chart-of-accounts, which is used to map trade promotion expenses to your P&L
  • Items, which are needed to create and manage your trade promotion allowances, rebates and discounts.
  • Customers, needed to identify who gets your trade promotion allowances, and track sales orders and invoices.
  • Vendors, needed for promotions to indirect customers
  • Orders and Invoices, needed to calculate maximum, expected and net liability.
  • Accounting periods, used to roll-up trade promotion spending for financial reporting.
  • Demand plans, needed for better baseline estimates and volume forecasting
  • Budgets, used as a benchmark to evaluate planned promotions.
  • Many other data elements, including unit-of-measure, subsidiary, currency, etc.

TPM inside the ERP eliminates data synchronization!  Any TPM solution that is outside your ERP must synchronization all of the above data to properly manage trade promotions.  As you can imagine, data synchronization is complex.  This synchronization process requires on-going technical support to maintain data integrity.

Real-time data with TPM inside the ERP:  For TPM inside your ERP, all required ERP data elements are available in real time.  Third-party solutions often synchronize data over night, resulting in data that’s already one day old.   In today’s fast-paced environment, day-old data can create problems.  For example, new items, customers, and vendors added to your ERP will take 1 day to sync over to your third-party TPM solution.  TPM inside your ERP will have real-time access to new data created in the ERP.   Real-time access to orders and sales provides better financial controls and visibility to all TPM stakeholders.

No data duplication with TPM inside the ERP:  With TPM inside your ERP, the TPM solution just uses the data that’s already in your ERP.  With third-party TPM software solutions, data is exported from your ERP nightly.  This data goes to an outside data center and is imported and duplicated in the third-party TPM solution.

Why consider TPM outside the ERP?   Third-party TPM solutions can have functionality that's not available inside the ERP vendor.   Carefully weigh the benefits of the additional functionality against the added complexity, loss of real-time data, and the cost of  ongoing synchronization maintenance.

iTPM is trade promotion management inside NetSuite:  If you are in the Food and Beverage industry and use NetSuite as your ERP, we invite you to look at iTPM for trade promotion management.   iTPM is a native SuiteApp, providing TPM inside NetSuite with all the benefits described above.   iTPM includes promotion planning, settlements, deduction resolution, post-promotion analysis and budgeting.

 

Alex Ring

President

CG Squared, Inc.

 

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