TPM or TPO: Which Should Come First for CPG Brands?

Explore the debate between Trade Promotion Management and Optimization in the CPG industry. Find out which one should come first for maximum growth.

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Speed to value is a problem in the TPx game. Vendor selection to go live can feel like an eternity. And once through implementation, it could even take a full year or longer to optimize your TPx solution, that’s nearly 2 years in total! That is an opportunity cost of about 10% of your total trade investment, each year. Throughout the whole time, your management team is asking for tangible results, they want a return on their investment.

There are times when a crawl-walk-run approach makes the most sense for an organization, and is the most common strategy., But let’s think outside the box here. There are ways to expedite that speed to value. You have options if you partner with a vendor that is flexible and innovative.

What if you could implement TPM (Trade Promotion Management) and TPO (Trade Promotion Optimization) at the same time?

Deploying TPO capabilities while you are getting your TPM up and running could be the right approach. This means your TPM vendor will:

  • Gather, clean, and harmonize your POS data
  • Integrate historical promotional information with historical data
  • Model base and lift (which will be a key need in your TPM implementation)
  • Optimize promotion plans based on historical results
  • Import optimized plans into your TPM, so that your sales and RGM personnel have a starting point to work from.
  • Prepare price elasticity models and scenarios your RGM team can utilize immediately.

With this approach, your team can focus on building alternative scenarios, refining guardrails, and joint business planning while your TPM system is getting set up. Overall, this will circumvent the implementation time and effort and allow you to optimize as you implement. 

TPM+TPO= power and agility 

By implementing both a TPM and TPO solution at the same time, your sales team will be able to access an optimized plan to work with from the beginning. A paired implementation will ensure your team has increased user adoption, which will bring a faster time to value for you. Implementing both solutions at the same time will help you gain deeper insights into baselines to get to the true ROI of your promotions. You’ll also be ready with optimized plans on your TPM go-live date! This will allow you to gain up to a 5%-10% increase in ROI. 

The crawl, walk, run approach 

The crawl, walk, run approach may still be the right option for you, particularly if your organization struggles with change management. Crawl walk run might look something like this:

Crawl - start with transactional TPM and develop your SOPs and processes Train, train, train. 

Walk - add in price elasticity capabilities. Model and monitor your baseline projections. Begin scenario planning with the sales team.

Run - Generate optimized plans with user-defined guardrails. Add in AOP top-down and bottom-up collaboration capabilities. Analyze plan results and incorporate findings into the next round of planning.  

If your revenue growth management functions are interrelated, your systems should be too. Whether you jump-start your speed to value with optimized plans out of the gate or you decide 'crawl, walk, run' is a better fit, it's important to select a vendor who has the capabilities and is willing to deploy them at your pace, not theirs.

A lasting partnership 

Meet CPGvision: the best-in-class, fully connected, and integrated TPM and RGM solution suite for Consumer Packaged Goods, built on the Salesforce platform. With the most advanced functionality in the industry, CPGvision equips you with real-life problem-solving applications for TPM, TPO, and RGM. 

Your success is our success- CPGvision proudly provides a dedicated customer success team staffed with CPG industry professionals. Regardless of where you are in your RGM journey, you’ll be fully equipped with the solutions you need for profitable revenue growth. Contact us today to learn more.

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