The results of a study on TPM implementation practices on a global basis, compiled by Trade Promotion Management Associates and Infosys Corp., finds that some much-discussed topics, such as predictive analytics and promotion optimization, are not being implemented as quickly as the talk might indicate.

The study, which will be released in more complete form this summer, was conducted over several months in late 2008, and includes responses from mostly larger companies, and mostly consumer packaged goods suppliers (though not exclusively so, in either instance).

The objectives of the study were to identify the current maturity level of global trade promotion management practices, to identify best practices and benchmarks in use of analytics for TPM, to assess process and technology sophistication, and to identify challenges and opportunities in TPM initiatives and implementations.

Respondents said that TPM is important to their companies, with a median rating of eight on a ten-point scale. But when asked about things that were stopping or slowing implementation:

• 77 percent said they had problems with data availability, quality, and harmonization
• 67 percent have problems with lack of standardization in processes
• 50 percent cite lack of alignment of goals among marketing, finance, and sales

These are substantial barriers, all of which are familiar to everyone in trade promotion. The nature of such barriers is further proof, if needed, of the importance of having senior management champions for TPM implementations.

As a result of the barriers, only 13 percent of respondents are using predictive modeling software, and a similar number are using pricing optimization tools. Considering how much talk there has been about these topics over the past several years, it is a bit surprising that only one-eighth of large CPG marketers have actually implemented such tools. A survey of smaller companies or companies in other categories would presumably find only a minuscule percentage of respondents using such tools. Most respondents are using only the promotion planning and funds management modules of their TPM systems, with smaller percentages using modules for data management, post-event analysis, and execution.

The metrics used to track effectiveness of trade spending are another indicator that we may not have moved as far as we might think. When asked what metrics they used, respondents replied:

• 73 percent: Actual spend to budget
• 73 percent: Net incremental sales
• 57 percent: ROI (based on consumption or shipment)
• 40 percent: Incremental spend per incremental case
• 33 percent: ROI (variable and fixed margin)
• 13 percent: Other

This survey places Oracle at the top of the most popular providers of TPM software, used by about a third of the respondents. Collectively, however, more are using a variety of in-house packages. Over 90 percent use Excel for some portion of the trade promotion process (though that could be as much as overall management and as little as downloading info from a larger system into Excel for manipulation).

Programs, systems, and processes being consistent around the world appear to be another example of a much-discussed ideal rather than a reality. In regard to systems, for example, few respondents are using identical software in all regions of the world, with a great deal of software customization being done on a regional basis

Differing distribution systems might impact global adoption of trade promotion programs. A number of respondents cited multiple levels of distribution and large numbers of small customers as challenges in developing countries. These channel differences might also impact use of identical systems and processes. Language is also cited as a barrier to global system implementation.

Most TPM systems have between one and four links to other systems, although some reported a much higher number. For the most part, these are internal systems, shipments, financial, master data management, etc. About half of all TPM systems are linked to external systems, such as syndicated data or retailer POS. A major CPG manufacturer, who reviewed this data, raised questions about the accuracy of external data fed into a TPM system from some developing countries.

In regard to cost, most respondents said that their systems fell between one and three percent of annual revenue. Ongoing cost was under one percent of revenue. Both numbers of course could vary considerably dependent upon the size of the revenue figure.

The survey suggests that the biggest challenges continue to be the most familiar: data availability and reliability, lack of system and process standardization, and a lack of clear goal alignment within the enterprise. While we have long known about these problems, practitioners are still struggling to overcome them. That's the bad news.

The good news for companies that have still not moved far along on the path to forecasting and optimization: You may not be as far behind as you thought.

TPMA wants to foster a continuing dialog on these issues, and we ask for comments and further ideas. Full results will be presented, with in-depth discussion, at our July conference in San Francisco.

Bob Houk is the executive director of the Trade Promotion Management Associates. Michael Forhez is a senior principle at Infosys Corp.