White paper: Comprehensive Trade Management (PDF) - Oracle

Comprehensive Trade
Management
Responding to the $1 trillion challenge of enhancing the value of
trade promotions and other trade-funded initiatives across industry,
distribution channel and consumer boundaries.
An Industry White Paper
October, 2009

TABLE OF CONTENTS
Introduction ....................................................................................................... 3
The $1 Trillion Trade Spending Problem ........................................................... 4
Drivers of Trade Spending ............................................................ 4
The Role of the Economy.............................................................. 6
Evolving Trade Relationships........................................................ 7
The Case for Collaboration ........................................................... 8
Trade Management Challenges ........................................................................ 9
#1: Establish an effective trade management process .................. 9
#2: Invest in technology to automate the process........................ 10
#3: Capture and harmonize disparate demand signals................ 12
#4: Improve account planning and retail execution...................... 12
#5: Transition promotion planning from an art to a science ......... 13
#6: Get real-time visibility to trade plans and promotion results... 14
Meeting the Challenges: Comprehensive Trade Management ........................ 14
How the Process Works.............................................................. 15
An Incremental Approach............................................................ 16
Summary and Conclusion ............................................................................... 17
2

Introduction
Manufacturers of consumer products have always struggled to
manage customer relationships, execute effective promotional
activities and measure consumer response in their distribution
channels. Over the past century and a half or so, trade funds, co-op
advertising, market development funds or other “soft dollar”
programs designed to stimulate demand have increased in both
complexity and volume. The percentage of trade funds to gross
revenues has risen from just slightly over 3% in 1930 to almost 20%
today. Fueled by a nearly 3x increase since the mid 1980’s, trade
spending is now the second largest expense item on most
consumer manufacturers’ P&L's.
New product introductions
Survey of Most Important Demand Generating
Activities Within Consumer Goods
19%
29%
List price management
Promotion Management
11%
16%
27%
30%
Sales incentives
Consumer Mktg programs
5%
7%
14%
18%
Product run-out strategies &
merchandising
7%
9%
Trade Incentives
4%
5%
Food & Beverage
Consumer Products
Source: 2009 Sales and Marketing Report by AMR Research
Where does the money go? Many industry pundits argue that the
expanding cost of media, human resources, distribution and rising
costs from retail consolidation are responsible for the increases.
Others simply blame greed on the part of the largest retailers,
prompted by reports that retailers’ profits from promotional funds
often exceed their net margin on product sales.
Understanding whether manufacturers have gotten any value
from increased trade spending is difficult, because even the
3

process of measuring the ROI of trade promotions is a relatively
new science. Recent AMR Research surveys show that field sales
teams measure ROI for just 43% of trade promotions; brand
managers do only slightly better (55%). 1 These statistics are
shocking, considering that leveraging these expenditures better
could increase corporate profitability by 15% or more.
Improving Trade Promotion Performance Can Substantially Increase Profits
Manufacturer ’
Return on Trade Dollars s Return
Spent
on Trade Spend
Profit Impact of Improving Trade Performance
0.8
0.6
0.4
0.2
0
-0.2
-0.4
-0.6
-0.8
-54%
-29%
50%
10% - 25%
ROI
Improvement
X
5% - 10%
Net Income
as %
of Revenue
15% - 20%
Trade as %
of Revenue
15% - 100%
Net Profit
Improvement
Min Median Max
Most manufacturers lose nearly
1/3 of the money invested in trade
promotions
Improving trade promotion
performance can increase
profitability 15% or more
Source: “ Trade Promotion: A Framework for Growing Profitability ” by Booz & Company
The $1 Trillion Trade Spending Problem
The amount of money spent today in global marketing is more
than $1.4 trillion dollars (USD). According to Deloitte, nearly one
third of that number is trade promotion. If you add in the amount
of money manufacturers spend on direct consumer promotion –
such as coupons and the exploding phenomena of Internet
advertising and marketing – the so-called below-the-line spending
associated with channel promotion funding approximately $1
trillion of that global market spend.
This “trillion dollar problem” is not exclusively the domain of
manufacturer and suppliers. It is a serious problem facing the
channel as well.
Drivers of Trade Spending
The two real drivers of trade spending growth are 1) increasingly
sophisticated consumers and 2) the massive, but resource-strapped
1 AMR Research; Trade Promotion Management in Consumer Products:
Trends and Market Opportunities; February, 2008
4

etailers who must cater to them in an ever increasing number of
formats and channels.
The Changing Consumer
Consumers are switching brands, retailers and channels more than
ever before.
• 68% are brand switchers. Only 5% are loyal to one brand.
• 73% shop in five or more channels. Only 26% are loyal to a
particular retailer. 2
A new “thrifty” behavior is emerging with the economic
downturn, so that consumer perceptions of value often trump
loyalty. Social networks are emerging as a “source of truth” about
brands 3 , fueling even more brand switching.
In essence, the consumer has matured; and with that maturity
comes a more daunting task for both manufacturers and resellers
alike – doing more than ever to attract, deliver and maintain a
loyal consuming public.
According to a February 2009 paper, AMR Research pointed out
that in the beginning of 2008, 40% of the decisions the shopper
made took place at the shelf. By 2009, only 24% of the shopper
decisions were being made there. 4 Retailers and Manufacturers
differ in their opinions that this is where the trade spend should be
concentrated (See “Evolving Trade Relationships, page 7). As
such, consumers are researching, planning and executing their
purchases more strategically in a recessionary economy,
dramatically affecting the impact of trade promotions.
The Changing Retailer
Retailers continue to consolidate and increase their leverage.
Whole Foods/Wild Oats, SuperValu/Albertson’s, Coles, and Ahold
are just a few of the most prominent recent combinations.
Meanwhile, company failures are becoming more commonplace
against the perfect storm of both the competition and the economy;
some of the victims include Circuit City, Linens N Things, Home
Expo and Smith & Hawkins. Many consumer manufacturers now
2 From Deloitte Consulting, Shopper Marketing White Paper, 2008
3 Ibid
4 AMR Research, Lora Cecere, C.J. Wehlage, and Jane Barrett; February, 2009
5

serve only a handful of major retail channel partners – reducing
their clout in the relationship.
Sensing their increasing presence in the consumer’s shopping
experience, many retailers have invested in their own brand image,
expanded store brands, and implemented shopper marketing
strategies, all of which affect the role of consumer brands. Target
Stores’ Archer Farms, Wal-Mart’s Great Value, and Costco’s
Kirkland 5 have all become major brands in their own right today,
increasingly profiled along with consumer manufacturer brands in
consumer ratings.
But in spite of consolidation and private label competition, channel
companies – especially the large retailers – are not always the ogres
that they are made out to be. Retail margins have dropped to
virtually nothing, especially when the products are promoted or
when there is a contractually low discount applied to every
product sold. 6 And while massive merger and acquisition activity
over the past three decades has reduced the number of channel
companies, it has also spurred tremendous growth of branch retail
locations and retail channel formats that offer more opportunity
for the consumer than ever before. New stores, more spacious and
attractive interiors, more emphasis on product categories and the
expansion from goods only to combinations of goods and services
mean higher cost, higher complexity and higher concerns from
both sides of the channel.
The Role of the Economy
In the late 1970’s, the center of power for financial assistance (co-op
advertising and trade funds) moved from consumer goods
companies to the retailers, causing spending to accelerate in the
‘80s and ‘90s. Alarmed, numerous fast-moving consumer goods
companies changed their funding methodology from lump sum to
product-based accrued funds to provide more direct control of
their expenditures. The effort initially had some success: over most
of the decade of the 2000s, the growth of trade spend flattened.
But the current economic problems in the U.S. and across the globe
have changed the base of power once again. With private label
5 From Deloitte Consulting, Shopper Marketing white paper, 2008
6 Everyday Low Pricing (EDLP) structures popular with Mass Merchants result in
an extremely low price markdown at wholesale in lieu of accrued and/or allocated
trade funds.
6

growth up 1% in the second half of 2008, 7 consumer goods
companies are suddenly fighting to maintain, much less grow
strong brands. The current recession not only straps the retailer for
capital – it puts tremendous financial pressure on consumer goods
companies in all categories to innovate and restore brand loyalty.
Source: Consumer
Goods Technology/AMR
Research"2009 Sales
and Marketing Report,"
June, 2009
Trade Tactic (Moment of Truth)
"At the
Shelf"
Spending
59%
"Before
the
Store"
Spending
41%
Evolving Trade Relationships
Manufacturers and retailers prefer different promotion tactics:
• Retailers prefer “before the store” tactics because they
believe they have better spend effectiveness.
• Manufacturers prefer “at the shelf” tactics because many
shopper decisions are made in the store.
Much of the trade spending mandated by the retailer is for “before
the store” initiatives – promotion tactics intended to drive price
discounts, provide pre-event advertising or other pre-promotion
activity. More than 41% of the total trade spend involves this type
of outlay. 8 Manufacturers argue that these costs, though a major
industry competitive requirement, are less effective and, therefore,
often wasteful.
On the other hand, spending that is directed to generate consumer
desire and purchase at the shelf is the most difficult to prove for
performance compliance. The same study shows that the
effectiveness of the spending (based primarily on the effect on
ROI) is marginally higher for the “before the store” tactics by an
average of 7.48 to 7.34 out of 10.0 for “at the shelf” spending. 9
Fundamental differences in retailer and manufacturer beliefs about
consumer response are the basis of much of the argument, mistrust
and strained relationships that have existed between the Consumer
Goods companies and the retailers.
For years, the problems retailers and manufacturers faced were
often transparent to each other, or worse, the channel wielded
power over the manufacturer/supplier so completely that the
“don’t ask” policy of the channel buyer prevailed. That meant
giving more money and getting less in the way of true marketing
recommendation opportunities. Manufacturers should focus their
7 AMR Research, Lora Cecere, C.J. Wehlage, and Jane Barrett; February, 2009
8 Consumer Goods Technology/AMR Research “2009 Sales and
Marketing Report,” June, 2009
9 Consumer Goods Technology/AMR Research “2009 Sales and
Marketing Report,” June, 2009
7

programs on gaining and retaining customers, while recognizing
retailers’ needs to enhance their own image.
Manufacturers are increasingly conceding to retailer-driven
programs because retailers have become far more intelligent about
their shoppers, and the retailers simply have more power in the
relationship. Manufacturers need to improve their understanding
of retail data to regain a seat at the table.
One response manufacturers have made is to create dedicated
cross-functional account teams. While a capitulation of sorts to
customer consolidation, the increased focus of a dedicated team
gives manufacturers the opportunity to become more attuned to
retailing realities. So far, this fundamental shift in resources has not
yet been matched by changes in companies’ functional
organization / power structure, nor their IT environment. (For
example, there is no “system of record” today for the strategic
account team.) A new paradigm is required for management of the
trade channel relationship.
The Case for Collaboration
With the channel often driving the direction, tactics, timing and
funding, it is easy to believe that the manufacturer has little or no
authority to make well-intended promotion recommendations. But
to attract the loyalties of the consumer and garner ongoing
prominence among the trade channel retailers, manufacturers are
continuing to escalate the role of trade channel execution and
promotion.
The reality is that both partners have a common goal: motivate the
consumer to enter through the doors and hold their loyalty once
they do. Attracting the consumer is nothing new, of course. But
today’s consumers sophisticated demand that promotion strategies
evolve from art to science – bordering on rocket science.
Industry initiatives such as VICS Collaborative Planning,
Forecasting and Replenishment (CPFR) have demonstrated that
retailers and manufacturers can work together to reduce
inventories. Next they need to collaborate to address trade
management challenges.
8

Trade Management Challenges
There are six key challenges that manufacturers must confront to
enhance their trade management effectiveness:
1. Establish an effective trade management process
2. Invest in technology to automate the process
3. Capture and harmonize disparate demand signals
4. Improve account planning and retail execution
5. Transition promotion planning from an art to a science
6. Get real-time visibility to trade plans and promotion results
#1: Establish an effective trade management
process
An effective comprehensive trade management process is part of a
larger integrated sales and marketing process, and links strategic
planning, tactical planning and execution. Ideally, there are seven
“pillars” of functionality that span an integrated sales and
marketing process.
Innovation
Integrated
Sales and
Marketing
Demand-
Driven
Operations
Business
Mgmt and
Control
Brand and
Category
Management
Consumer
Marketing
Price
Management
Demand
Signal
Management
Advanced
Trade
Planning
Trade
Promotion
Management
Retail
Coverage
Planning &
Execution
Business Intelligence / Master Data Management
The specific pillars that are related to trade management include:
Comprehensive Trade
Management is the core
functionality that delivers
the managed ROI of trade
funds and spending.
o
o
o
Advanced Trade Planning – The processes of account
planning that include forecasting, sales volume planning,
predictive modeling and fund allocation.
Trade Promotion Management – The processes
surrounding fund management and accounting, claim
audit and deduction management, and settlement.
Retail Coverage Planning and Execution – The processes
of trade and brand coverage planning, objectives planning,
route scheduling, visit planning, and on-site execution
functions of performance compliance, store audit, cash and
order management. The latter is generally performed on a
disconnected mobile handheld device.
9

o
Demand Signal Management – Using retail point of sale
data as the primary source of intelligence, this process
combines elements of category and brand management,
price management, competitive tracking and retailer
performance scorecarding to guide account teams toward
more effective analysis of business operations and financial
ROI.
For most companies there still exists a problem across the
remaining functional pillars within integrated sales and marketing.
This problem is not unique, but seems to be universally shared
across all consumer products companies in a number of industries
including food, beverage, health & beauty aids, automotive
aftermarket, consumer electronics, apparel/footwear,
hardware/DIY and high technology.
What often limits this reengineering of processes are the natural
barriers that have been erected over the years by the various
departmental constituencies such as brand marketing, category
management, sales, administration, finance, demand planners, and
supply chain management. For the most efficient and effective
sales and marketing organization to exist, these barriers have to
come down and be replaced by an integration of fact based
collaboration, business intelligence and decision making.
Moreover, what often disrupts this plan, even if the willingness
and commitment to a more streamlined linkage between these
functional pillars exist is the lack of a single unified technology.
#2: Invest in technology to automate the process
Most IT organizations have so far focused on improving the
transactional technology that accounts for trade fund spending,
emerging from three decades of manual procedures, spreadsheets
and cumbersome internally developed solutions.
Now, however, with many companies meeting transaction
performance, mandated internal business controls (e.g. Sarbanes-
Oxley standards) and administrative goals, they have turned their
attention to the end-to-end technology and application solutions
that support the harder chores of integrating the functional
processes and providing world class technology. This is
accomplished by:
10

o
o
Setting IT budget priority that matches the level of
corporate spending and opportunity
Evolving from desktop tools and homegrown legacy
solutions to enterprise-class technology
There has been, over the past few years, a trend toward allocating
more IT dollars to the improvement of trade promotion
management. AMR reported that IT investment in trade
management averaged $6 million in 2007 and grew by more than
9% in 2008. 10 Executive management has become more focused on
Trade Promotion Management (TPM) funding and return – a clear
sign that IT spending is needed in this area.
The problem most consumer goods companies have is that the
layer of components that operate and/or manage the trade channel
are not equally shared, consistently managed or even under one
organizational responsibility. Each such component is often at
different stages of technical development or capability.
Often there are “home grown” applications with management and
maintenance that are inherited through the typical organizational
attrition, so the understanding of how they fit into the service of
the channel management spectrum is limited and often
disconnected from the rest of the process and technology owners.
The sales organization may own retail execution, the trends show
finance owns TPM, the brand marketing typically owns category
management and brokerage firms are often involved with the
annual customer planning. But linking, coalescing, and
reengineering these together is beyond typical transactional
definition and operations management. Therefore, a new
10 Trade Promotion Management in Consumer Products, Trends and Market
Trends, AMR Research, February, 2008
11

consolidated process, with combination of all functions detailed in
the functional pillars shown on page 9 is the definition of
comprehensive trade management in particular and integrated
sales & marketing in general.
#3: Capture and harmonize disparate demand
signals
Consumer goods companies are swamped with data - both internal
as well as external. Manufacturers must deal with an ever
increasing number of sources, from outbound shipments to
syndicated market data to store level consumption data.
The first step is to bring all of that data into one single source of
intelligence. Multiple data sources, which are not aligned,
synchronized, integrated or timely, hinder trade planning and
management. Diverse data sources also create conflicting reports,
putting data quality (accuracy and breadth) in question.
The next major challenge is to mine and transform the data to form
the base of knowledge and intelligence that enables more effective
and efficient management of the consumer demand signals.
Manufacturers who master these signals can monitor and modify
ongoing events, conduct timely pre and post event analysis, and
plan future events with greater precision.
#4: Improve account planning and retail
execution
The ability to transmit marketing and promotion campaigns to
actionable in-store performance continues to be a challenge in
developed markets and almost an impossible task in developing
geographies. Today, most manufacturers today rely upon a
combination of spreadsheets and one or more data warehouses to
plan and analyze their trade coverage resulting in:
• Difficulty aggregating account plans or creating rolling
estimates
• Limited scenario modeling capabilities
• Lack of tools and software conducive for mobile use, joint
retailer planning, or sales productivity
Integrated business planning requires a more comprehensive
platform to combine the insights of the baseline demand plan with
the effect of promotion through the sales & operations planning
12

process. Sales executives today need to know both the baseline
and lift to understand the incremental growth necessary to achieve
the desired ROI.
Retail execution is also not easily managed. Manufacturers face
challenges in planning and executing at store level, including sales
and merchandiser coverage, routing, order and asset management.
Consolidating and tracking retail compliance on ads, display, shelf
space, assortment and price is difficult. Limited scorecard
capabilities reduce manufacturers’ ability to evaluate retail
performance and profitability.
The intent of
Comprehensive Trade
Management is not only
to be more strategic, but
also to leverage a
growing wealth of point
of sale data that enables
more alignment between
individual tactical
decision making by the
rep and the store buyer.
Goals and objectives vary
with so much more
regularity, depending
upon the combined
environments of channel
and supplier that the
consumer-centric model
must enable a better
response to the
marketplace demands.
#5: Transition promotion planning from an art to
a science
Promotion plans are still too often the result of guesswork or
inertia (minor revisions to last year’s plan). 74% of planned trade
expenditures are based on history, perpetuating poor historical
performance. 11 Data driven analytical models are already more
reliable than traditional methods of estimating performance under
most conditions, and more importantly, they make it possible to
plan hundreds of localized promotions that would be beyond the
capacity of manual approaches.
What is often missing is the capability to generate insightful and
appropriate decision making power without the stress, time and
pain required in today’s analytical processes. The problem is
complex, compounded and confounding. The primary post event
measure is still sales volume, not profitability or ROI. Of 52% of
companies that measure post event performance, only 48%
measure ROI 12
Analytics can help with promotion evaluation as well. Lack of
analytics contributes to over-spending of trade budgets,
misallocation of marketing resources, and inaccurate financial
reporting. The problem most vendors have struggled with is the
dynamic effect that environmental conditions (e.g. seasonality,
weather, competitive deals, etc.) will have on the pre and post
evaluation of performance. What is required is a sound attributebased
statistical science that takes the pure historical facts and
11 Consumer Goods Technology/AMR Research “2009 Sales and Marketing
Report,” June, 2009
12 Ibid
13

Dollars in Millions
Cumulative Trade Event Contribution
$4.5
$4.0
$3.5
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
41% of events
175 350 575 700
Number of Events
Trade promotion effectiveness
varies widely by event
Source: “Trade Promotion : A Framework for Growing Profitability” by Booz &
Company, Oracle Insight
creates these scenarios as attributes that provide even more depth
to the level of analysis that can be done. This attribute-based
pattern or trend recognition contributes to a higher quality
analysis of both pre- and post-performance analysis.
#6: Get real-time visibility to trade plans and
promotion results
Companies generally lack the end-to-end view of financial,
marketing and sales resulting from effective promotions. This
partial visibility of market conditions results in multiple forecasts
for revenue, volume, and trade spend. Differences in
understanding among functional teams limit collaboration both
internally and externally.
Manufacturers also can benefit from more timely data. Some
retailers provide near-real-time access to sales results, which can be
critical in the first few hours of a promotion. Many companies have
not exploited real-time visibility in a systematic way to plan and
respond to consumer uptake of promotions. In fact, many
companies are not able to interactively incorporate this data into
planning assumptions to identify any “exceptions” of assumptions
to reality.
Meeting the Challenges:
Comprehensive Trade Management
Implementing a true end-to-end integrated sales and marketing
process that includes comprehensive trade management
functionality can enable sales and margin improvements for both
the consumer goods company and its trade channel customers.
Comprehensive trade management starts with the consumer as the
central focus. It enhances account and category management,
productivity and collaboration to stimulate consumer demand.
This multidisciplinary process requires an end-to-end suite of
application solutions that are integrated together.
For years, manufacturers have endeavored to assemble and
integrate the appropriate components of a full scope end-to-end
comprehensive trade management suite; but they have had to
resort to a variety of different applications that often fail to fully
and successfully integrate between each other.
14

How the Process Works
A comprehensive trade management process encourages bestpractice
interactions of account team, administrative and corporate
stakeholders. It combines nine disciplines:
2
Retail
Category
Management
4
Promo
Modeling &
Simulation
5
Promo
Optimization
1
Marketing
Resource
Management
3
Promotion Planning
& Fund Mgmt
6
7
Retail
Coverage
Planning
8
Retail In-store
Execution
9
Settlement &
Deduction
Management
Business Intelligence and Analytics
Retailer
Performance
Scorecard
1. Marketing Resource Management: Marketing campaigns
are created with promotion objectives and funds that
tightly align with corporate business requirements and
trade calendars are created and distributed.
2. Retail Category Management: Brand and category
managers analyze retail performance, pricing and share of
all commodity volume (ACV) to ensure proper coverage of
the company’s categories down the lowest hierarchy of
product and to the lowest level of the retailer’s store
organization. Also this is where the view of both the
consumers’ habits as well as the individual branch store
locations’ performance of POS data is analyzed –
generating a significant portion of the story of “cause and
effect” that drives consumer marketing.
3. Promotion Planning and Fund Management: Key Account
Managers will review the marketing, brand and category
objectives and begin formulating the detailed plans for
promotions to support the sales volume forecast and
demand plan, including determining the right combination
of in-store merchandising support.
4. Promotion Modeling and Simulation: Promotion planners
will be able to create multiple scenarios by performing
simulation modeling to develop the most effective
promotional combination.
15

Oracle’s Comprehensive
Trade Management
Suite responds to and
solves the CG industry
business challenges
Challenge #1:
- Oracle domain experts help review
and evaluate your company’s
processes against industry best
practice requirements, process and
technology.
- We help you reengineer and support
a process that meets CTM standards
and your company’s business controls
Challenge #2:
- Oracle’s phased approach to
comprehensive trade management
enables you to add applications
separately or together, depending
upon your needs
Challenge #3:
- Oracle’s DSR captures direct
retailer POS and provides both the
retail and manufacturer data schema
to portray key category, sales,
competitive and scorecard intelligence
at the lowest SKU levels and the most
granular retail outlet views
- Oracle CG Analytics enables rapid,
precise and trustworthy business
performance insights that drive
profitable execution of promotions
Challenge #4:
- Oracle’s Marketing Resource
Management (MRM) module enables
powerful marketing, brand and
category programs to be created along
with terms, rules and guidelines that
flow through to execution and
settlement
-Oracle’s Advanced Trade Planning
account planning coupled with
Predictive Trade Planning and
Promotion Optimization provides a
sales volume planning and trade
promotion management combination
that is industry’s best of breed.
- Oracle Retail Coverage Planning
and Execution ensures full scope cycle
planning, objectives and in-store
compliance audits
Challenge #5:
- Oracle Business Intelligence,
combined with the DSR and CG
analytics will deliver a powerful
foundation of knowledge that drives
good decisions throughout the CTM
process
Challenge #6:
-Integration with ERP enables real
time financial liability and spending
updates
- Oracle mobile handheld retail
execution monitors on-site in-store
compliance to promotions and pricing
tactics
5. Promotion Optimization: To validate the promotion
model, the account planner should be able to use a
promotion optimization tool to develop the most effective
scenario based on the planner’s individual objectives/goals
and constraint criteria.
6. Promotion Planning and Fund Management (2): The
promotion plan accrues the fund liability, assigns the fund,
and enables the planner to override the default funding by
manually assigning and apportioning across multiple funds
if necessary. Once the negotiation is complete with the
retailer, the planner finalizes the promotion through an
approval routing process that, upon completion, queues the
promotion for execution and performance.
7. Retail Coverage Planning: The merchandising team sets
retail execution objectives, performs trade and brand
coverage planning, visit scheduling and determines on-site
store requirements for the route sales rep, merchandiser or
auditor.
8. Retail In-Store Execution: Inside the store, the rep or
merchandiser uses mobile technology to conduct the
business activities mandated by the promotion.
9. Settlement and Deduction Management: The customer
service team handles claims and rebate audits, deduction
management and settlement.
The challenge a consumer goods manufacturer faces today is to
make all of these individual disciplines work together across a
framework of business intelligence, analytical tools and master
data management. Account managers should be able to check
performance using ongoing scorecard tracking of key performance
indices such as inventory levels, distribution logistics, promotion
compliance and an array of other important metrics. There must be
a strong integrated analytics and business intelligence capability
that supports the entire process through real time reporting, userconfigured
dashboards and master data management technology.
An Incremental Approach
Combining all of these functions into the same foundation, while
preserving the best-of-breed advantages of individual applications
offers consumer products companies and their trade channel
partners a powerful set of benefits. Achieving comprehensive trade
management requires significant change management as well.
16

The features, functions and benefits of a comprehensive trade
management process and supporting technology are often thought
of as a phased approach that begins with the basic transactional
foundation that, with the pressures of regulatory mandates has
resulted in a number of companies streamlining this foundation
already. But where a comprehensive trade management initiative
begins to produce more benefit is when you begin evolving toward
more advanced capabilities to predict and optimize promotions,
ending with the transformational capability to collaborate on
events with channel partners.
TRANSFORMATIONAL
FOUNDATIONAL
FUND, PLAN, EXECUTE, PAY
• Optimization of speed
and efficiency of trade
management
transactions
• Implementation of
spending controls
ADVANCED
PREDICT AND OPTIMIZE
• Predictive modeling to
improve trade spend
efficiency & effectiveness
• Trade & demand planning
systems integrated for
near real time demand
forecasts
• Trade & financial systems
integrated for improved
management and
reporting on trade costs
COLLABORATE
• Near real time trade
activity visibility across
enterprise:
–Enterprise collaboration
on single sales forecast
–Alignment of brand &
trade marketing plans
• Near real time
collaboration with retailers
on sales, marketing and
demand planning
• Proactive management of
store level retail execution
Comprehensive Trade Management
Summary and Conclusion
.
Comprehensive trade management addresses the Trillion Dollar
Challenge of trade spending in the consumer sector. Case studies
of manufacturers who have made this journey illustrate the
potential: 13
Reduction overspend by up to 20% one year after implementation
15% reduction in stock-outs
12 – 28% increase in efficiency in trade promotion management
13 Various sources including AMR Research, Booz-Allen Hamilton and
documented value attainment from existing Oracle customers, 2007 –
2008.
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Increase trade deduction management productivity by 10% per
year
1.5% increase in revenues per year
2.2% net profit increase with attribute-based promotion
optimization
11% reduction in excess inventory due to better promotion
planning
The primary purpose of the comprehensive trade management
technology is to automate the end-to-end process of effective and
efficient channel management activities.
Bringing these disparate point solutions together is often more
than an internal organization can do – even one with a large and
talented I/T development staff. It will require a significant effort
toward change management as well.
The benefits gained from internal efficiency, communication and
performance intelligence clearly results in one of the most
significant returns on investment of capital any company can
make.
Comprehensive Trade Management
September 2009
Authors: Rob Hand
Oracle Corporation
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