Trade Funds Management Application Using Microsoft Dynamics CRM 2011

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Consumer Products Good (CPG) Manufacturers set up Trade Funds each year to account for the millions of dollars that are spent promoting their products with food, drug, mass and club class of trade retailers. One only has to bring up the term “Trade Funds” with a senior or regional sales manager to elicit a cringe on their faces. The reason for this lies in how complex TFM is within the company.

Some sample promotions for a given product brand might include:

  • Temporary Price Reduction (TPR)
  • New Distribution Allowances
  • End-Cap Display Allowances
  • In-Store Radio
  • In-Store Advertising
  • Newspaper Ad
  • Television Ad
  • Coupons
  • Free Standing Insert (FSI) Placement

These are just a sample of the many types of advertising expenses that a sales manager for a large CPG company would encounter in dealing with a national retailer. In addition, the funds can be set up on a conditional basis, meaning the retailer must “perform” in order to receive the allowances. Typically, the list of performance criteria relate to advertising and price, but it could include store shelf placement, for example.

CPG companies usually incorporate some type of company-wide ERP solution to track Trade Funds Management (TFM) activity. Complexities arise with tracking promotion funding, in areas such as:

  • Deduction Resolution Management
  • Off-Invoice Performance
  • Bill-Back / Check Payments
  • Proof of Performance (PoP) Tracking
  • Over-Spending and Under-Spending

In addition, the allocation for funding can be a very difficult issue to determine amongst the retailers. For example, should the division of funding be based upon Market Share, Dollar Share, % Growth from Previous Year, % of Total Sales, or % of Brand Sales? - All of these methods could be argued as valid.

At the end of the day, however, the fact remains that at the very heart of the administration of TFM lies two basics things: 1) Trade Funds; and 2) Promotional Events. I would argue that, using Dynamics CRM, a sales organization can manage these funds and track performance very easily, without having to use a full-blown ERP solution, which can be very expensive, complex, and time-consuming for the sales group.

In roughly 30 minutes, I built out a Trade Funds Management entity and Trade Fund Event entity in CRM. See screenshots below:

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Figure 1: Trade Fund

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Figure 2: Trade Fund Event

In these two entities, we have captured the main components of TFM and linked the funds to the fund events. These main components include:

  • Fund Amounts
  • Brand/Category Alignment
  • Fund Status
  • Fund Start/End Dates
  • Account Alignment
  • Promotion Dates
  • Promotion Performance Type
  • Event Costs
  • Proof of Performance

I have seen organizations take 2 years to implement a Trade Funds Management system, spending millions and millions of dollars and utilizing hundreds of people. I think there is an inherent genius in simplicity. Just as organizations evolve, so should systems, processes, and capabilities. Using Microsoft Dynamics CRM 2011, an organization could quickly implement a solution – and then build on that solution. Initial user adoption would be high due to the relative ease-of-use of the application. Over 3-6 months, feedback would help to shape “Phase 2” of the application. Lastly, if needed, integration processes can output/input data to the application, but would not be visible to the user. This would eliminate “system clutter” and help make the user interface cleaner.

Obviously, this isn’t meant to attempt to replicate the full capabilities of a traditional ERP application. However, it does represent a viable alternative for a lot of companies that are looking to quickly develop processes and skillsets in this area, and shows the power of XRM for rapid development of line of business applications.

Good luck in your 2011 implementations!!

by Customer Effective, a Florida Microsoft Dynamics CRM Partner

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