Some Perspective on Why TPM Implementations Fail
In the 2010 MEI Trade Promotion Management Trends study, there was a very telling data point—38 percent of all Trade Promotion Management (TPM) implementations fail. If you consider the number of TPM implementations that deliver results below expectations, experience would suggest that the number is even higher and into the 50th percentile. Given that (a) trade spending is typically the 2nd largest expense for most CPG manufacturers and (b) the amount of money people are investing into TPM change efforts, the stakes are too high for one in every two installations to fail.
The question is—why do they fail? Here is my Top 5:
1. Lack of executive/senior sponsorship. This has to go beyond the “rubber stamp.” This must be demonstrated from the start of the project through implementation. Too often we hear senior leaders question some of the basic tenets of the implementation after the fact.
2. Inconsistent cross-functional engagement and alignment. Multiple disciplines are impacted by trade (i.e., Finance, Marketing, Accounts Payable, Sales, etc.) Each discipline has an expectation and desired benefit, which must be taken into consideration; otherwise, lack of usage or the development of “one-offs” occur which is a recipe for failure.
3. Failure to connect to strategy. When your trade promotion process is inconsistent with your strategy, your organization will lose trust in the system, the data and the reporting. In most cases, people will create “one-off” tools (i.e., spreadsheets) to manage the differences.
4. Automating existing processes without leveraging best practices. This is a simple math exercise: bad processes + new software = expensive bad processes. It is important to remember that the software is an enabler. Most organizations don’t decide to bring in new software or a new application because, “We’re doing this really well, we just need to change the technology application we’re using.”
5. Absent change management/poor or insufficient training. Lack of up-front planning, coupled with lack of ongoing resources to refresh and enhance system-related skill set, process understanding and performance core competencies (i.e., tell someone to sell value, but don’t train them how to sell in the new manner) will lead to compliance and adoption issues.
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