As part of trade and consumer promotions, the trade-spending fees and discounts given to retailers can be 10 percent to 15 percent of the cost of goods sold. That amount may account for hundreds of millions of dollars. Therefore, a company needs to know the return on investment on the trade spend and target trade promotions to the right product categories and brands. A company needs to capture the promotion’s lift in demand and compare it to the baseline demand without the promotion.

SAP Customer Relationship Management (CRM) Trade Promotion Management (TPM) enables trade marketing managers to allocate the trade spend to different initiatives. TPM helps managers create a trade planning structure and gain visibility into trade promotions. Managers can identify the most profitable customers, fastest-moving product groups, and most effective types of promotions (e.g., end-of-aisle displays or front-page ads). Trade marketing managers generally work at higher levels in the product hierarchy (e.g., product groups or brands for a retail chain). However, demand planners work on a lower level (e.g., product) so that they can interact with supply planners to ensure adequate supply for trade promotions. For promotions to be effective, they need to be operationalized at a lower level so that planners can monitor supply levels.

TPM can send a promotion to SAP Advanced Planning & Optimization (SAP APO) Demand Planning (DP) in real time, a move that offers many benefits. It keeps the promotion in sync for both SAP APO and SAP CRM because in its absence, the demand planner may be working on a different number than the trade promotion planner. If a trade promotion is extended in the short term for a few days, this needs to be communicated to the demand and supply planners as soon as possible to avoid a shortage. Also there could be new promotions created in the short term that may be absent in the demand and supply plans. Without real-time integration, the production and inventory plans will only provide supply to meet the baseline forecast. DP typically uses a sales history spanning one to three years to generate a baseline forecast using statistical or judgmental techniques. SAP APO can then send this baseline forecast to TPM to help a trade marketing manager create a more accurate trade promotion. The promotion can be based on an absolute number or a percentage of the baseline forecast.

The Architecture Behind TPM–DP Integration

The technical architecture to integrate TPM and DP is shown in Figure 1. The main steps in the high-level data flow are as follows:

• DP generates a baseline forecast using statistical models based on historical data of two to three years. This baseline forecast has to be transferred from DP to TPM using SAP NetWeaver BW, but this activity is outside the scope of this article.
• Using the baseline forecast, SAP CRM creates a trade promotion in TPM and changes the status from draft to approved. The marketing manager uses TPM to create promotions and allocate the trade spend to specific products and customers. The trade promotion can be created for specific products or higher levels such as product groups.
• TPM transfers the trade promotion to DP directly to create a promotion ID. These promo IDs are created in draft status in DP, and the demand planner will activate them. The transfer is done by creating a site for SAP APO and publishing the trade promotion to SAP APO as explained later in the article.

Figure 1

The data flow between TPM and DP

The Business Scenario for a Trade Promotion

For a business scenario, let’s suppose ABC, Ltd., a consumer packaged goods company, is creating promotions for products sold through a retailer called MJA Corporation (the customer). ABC uses SAP SCM 7.0 for global demand planning and SAP CRM 7.0 for TPM. ABC plans trade promotions in TPM and the lift quantity needs to transfer to DP.

ABC uses DP, Supply Network Planning (SNP), and Production Planning/Detailed Scheduling in SAP APO. The company also uses SAP ERP Central Component (SAP ECC) with Financials, materials management, production planning, and sales and distribution modules. It uses SAP NetWeaver BW for reporting.

Nine Configuration Steps

To support the hypothetical business scenario, you must configure SAP APO and SAP CRM to transfer the promotion and activate it in DP.  First, use the following steps in SAP CRM so that TPM can interface to APO DP:

Step 1. To avoid errors later on, create a trusted remote function call (RFC) destination and a site for SAP APO in SAP CRM by using transaction SM59 in SAP CRM. Then create a site for SAP APO in CRM using transaction SMOEAC (Administration Console in CRM System). From the SAP Easy Access menu, follow Architecture and Technology > Middleware > Administration Console (SMOEAC).

From there, take the following actions (Figure 2):

• From the Object Type drop-down menu, select Site
• Create a site by clicking on the Create icon near the top
• Enter a name and a description in the appropriate fields
• From the Type drop-down menu, select APO Promotion Interface
• Click the Site Attributes button
• Enter the attributes in the field that appears

Figure 2

Create a site for SAP APO in SAP CRM

Step 2. Using the Subscription Wizard, create the Object Type Subscription for the site you just created (Figure 3). When creating the subscription, the only sites displayed for selection are those that allow a subscription to the selected publication. TPM has different technical object types, such as Site, Subscription, and Publication that are dependent on each other for the configuration. In this example case, you create the site for SAP APO, then a subscription for the site, and finally a publication. You can assign one or more sites to your subscription.

Figure 3

Create the subscription for your site

From the SAP Easy Access menu, follow Architecture and Technology > Middleware > Administration Console (SMOEAC), and select Object Type Subscription. Follow the Subscription Wizard’s prompts, fill in a description for the subscription (e.g., ABC_Trade Promotion Planning), select the publication Campaigns (MESG), assign your SAP APO site, and click the Complete button.

Step 3. Create the planning profile groups in SAP CRM customizing. Go to the IMG and follow menu path Customer Relationship Management > Trade Promotion Management > General Settings > Define Planning Profile Groups. The plan types are available as read-only planning data, and are used for specific marketing functions, such as the print preview or SAP APO integration. Choose Plan Type APO, which reads the uplift quantity in the SAP APO integration interface (Figure 4). This enables you to evaluate whether a promotion is feasible by transferring it to DP and checking for supply.

Figure 4

Create the planning profile groups

Step 4. Define the status profile in SAP CRM customizing. Go to the IMG and follow menu path Customer Relationship Management > Marketing > Marketing Planning and Campaign Management > General Settings > Define Status Profile for User Status (Figure 5).

Figure 5

Define status profile for user status

A predefined status triggers SAP CRM to send the promotion to SAP APO. You can define the initial status that is automatically assigned to the promotion when you create the object. Then in the status profile, assign a transaction to be executed when a user status (e.g., approved) is given. You can allow the status of a promotion to trigger different follow-up transactions, but you need to assign the transaction in the status profile. For example, when you want to trigger the integration to SAP APO, the status of the promotion must contain transaction Dist Campaign/Promotion to SAP APO.  

The next steps occur in the APO system so that TPM can create promotion IDs in DP:

Step 5. Maintain the promotion key figure for the DP planning area, as this is a mandatory setting to create a promotion base later. Figure 6 shows the definition of the promotion key figure and level for a planning area using transaction /SAPAPO/MP33 (Maintain Promotion Key Figures). I entered 9ADP01 in the forecasting Planning Area, the key figure is 9APROM1 to store promotions at the lowest level of product that is stored in the InfoObject 9AMATNR. Under the Promotion Key Figure, 9APROM1 is the standard info object for Planning Area 9ADP01 used by SAP APO to store the promotion quantity. Under the Char. for Promotion Level, 9AMATNR is the standard InfoObject used by SAP APO to store the product number.

Figure 6

Maintain the promotion key figure

Step 6. Maintain the promotion base for the planning area. The promotion base represents the different levels at which you can create promotion IDs in DP. You can define multiple promotion bases for a planning area, and the quantity of the promotion will be stored in the promotion key figure defined in Step 5. You can create promotion IDs in DP at multiple levels (e.g., product or product-group-customer). However, you need to define the lowest level of product in the product hierarchy as a characteristic in the promotion base.

When you create a promotion ID using a promotion base, you can only assign a characteristic to the promotion if this characteristic is contained in the characteristic value combination. You can create multiple promotion bases (e.g., product or product plus customer) and assign the promotion base to the planning area. To create a promotion base, use transaction /SAPAPO/MP40 (Maintain Promotion Base). Enter the key figure 9APROM1, in which the promotion values are stored and displayed in the planning book. Also enter one or more characteristics for the promotion level (e.g., 9AMATNR for product or 9ALOCNO for customer) as shown at the bottom of Figure 7. This is the lowest level on which you can plan, and then you assign the promotion base to the planning area.

Figure 7

Maintain the promotion base for the planning area

Next, enter the start and end dates for the promotion base. You can also enter the number of periods and promotion start date in an interim step. The periods can be in weeks or months and will be the duration of the promotion. The system then calculates the missing entry for the promotion end date. You will get an error if the periods overlap with an existing promotion base. In that case, change the periods, because a characteristic value combination can only have one promotion base active for a certain time period. DP does not allow overlaps of dates.

Step 7. Create a promotion planning book in DP. You already need to have created the DP planning area as a foundation when you create the promotion planning book. To create a DP planning book, follow menu path Advanced Planning and Optimization > Demand Planning > Environment > Current Settings > Define Planning Book or use transaction /SAP APO/SDP8B. In the screen that comes up, enter information such as the name of the planning book and the planning area you are using (Figure 8). Make sure the Promotion box is checked because you want to use promotion planning with this planning book.

Figure 8

Create the promotion planning book

Step 8. Display the promotion ID created by TPM in the DP planning book.

Use transaction /SAPAPO/SDP94 or follow menu path Advanced Planning and Optimization > Demand Planning > Planning > Interactive Demand Planning and display the promotion ID created by TPM in DP. Upon opening the planning book in interactive planning, a Promotion Planning icon is visible with a double bar that you can use to navigate to promotion planning IDs that TPM has transferred.  

The status of this promo ID is approved as shown by the green icon in the shuffler window (Figure 9). For example, a promotion has been created for product TEST123 for April 2011 for 1,000 pieces and May 2011 for 1,200 pieces. This will be visible later in the key figure in DP interactive planning.

Figure 9

Display the promotion ID

Step 9. Display the promotion key figure in DP interactive planning. In this final step, use transaction /SAPAPO/SDP94 or follow menu path Advanced Planning and Optimization > Demand Planning > Planning > Interactive Demand Planning and review the Promotion 1 key figure (Figure 10). The promotion has been created for product TEST123 for April 2011 for 1,000 pieces and for May 2011 for 1,200 pieces. The Forecast key figure is calculated by the demand planner using statistical models. You can then add the baseline statistical forecast to the promotion to calculate the total forecast. The total forecast is then released to APO SNP for supply planning to meet the increased promotion demand.

Figure 10

Display the promotion key figure in DP interactive planning

Manoj Ambardekar

Manoj Ambardekar has more than 20 years of IT and manufacturing experience with firms such as IBM, Infosys, PricewaterhouseCoopers, and Siemens Information in the CPG, brewing, and process industries. He has more than 14 years of experience with SAP APO and SAP ECC with specialization in logistics. He has played multiple roles as functional and technical lead as well as project manager. He has implemented SAP applications at more than 12 large- and medium-sized projects since 1998. Manoj is a chemical engineer certified in production and inventory management (CPIM) from APICS – USA, and holds a master’s of engineering (industrial) degree from B.I.T.S. in Pilani, India. Manoj works on both large and SME clients to implement SAP as both a configuration SME in APO/ECC PP-MM/Solution Manager and project manager/team lead. He specializes in supply chain management solutions using software such as SAP APO, SAP SCM, SAP ECC, SAP Solution Manager, and business intelligence for North American clients.

You may contact the author at manoj_bits@yahoo.com.

If you have comments about this article or publication, or would like to submit an article idea, please contact the editor.