GMA Question: Considering today’s tough sales / profit environment, what, in your opinion, is the single most important e-business area or capability on which CPG industry management should focus in 2003? Why?

Synectics Group Response: We at Synectics Group believe that one of the greatest e-business opportunities is the development of a collaborative trade promotion management initiative. Trade promotion has gained the dubious distinction as the single largest expense in the CPG industry, with an estimated $115+ billion dollars spent annually. The other equally sobering fact is that most experts agree that between 40% - 50% of this staggering investment never reaches the consumer. The inefficient use of these funds has played a significant role on the profit erosion felt by both the retailer and manufacturer.

1. The technological capability exists today to enable both partners to reverse this cancerous profit erosion trend. We have the capability electronically to link all aspects of trade promotion management to accomplish the following critical objectives;
   
2. Increase invoice accuracy by electronically populating/linking approved plans to retailer contracts.
   
3. Improve promotional order fill ratios by electronically communicating merchandising adjustments/volume needs directly from the retailer to the manufacturer satellite production facilities.
   
4. Significantly reduce the manual cost of trade payment management by electronically linking the financial settlement to the specific agreed to plan and upon approval clearing them via e-commerce.
   
5. Evaluate the effectiveness/efficiency of the trade spend from both a category and brand perspective in real time. POS data would be available in a rich reporting format the day after the category promotion period closed. A collaborative and objective environment would exist to strive to strategically and tactically re-deploy trade funds for mutual maximization of volume/profits.

We are at a true crossroads in the CPG industry where mature categories, dual income lifestyle pressures, and less then optimal communications between trading partners are all key contributors to the mutual margin erosion we are realizing. The time has never been more perfect to embrace a collaborative
e-business trade promotion management solution. I know we all agree that the trade promotion expenditure can be managed more effectively. The technology has arrived to provide the necessary tools to manage the four critical objectives noted above in a real time, collaborative, and mutually profitable scenario.

We at Synectics Group believe there are 85+ billion reasons to place a collaborative trade promotion management e-business solution high on the CPG industry priority list.