Ready for Anything: Improving Business Agility Through Pricing in the Manufacturing Industry
July 16th, 2020 (Updated 03/24/2021) | 6 min. read
By Duncan Hendy
How to Improve Business Agility in the Manufacturing Industry
The discrete manufacturing industry belongs to an increasingly volatile and uncertain environment, where rapid and frequent change is becoming the norm. So, it’s time for companies to seriously investigate how to improve business agility.
Business agility is the ability of a company to rapidly respond to changes in the market. It’s a company’s ability to pivot and adapt, and determines whether it weathers the storm – be it changes in the market, demand, competition, supply chain, regulations, technological breakthroughs or global pandemics.
But how do you improve business agility when your basic Business Intelligence tools offer a poor view of customer and product profit drivers? How do you remain competitive and grow when pricing is reactionary, money is frequently left on the table, and deals are lost due to prices that miss the mark?
If you have no systematic way of managing price lists and contracts, you are going to be slow in your response to change. And this is something you just can’t afford to be.
Perhaps the most powerful way to improving business agility is by boosting pricing insight, acumen, and speed. You need to be able to develop optimized pricing the entire team understands, to leverage machine learning in order to uncover opportunities for immediate margin improvement and to quickly and confidently respond to market changes, whatever form they take.
It’s time to start pricing to improve business agility.
Insight for Instantly-Agile Margin Optimization
Attempting to perform any kind of analysis, segmentation, or optimization of your prices or margins using general-purpose business intelligence tools (or Excel!) is like trying to play Mozart’s Piano Sonata in D Major with your toes.
How do you expect to improve your margins without knowing the margins each product, service, and client is producing?
Meaningfully Improving pricing and profit margins requires powerful pricing-specific tools that bring insights into your true profit drivers—for every salesperson, customer, product, and transaction.
And you should be able to clearly identify and eliminate any drags on margins (like freight and other costs, discounts, extended payment terms, off invoice incentives).
PriceAnalyzer brings accurate insights into your pricing, margins, and customers to help you identify pricing opportunities and margin leakage.
You get clear and impactful visualizations throughout the price waterfall, with on-demand ad-hoc reports and alerts that help you quickly identify underperforming products, accounts, and marketing programs with granular root-cause analysis.
The customizable interface allows you to design your own role-based analysis dashboards where your team can access real-time data and instant insights, as well as create benchmarks based on factors like customer segments and products.
With the right insights, you can perform real-time margin analysis of your key products, services, and customers to define (and cull) your low-margin distractions so you can focus on your clearly identified profit drivers. You’ll also be able to work out where attrition exists and find ways to eliminate it (through shorter customer paths and process automation) to lower your overhead per unit and improve your margins.
Transparent Data-led Optimized Pricing for Agility
Prices missing their mark is death by pricing.
Overly complex and inscrutable “black box” pricing will be just as beneficial to you as over-simplistic segmentation and “one-size-fits-none” pricing; both resulting in lost deals and money left on the table.
You need a fully transparent pricing strategy based on willingness to pay, whose optimization is powered by machine learning and AI for a “Clear box” approach to optimization.
PriceOptimizer and PriceOptimizerAIpowers up your pricing with Machine Learning and data science techniques, helping you optimize your pricing strategies, segments, volumes, and margins, and execute real data-driven price management.
You can quickly import data and define your own profiling criteria based on customers, products, segments, and more. You can choose from a variety of segmentation and optimized pricing models and group customers by segment or category to calculate their willingness to pay.
Leveraging the AI system’s vast capabilities, you can provide sales staff with optimal prices along with guidance and groundwork for each quote or transaction. And you’ll all be working off the same page.
Real-time Agile Response to Market Changes
Without pricing-specific software, you have no accurate or systematic way of managing price lists, contracts, or frequent price changes, meaning your response to changes in cost, competition, and demand is slower than those that have it.
Real agility in modern discrete manufacturing requires dynamic pricing capabilities (for parameters-based repricing, variable price contracts, etc.) and “what-if” simulations that can be executed before implementation, so fewer deals and dollars are lost to obsolete or inaccurate pricing.
Dynamic pricing (in which prices continuously adjust in response to supply and demand) gives you better control of your pricing strategy. You’ll have access to real-time pricing trends across the manufacturing industry, will be alerted to changes in competitor prices, and will get a clear picture of the supply and demand of individual products, allowing you to maximize revenues with optimized prices.
PriceBuilder lets you define a pricing strategy specifically tailored to your business and run price calculations using variants based on any combination of multiple factors (like quotes and purchase data, cost, market, competition, and attribution).
It enables the creation of price policy definitions, price guidelines, and real-time pricing simulations (of gross, special, and net prices) to test how discounts and offers might impact your margins.
Customers can be segmented based on market, cost-plus, value-based, or mixed pricing strategies and prices can be generated based on any business hierarchy level (global, regional, customer, segment).
Dynamic pricing gives you real-time insights into the economics of your business at an extremely granular level; transforming your business agility and packing a powerful punch to the bottom-line.
Pricing To Improve Business Agility
In order to achieve true business agility, your company needs a shift in mindset. You need to become more flexible. And to build robust, proactive strategies that account for the need to react swiftly to unexpected market turns. You must have your finger on the market pulse and be able to analyze vast amounts of data quickly and accurately.
Using automated intelligence, machine learning, and dynamic pricing tools, you can collect, and analyze real-time market, product, competitor, and customer data for serious optimization of your prices, no matter what is going on in the world.
Business agility is about taking as-yet-unknown market changes in your stride and remaining one step ahead of the competition. Without it… you’re just hitting random piano keys with your toes.