The Keys to Reducing Cost and Risk in the Food and Beverage Industry
January 19th, 2021 (Updated 03/24/2021) | 4 min. read
8 Pricing Essentials for Reducing Cost and Risk in the Food and Beverage Industry
Have you been struggling to mitigate costs and control risks in an attempt to reach margin targets?
Are you, like many, still using cost-plus pricing methods, where price execution is based on static rules or formulaic price calculations that aren’t updated in real-time and are, therefore, unable to respond to changing market dynamics?
Are your pricing deviations often inconsistent, meaning pricing can’t be optimized according to customer willingness to pay? Is ad-hoc trade spend based on gut feeling rather than data-driven insights, leading to uncertain revenue leakage?
Without standardized pricing and quoting processes, there is no consistency in contract pricing or customer agreements, and complex contracts only ever achieve low margin results due to habitual over discounting.
In addition to inconsistent margin performance caused by a complete lack of visibility into true customer profitability, price building and execution processes are often prone to error leading to customer pricing being based on faulty cost inputs.
Food and Beverage companies really need to get a grip on their pricing data and revolutionize their processes in order to make smart decisions that maximize on profitability while reducing risk and costs.
Pricing Essentials for Food And Beverage Companies
You need a clear, holistic view of all your data – not just internal (with current and projected sales history and costs) but external (with customer demand and channel partner data).
2. Strategy and Leadership
Your leadership team should be aligned with company goals, know how they will influence tactical decisions, and understand the potential impact of exceptions.
Streamlining and automating workflows helps you execute mass price updates with less manpower, while improving consistency, accuracy, and speed.
4. Tools and Systems
Essential in the pricing decision-making process, tools bring more specialized analyses and systems support optimal pricing decisions.
To avoid locally optimized but macroscopically siloed decisions, you want only those best able to make the best decisions doing so. An interconnected data system allow teams to have real time, accurate data to make better decisions Having an interconnected data system means teams get real–time, accurate data with which to make better decisions. So a cloud-based solution that easily integrates with your existing technology and means everyone is looking at the same data is essential.
Of course, pricing acumen is crucial. But when your pricing team is tied up doing manual tasks that could be automated, you’re flushing that down the toilet. With the right tools, workflows, and processes, you can free up your team’s skills to work on profit growth.
7. Value and Price Communication
Specific practices are required to ensure prices are not only based on value but are considered fair and consistent by customers.
8. Reduced Risk
Companies should seek to reduce risk through data insights that reveal opportunities and mitigate costs. Quoting and negotiation workflows should be automated to streamline and accelerate order taking. The execution of mass price updates should require less manpower and provide greater accuracy and speed. And the overhead and complexity around the ship & claims process should be reduced.
At the heart of these essentials is price analysis.
Without putting too fine a point on it… most data is in disarray; stored across multiple siloes and choked with irrelevant or incorrect entries or gaps. Data like this won’t bring tangible results.
PriceAnalyzer from Pricefx cleans and enriches all your data to build a holistic picture from which it creates highly relevant and useful data marts that you can pull at will for analysis, to help you identify pricing opportunities and segment your business by product, customer regions, and more.
What’s more, with PriceAnalyzer, you can visualize your data as data tables; scatter plots; bubble charts; line, bar, and pie charts; time series; price waterfall; revenue and margin breakdown; histograms; box plots; heatmaps; and dashboards.
With visibility comes insights – and with insights come smart pricing decisions.
Price Analysis for Better Pricing Decisions
The right pricing solution will propel you toward your revenue goals by turning your scattered mismatched data into powerful centralized insights with which you can uncover new opportunities and mitigate costs.
Pricing analysis is at the heart of pricing success. And at the heart of pricing analysis is PriceAnalyzer from Pricefx.