Pricing Optimization: Striking the Right Balance for Margin Advantage
The NAW Institute for Distribution Excellence announced its newest research study, Pricing Optimization: Striking the Right Balance for Margin Advantage, based on a two-year research consortium conducted by Texas A&M University’s Global Supply Chain Laboratory.
Forward-thinking wholesaler-distributors who strive for above-average returns in the “New Normal” by leveraging pricing optimization best practices that are rooted in sound analytics must read this book.
The time has come for wholesaler-distributors to address their concerns about shrinking margins by upping their game on pricing decisions. If distributors keep doing more with less, they’ll soon find themselves doing everything with nothing. The issue of margin erosion will never end if distributors do not get creative — first with their pricing methods, and second with their value proposition. Issues involving pricing methods are more critical to profitability and so should be tackled right away.
For many distributors, pricing decisions are completely left to individual salespeople to do in their own way. Allowing this kind of flexibility is a distributor’s weakness. Pricing is already quite complex, and inconsistency will only increase complexity and will lead to chaos. Here lies the crux of problem. The solution to this dilemma lies in “complexity management” — providing structure with fewer variables, and “consistency” — doing things the same way every time. This comprehensive study will help you achieve the right pricing solution for your business.
Kevin Martin, Vice President of Operations for Pipeline Packaging, said this after reading Pricing Optimization: “This Pricing Optimization study has been an invaluable tool for highlighting opportunities to improve margins. Implementing the principles in a pilot location raised gross margins by over 3 percent in less than a year. It has been an eye-opening experience for those salespeople using the cost-plus method for determining sales price.”
This research study is the fourth one created through collaboration between the NAW Institute for Distribution Excellence and Texas A&M University’s Industrial Distribution Program — two leaders in wholesale distribution education and training. These organizations joined forces in January 2009 to launch an alliance dedicated to furthering the understanding and application of best practices in wholesale distribution. Through this alliance, the Council for Research on Distributor Best Practices (CRDBP) was created. The mission of the CRDBP is to create competitive advantage for wholesaler-distributors through development of new industry research, educational programs, and publications to deliver that research and knowledge to industry executives and their management teams.
The other studies are:
• Optimizing Distributor Profitability: Best Practices to a Stronger Bottom Line (http://www.naw.org/optimizdistprof)
• Customer Stratification: Best Practices for Boosting Profitability (http://www.naw.org/customerstrat)
• Sales and Marketing Optimization: Developing Competitive Value Propositions in Distribution (http://www.naw.org/salesmarketingoptimi)
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