In this business use case, pricing practitioners can promptly and accurately track supplier cost updates, so they can adjust pricing strategies accordingly. This allows them visibility into the business impact of pricing decisions enabling distributors to assess pricing realization. Within the solution, cost administrators can maintain healthy margins, mitigate financial risks, gain visibility into pricing impact, identify areas for improvement, optimize competitiveness, and enhance profitability.
Use Case Situation Description
User Role:
Cost Administrator
Business Objective:
Supplier cost updates are passed by way of a Distribution Price Book and are commonly referred to as DBC or Disti Book Cost. These costs are passed at the supplier's discretion and normally passed on a specific cadence (monthly, quarterly, semiannual, annual). By promptly and accurately tracking these updates, the business can adjust its pricing strategies to maintain healthy margins and mitigate potential financial risks. Having visibility into the business impact of pricing decisions enables the distributor to assess pricing realization and look for areas of improvement and make informed adjustments. Market conditions, customer preferences, and supply chain dynamics can rapidly change necessitating the need for timely updates to maintain competitiveness and optimize profitability.
Complications:
· Cost increases or decreases may happen frequently as a result of market conditions, transportation costs, or other factors.
· Limited tracking and visibility of supplier cost changes over time.
Capabilities needed:
· Comprehensive and up-to-date view of supplier cost impact analysis enabling distributors to make informed pricing decisions.
· Alerts on cost trends allowing proactive responses to market fluctuations and adjusting pricing strategies accordingly.
Benefits:
· Improved margins through support of cost impact analysis allowing informed pricing decisions to maximize profitability.
· Reduced possibility of errors in cost files from suppliers ensuring accuracy of pricing calculations and minimizing financial risk.
· Experience of improved alignment between procurement and pricing teams by fostering collaboration.
KPIs:
· Alignment with market dynamics and improve competitiveness.
· Ability to assess supplier performance.