In most specialty chemical companies the majority of individual customer/product pricing decisions are made by product line or segment marketing managers based in part on inputs from finance and sales resources and guidance from business leadership. While it is important for resources with clear ownership of pricing decisions to be completely aware of all available price and margin data, companies often make the mistake of relying on these resources to construct pricing analyses themselves as part of their daily responsibilities – a task they are often too busy to accomplish. By carefully constructing analyses in a standardized format, organizations are able to take advantage of scalability to significantly reduce the burden of analysis creation (data extraction, cleansing, manipulation, presentation) – which allows resources to spend significantly more time hunting for and implementing price and margin improvements instead of performing hours of analysis.
For example, a sample chemical company with four global businesses, four regions per business, and three segments per business would have 48 different segment managers in charge of pricing. If each segment manager spends 5.5 hrs preparing the analyses for their segment, the company would be allocating 264 resource hours per month to simply preparing analysis. Had the company had one dedicated resource taking advantage of analysis scalability, the company might only require 11 hrs of resource time to produce the same output – which would free up significant amounts of time for more value-added activities.
For guidance on leveraging your pricing capabilities please
contact us anytime.
