Politics and Profits
In the midst of a political climate known for trade wars and Trump tariffs, distributors and manufacturers are seeing direct effects on revenue and profit. While still relying on manual processes, these organizations are struggling to cope with the stress, volatility, and speed of market changes so their ability to hit their target numbers is at stake. The only certainty is this – change will continue, and to succeed, organizations need to prepare by leveraging artificial intelligence and machine learning to plan for profit, optimize prices, and push those prices out. Now is the time to make the transition from reactive panic to responsive confidence.
Plan for Profit:
How can organizations plan to be profitable without knowing what is coming? How can they calculate the impact of manufacturing and distributor tariffs on their numbers? The key is to steer away from making blind, uninformed decisions and instead, leverage data-driven insight for different scenarios. Whether considering switching vendors because of high costs or considering dropping/increasing certain product prices but now knowing which to choose, organizations need to process and understand mass amounts of data. To do so, PROS provides impact analysis fueled by predictive analytics that estimates the impact on revenue and profitability for any scenario being considered.
With multiple vendors, SKUs, and sales channels to consider, how much capacity and agility do organizations have to update price lists? Considering that, how do they manually calculate the impact of ever-fluctuating costs in a timely and effective manner? To succeed, organizations must move away from manual systems and cost-plus strategies to harmonized omnichannel pricing while leveraging real-time dynamic price calculations that incorporate the latest market information. PROS dynamic-AI platform enables organizations to manage pricing strategies that incorporate manufacturing and distributor tariff costs as a pricing input and pair that with customer's willingness-to-pay and strategic objectives to ensure they're optimizing win rates while maximizing value in their updated prices.
Push Out Prices:
How do organizations execute pricing for multiple skus and for multiple sales channels? How do they ensure consistency on their ERP system, e-commerce sites, and with their sales people? With manual processes, market speed is slow and administration efforts are high. To protect the customer buying experience and maximize profit, organizations must update prices in real time – not twice a year. With PROS, prices can be updated in real time for every single SKU and for every single channel so that when the pricing team says, “move right,” the rest of the organization follows.
How does PROS do it?
First, companies must think about what variables they want to account for when optimizing prices, such as indexes, competitive data, volume, SKU type, product source, customer type, geography, etc. Those variables are included in the pricing formulas and rules that guide the pricing along with granular exceptions. These formulas are easily understood, managed, and updated. For example, an organization can create a rule that says certain products from China, as of next month must incorporate a 25% manufacturing tariff while being within a 2% range from their competitors. Then, in real time, the new pricing guidance is delivered with controls and windows that allow interaction with the underlying science and output optimization. Finally, the company can deploy new prices to harmonize pricing across channels.
Profit, Profit, Profit
While organizations with analog systems panic when faced with unforeseen market changes such as manufacturing and distributor tariffs, those who leverage artificial intelligence and machine learning to plan for profit, optimize prices, and push those prices out are seeing a 20x return on investment. Now is the time to act and partner with PROS. Our market is moving… are you?
PROS as your Digital Transformation Partner
PROS is the partner manufactures and distributors need to succeed in their digital transformation journeys in today’s dynamic marketplace. Aside from being a market leader and pioneer of artificial intelligence and machine learning for pricing for over 30 years, PROS offers the only end-to-end pricing optimization and selling solution for distributors and manufacturers. PROS dynamic AI-based platform enables optimized profitability, sales growth, and increased win rates which sets organizations up for accelerated growth. PROS believes that it’s not just about creating winning strategies or focusing on operational efficiency but also about executing your strategies to perfection and transforming your business so that it journeys along with the ever-changing marketplace. PROS is your evolving, strategic partner that grows with you and continues with you in your digital transformation journey. PROS dynamic AI platform is built to adapt to your changing business and help you to achieve sustainable, profitable growth regardless of what comes your way.
To learn more, be sure to read part one of this article and discover Tariffs' Impact on Manufacturers and Distributors.
About the AuthorMore Content by Richard Blatcher