| There is little doubt that with raw material shortages, | | | | Again, as more businesses realize the competitive |
| rising energy cost, and an ever-tightening stranglehold | | | | advantage that comes from analytical approaches to |
| on capital acquisition, manufacturing today is a volatile | | | | pricing, the edge of the advantage dulls. However, the |
| geography filled with peaks and valleys. Manufacturers | | | | practice is not widespread and the potential |
| are confronted with both simple and the most complex | | | | advantages of analytical pricing are currently |
| challenges to get things done. There is intense | | | | considerable. |
| competition from all corners of the planet, increasing | | | | Certainly, it's important to realize that manufacturers' |
| direct and in-direct costs, and product life cycles that | | | | broad product lines, large CRM databanks, and the |
| seemingly move at light speed. To help, technology | | | | negotiated sales model all combine to create a |
| investments in enterprise systems such as ERP, MRP, | | | | business environment can easily have at its heart a |
| and CRM have come to the aid of manufacturers in | | | | more informed approach to pricing. ERP software |
| controlling operating costs and increase the ability to | | | | manufacturers are increasingly understanding the need |
| respond to ever-changing circumstances of the | | | | for more sophisticated pricing formulas in their |
| modern economy. | | | | systems, and to the extent that strategic and precision |
| However, as everyone moves to lean-based ERP | | | | pricing should be a part of efficient manufacturing |
| manufacturing philosophies, adoption of these | | | | practices today, many pricing software applications |
| capabilities has spread to the point of producing what | | | | have been developed that satisfy industry-specific |
| is often described as equilibrium in manufacturing | | | | needs. For this reason, there is a growing use of |
| where competitive advantages simply disappear as | | | | advanced pricing techniques and applications in |
| they zero-out each other. What's important to realize is | | | | manufacturing software that have achieved these |
| that there's more to ERP than simply "running the | | | | sorts of measurable benefits. |
| shop"; indeed, the data that is produced and collected | | | | Following the example set in other industries such as |
| as a result of using ERP software has business | | | | airlines and hotels, some manufacturers started pursing |
| intelligence applications that can optimize business | | | | ERP pricing approaches quite a long time ago, albeit |
| performance in areas all around the company. | | | | not always through their software. As part and parcel |
| For example, consider what competitive advantages | | | | of innovative lean attempts to eliminate waste in |
| can be built around the notion of pricing your services | | | | manufacturing systems, early analytical pricing |
| and products. Run your data and listen to it. Hear what | | | | schemes were designed to control discounting and to |
| it has to say. It could be that because of your particular | | | | take advantage of price instability in the marketplace. In |
| customer segmentation you might be able to find | | | | almost every case, these lean pricing projects have |
| pricing sets that are much more profitable than those | | | | exceeded expectations in terms of building long-term |
| currently throughout your vertical. We call this pricing | | | | business models, and in some cases they have |
| intelligence, and it's something that can often be found | | | | delivered significant profits to the visionary companies |
| as a residual outcome in ERP data. It's also the sort of | | | | that enacted them. Because of these successes, |
| approach to manufacturing efficiency that results in | | | | many more manufacturers are now pursuing similar |
| improved business functions that are related to pricing. | | | | analytical pricing practices. |