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Standardizing Price Updates
New product/price information format saves time & money
This updated pricing format was first developed in 1999 for bearing and power transmission manufacturers and distributors. The two associations behind it are pushing its value to other product distribution channels as well. The bottom-line results of automating the process of capturing increasingly frequent price changes can be dramatic.
by Lindsay Young
More frequent price changes go hand-in-hand with the ever-rising cost of raw materials such as oil and steel. Doug Savage, president of Bearing Service Inc., says instead of annual price updates, which had been the norm, he now has to deal with them at least twice a year. But instead of the 40-50 man hours making those changes might have taken in the past, he has adopted a pricing format that lets his company load the updates in as little as 10 minutes.
It saves him money and ensures price changes go into effect immediately, protecting his and manufacturers’ bottom lines.
The Product and Price Information Format (PPIF) came out in 1999 but recently was updated and is being promoted heavily by the Power Transmission Distributors Association and the Bearing Specialists Association. The organizations want manufacturers, distributors and OEMs to adopt the format, which allows detailed information on products, parts and prices to be transmitted via mail, e-mail or the Internet.
The single-format system eliminates vendor-based formats and reduces the time it takes to process updates. What’s more, it does away with manual re-keying and ensures accuracy in applying manufacturer price updates.
Version 2.0 includes:
- expanded field definitions and comments to address confusion over correct use;
- improved nomenclature to flag new, obsolete and price-on-request (POR) products; and
- new fields for minimum order quantity, conditional price multiplier, conditional invoice price and user-defined use.
So far, more than 75 distributors and 65 manufacturers have signed on to the format. In addition to the PTDA and BSA, the American Bearing Manufacturers Association, the Association for High Technology Distribution and the European PTDA have endorsed the format. Distributor software providers Computer Insights Inc. and Prelude Systems Inc. have also signed on.
"Because it has a direct positive affect on the bottom line, the PPIF has been well received," says Jerilyn Church, executive secretary for BSA. Steve Philpott, president of the Bearing Belt Chain Co. Inc., says his company saved more than $63,000 the first year it used PPIF. He uses the PPIF as a factor when considering new suppliers.
SKF Sealing Solutions reports it is able to transmit product and price information to distributors on more than 14,000 items. The manufacturer was able to reduce debit and credit processing errors because it was able to eliminate price discrepancies.
Church says manufacturers and distributors of all sizes have found the new format helpful. Savage says some smaller distributors and tertiary providers have been the most resistant to the change. Some may be concerned with the initial costs of implementing the system, Savage says. That cost varies depending on what the distributors currently use and how easy it will be to upload the initial prices and product information into PPIF. Some tertiary vendors still use price sheets, Savage says. But he says the ongoing costs are negligible.
Other vendors are worried that transmitting price and product information electronically in one format may make it easier for price comparisons.
But, "I think we have the critical mass," Savage says.
In addition to pricing updates, manufacturers can use the format to identify new items, superseded items and obsolete items. This eliminates the need to research each part. The format also allows for reporting stock/non-stock information, as well as part weights, which informs purchasing consolidation and freight decisions.
PTDA and BSA suggest the following to manufacturers who want to get more of their distributors on-board:
- Announce the availability of updates in the PPIF format on all price notices and provide contact information to request updates in this format
- Provide price updates only in the PPIF and provide advance notice of the change to distributors to allow ample preparation time.
The PTDA and BSA recommend that distributors who use PPIF let suppliers know they prefer to receive updates in this format and request they endorse it. The PTDA and BSA have created letters manufacturers and distributors can use to encourage endorsement of the format.
A free copy of PPIF is available at www.ptda.org/ppif or you can request a copy from PTDA at 312-876-9461 (ptda@ptda.org), or BSA at 630-858-3838 (info@bsahome.org). Revisions or suggestions should be directed to the same numbers.
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