The 2020 Mid-Year Economic Update_long

Tip: Tune ERP for Better Strategic Pricing

Technological changes can make the process less manual, more consistent.

Many distributors’ plans for better pricing have failed to keep up with technological changes that can make the process less manual and a little more “automatic,” according to Brent Grover, managing partner at Evergreen Consulting.

“I feel comfortable in saying that in most wholesale distribution companies, they underutilize the ERP system,” Grover says in Optimize Technology for Better Pricing. It requires effort on the part of distributors to tune their ERP systems to optimize their strategic pricing capabilities, he says.

Tuning a business’s ERP is a four-part process: transaction analysis, refining the pricing process, tuning the pricing engine and sales training. Refining the pricing process and making it semi-automated will make “routine pricing more routine,” Grover says.

Changes in business system capabilities have made it easier for distributors to reduce the burden on salespeople in making pricing decisions critical to maintaining customer profitability. Using a process that requires salespeople to determine discounts and premiums manually for each customer leads to inconsistency and creates outliers, he says. Using your ERP system to make the process “semi-automatic” creates a structure that is “consistent and efficient.”

“Without strategic pricing, you could be leaving a lot of money on the table,” Grover says.

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