Overview
The client, a $15B global distributor, had recently embarked on an important project to rationalize its product catalog and implement market-based pricing. DLC was engaged to guide the project timeline and execution.
Business Challenge
The project promised a big financial return, but had become bogged down by endless meetings, manual processes, and a plethora of disparate data and spreadsheets. Pricing in particular was a bottleneck, with only 15% of needed SKUs having approved prices six months into the project.
Approach
DLC implemented a method to consolidate and analyze information from the client’s various spreadsheets and data sources to accelerate the pricing process. To execute the project, DLC provided an experienced consultant with expertise in financial modeling, project management, and corporate strategy.
The DLC team identified the root cause of problems as: 1) lack of a standard approach to pricing across the team, and 2) too many spreadsheets.
The team of consultants presented these findings and began work with the team to define an overall pricing strategy and, critically, translate the strategy into a set of standard pricing rules. In parallel, the consultants built out a unified pricing model that incorporated all products and the newly developed standard pricing rules.
The model replaced over 300 existing spreadsheets, enabled consolidated analysis and vastly reduced complexity. The pricing strategy ensured prices aligned with overall company goals and, just as critically, ensured everyone was on the same page with how products were priced. With the model determining prices using a standard ruleset, the client was now managing and debating prices by exception rather than product by product.
Results
Upon completion of the pricing model and approval of the new pricing strategy by senior leadership, DLC worked with the client to price the remaining 85% of products covered by the project in under 3 weeks (the first 15% had taken 6 months).
With the original project complete, leadership realized the potential of the model and methodology across its business. Upon direction of the client, the DLC team generalized and expanded the model to handle additional use cases, trained users and transferred the processes. The model and strategy is now used across the client’s business, driving margins and dramatically increasing the efficiency of pricing and pricing analysis.
Before DLC:
- Disjointed, opinion-based pricing
- Meetings to discuss product prices one-by-one
- Hundreds of spreadsheets
After DLC:
- Data-driven, standardized pricing aligned with client’s overall strategy
- Agreed upon rules and management / discussion by exception
- One unified model
Services Provided:
- Pricing Model Development
- Financial Modeling
