Read how AH Harris adopted a scientific approach to pricing which is still driving continued gross margin improvements.
“We improved the overall accuracy and consistency of pricing across the board. Our people don’t fall victim to the ‘last price paid’ trap anymore and customers are always provided with a fair and well thought out price.” As Mr. Stanek says, “This is a sustainable gain.”
Building Supplies with an Entrepreneurial Bent
Recently, we had the opportunity to speak with Jonathan Stanek, CFO of AH Harris. Jonathan exemplifies the new breed of strategically-focused CFOs. Demonstrating the actions of this new generation of CFOs, Jonathan provides not only financial staff services, but also tactical and strategic direction based on the financial and market conditions.
According to Mr. Stanek, “One of the main challenges of my job is to refocus the company’s cash on available opportunities. This includes traditional things like the careful maintenance of Accounts Receivable, management of inventory, management of rental assets, and management of financial risks but extends into streamlining other parts of the business. Because they represent a significant portion of the distribution business, freight costs were one of the priorities for command and control.”
Early in 2010, AH Harris began a plan for segmenting and justifying customer investment as part of their freight analysis. It was during this time an AH Harris Regional Manager brought Strategic Pricing Associates to Mr. Stanek’s attention.
Again quoting Mr. Stanek, “We had begun the process in house, but upon learning of SPA, decided we could drive results quicker using an outside firm. We did due diligence and explored several other companies in the pricing industry. The selection was based around three criteria: speed of implementation, completeness of the offering and feedback from current clients. And, Strategic Pricing Associates had some very credible clients who raved about the results. As a matter of fact, many openly shared the results with us.”
Finally, we asked Mr. Stanek to share his experience with our readers by laying out lessons learned. Here are his thoughts:
- “Given the time frame required to make a scientific process really work, don’t worry about perfection. Get it out there and moving forward quickly.
- It’s important to keep the momentum moving forward by continuing to focus on the process during the months following the initial rollout. For AH Harris, it’s been nearly four years and we are still talking up the process.
- Expect a natural tension from employees. Different departments are incented to maximize different aspects of the business. This is a good thing.”
Click here to read the complete AH Harris case study.
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