Month: August 2014

Inside SPA > Case Studies – Distributors

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The following are highlights from some of  our distributor client case studies that will help you to learn more about the significant margin improvement with a fast ROI realized by some of the 400 distributors that have partnered with SPA. These case studies cover all aspects of SPA’s work with clients including data and analytics, sales force training, behavior/culture change, and sustaining ongoing profitable pricing strategy.

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Featured Distributor Case Studies

Chas. E. Phipps Company

Chas. E. Phipps Company of Cleveland, Ohio, is a general distributor with 30 employees in three locations, and 2,300 commercial and industrial contractor customers. The company uses the Epicor Prophet 21® platform to manage its 7,000 product SKUs and was looking for a disciplined approach to its product pricing.

According to Tony Filipovic, Vice President of Administration at Phipps Company, “We knew there was a lack of pricing consistency among our branches and among salespeople. We believed that many smaller customers were getting an undervalued price.”

Phipps Company has seen about 1 percent overall margin improvement with Strategic Pricing, and a 2-3 percent overall margin improvement specifically with “tiny” and “small” customers. Filipovic reports, “Working with SPA after the full implementation, we’ve set goals of achieving a 60 percent strategic pricing threshold, meaning that 60 percent of our total sales for our ‘tiny’ and ‘small’ customers should be going through as strategically priced item sales. Phipps is currently at a 50 percent threshold and working toward this goal.”

In addition, the overall knowledge gain impressed Filipovic. “The discipline of Strategic Pricing is valuable; the combination of the software plus the theory is what makes it succeed,” he says. Phipps’s people can now trust that products are being priced accurately, within a range of where they need to be. “Part of the process was getting our salespeople to think strategically,” notes Filipovic.

Click here to read the complete case study.

Harry Cooper Supply

To take profitability to the next level, Harry Cooper Supply Co. set out to achieve an incremental implementation of Strategic Pricing, from “tiny” to “huge” customers. The initial data extract was started in April 2010. By August 2010, the company was live with its first set of customers.

McMullin enthuses, “The results are as predicted…Strategic Pricing works! As long as you spend the time to analyze the data properly, there can be a fast payback. We are more disciplined and not as emotional in our pricing process, so there is more consistency. Prices are the same across the board, and there has been very little customer pushback.”

The benefits were both quantitative and qualitative, according to McMullin. “We see real potential for increased profit, and better insight into our customer base. We learned that some customers were not as profitable as we thought,” he says.

Click here to read the complete case study.

IEC Supply

Over the years distributors have developed a mythology of their own. Some believe technology is out of their price range. Others feel process building a solid process around their business negates the creativity of their staff. Another myth exists around the pricing process; where distributors conclude that pricing process is something that only works for those mega distributors selling commodity products. Mike Zielinski of Arizona’s IEC Supply doesn’t buy into any of these commonly held beliefs.

After considering a number of options, IEC Supply selected Strategic Pricing Associates based on what they considered to be one of the smoothest implementation processes on the market. In just slightly over 90 days from signing the initial agreement, SPA came live with the IEC organization.

IEC Supply has seen dramatic results. According to Mr. Zielinski, the payback period for this piece of technology was less than two months. Further, the ease of installation and implementation took a great deal of strain off of his administrative staff. Per Zielinski, “We are a 20 employee company and we regularly push the limits of our staff. Any kind of extra load on the IT department quickly spills over into other parts of the business. The Strategic Pricing Associates program takes away much of the work required to get data from our business system to their pricing algorithms. We basically assigned a trusted senior inside sales resource to identifying product and customer classes. And overseeing the operation of the process.”

Click here to read the complete case study.

Industrial Distribution Group (IDG)

IDG is a $500 million industrial distributor with 31 sales offices and 10 distribution centers. One segment — our $200 million general distribution business — was underperforming.  We partnered with SPA to get help creating the discipline, controls, process and strategy we lacked in our pricing, with the hope that this could help us deliver acceptable results.

I knew we needed to do something with pricing because it was the place where we had the most opportunity. Our pricing approach was “cost-up.” Good sales reps had high margins and average sales reps had poor margins, and pricing decisions were in the hands of our sales and service teams.   The lack of any centralized process or control was somewhat embarrassing.

When selecting someone to help us, we looked for someone who could offer an aggressive and comprehensive approach.   We chose SPA because they offered not only a program, but also a compelling philosophy which made sense to us.

Positive results?  There have been so many.  Our investment in the SPA program has delivered a 6-fold return on investment.  Our profitability improved by $3 million in the first year alone.  And, we get far fewer customers calling with pricing complaints, which frees up our associates to focus on providing real service to our customers.

Click here to read the complete case study.

 

Click here to read more Case Studies.

Upcoming Events

September 11

Learn How Harry Cooper Supply Uses Strategic Pricing Tools to Identify and Capture Available Margin Premiums

Register to attend our webcast that starts at 2:00 PM EST where Larry McMullin, CFO at Harry Cooper Supply will share their journey to pricing excellence and how they are leveraging science-based strategic pricing tools to identify and capture available margin.

To implement a solution that enhanced profitability, developed pricing discipline, and removed emotion from the pricing function, they turned to SPA to implement a proven strategic pricing initiative founded on SPA’s powerful pricing analytics tools. During this 60-minute webcast, they will share their experiences and advice that will provide you with a wealth of practical knowledge including their fast ROI and lessons learned!

Click here to register

September 17-19

SPA will be participating in the Eclipse User Group Conference in Atlanta, GA.

September 21-23

SPA will be participating in the Prophet 21 User Group  Connect 2014 Conference in Dallas, TX.

Follow SPA

To easily keep us with the latest SPA announcements, events and resources you can subscribe to our Strategic Pricing Pays blog or follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

Inside SPA > Case Studies – Manufacturers

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The following are highlights from some of  our manufacturing client case studies that will help you to learn more about how companies have partnered with SPA to realize significant margin improvement with a fast ROI. These case studies cover all aspects of SPA’s work with clients including data and analytics, sales force training, behavior/culture change, and sustaining ongoing profitable pricing strategy.

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Featured Manufacturer Case Studies

Parker Hannifin

Working with operational leaders worldwide, SPA developed pricing strategies that maximize the profitability of each business unit. Parker distributors have consistently achieved improvements greater than 2 percent of sales; and many have reached 4 percent of sales.

The project covered virtually every aspect of Parker’s pricing mix including:

  • competitive strategy and positioning
  • channel pricing strategy into distribution: list prices, discount tiers, rebates, exception pricing guidelines
  • value-based economic analysis of customer usage
  • good/better/best positioning of products
  • new product pricing strategy
  • direct account pricing strategy: customer/part number pricing recommendation
  • global pricing agreements
  • management of freight recovery, EDI incentives, other terms and conditions

Click here to read the complete case study.

General Electric

Working with GE operational leaders, SPA developed pricing strategies that maximized the profitability of both business units. The project covered virtually every aspect of GE Lighting’s pricing mix:

  • competitive strategy and positioning
  • channel pricing strategy into distribution: list prices, discount tiers, rebates, exception pricing guidelines
  • distributor special price request rationalization
  • value-based economic analysis of brand value in the consumer channel by segment
  • good/better/best positioning of products
  • new product pricing strategy for the reveal product line
  • global pricing agreements
  • management/rationalization of channel coop funds
Click here to read the complete case study.

American Standard

Working with operational leaders, SPA developed pricing strategies appropriate to maximizing the profitability of both business units. The project covered virtually every aspect of American Standard’s pricing mix:

  • competitive strategy and positioning
  • channel pricing strategy into distribution: List prices, discount tiers, rebates, exception pricing guidelines
  • distributor special price request rationalization
  • good/better/best positioning of products
  • management/rationalization of channel coop funds
Click here to read the complete case study.

ExxonMobil

SPA provided ExxonMobil’s Lubes & Specialties Business with its Product Sensitivity Profiling to build list prices using a market-sensitive approach focused on  discounting only where it produces results. Using the SPA proprietary Price Indexing methodology, ExxonMobil assessed its rebating process to identify leakage points.

Click here to read the complete case study.

 

Click here to read more Case Studies.
 

Upcoming Events

September 11

Learn How Harry Cooper Supply Uses Strategic Pricing Tools to Identify and Capture Available Margin Premiums

Register to attend our webcast that starts at 2:00 PM EST where Larry McMullin, CFO at Harry Cooper Supply will share their journey to pricing excellence and how they are leveraging science-based strategic pricing tools to identify and capture available margin.

To implement a solution that enhanced profitability, developed pricing discipline, and removed emotion from the pricing function, they turned to SPA to implement a proven strategic pricing initiative founded on SPA’s powerful pricing analytics tools. During this 60-minute webcast, they will share their experiences and advice that will provide you with a wealth of practical knowledge including their fast ROI and lessons learned!

Click here to register

September 17-19

SPA will be participating in the Eclipse User Group Conference in Atlanta, GA.

September 21-23

SPA will be participating in the Prophet 21 User Group  Connect 2014 Conference in Dallas, TX.

Follow SPA

To easily keep us with the latest SPA announcements, events and resources you can subscribe to our Strategic Pricing Pays blog or follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

SPA’s History, Increasing Distributor and Manaufacturer’s Profits through Strategic Pricing for Over 20 Years

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SPA is proud to have helped 100’s of distributors and manufacturers to improve their profitability significantly through implementing strategic pricing tools and best practices over the last 20 years. We are honored that industry leaders such as BASF, Parker Hannifin, GE, and ThermoFisher Scientific have selected us to work with them to improve their pricing.

SPA Milestones and Highlights

1993

  • SPA is launched in Cleveland, Ohio by David Bauders following stints in pricing at IBM Corporation and Booz Allen as well as having been a teaching assistant in price theory at Oberlin College and The University of Michigan.
  • Master Builders, a division of BASF, becomes SPA’s first client.

1994

  • SPA begins serving a growing number of Fortune 500 manufacturing leaders, including ICI, General Electric, Sherwin Williams among many others our the next few years.

1999

  • SPA conducts a successful pilot Strategic Pricing initiative for Parker Hannifin’s Skinner Valve Division.

2000

  • Parker Hannifin expands program to additional divisions.

2001

  • Parker Hannifin announces that Strategic Pricing will be one of three core elements in its Win Strategy, and launches a four-year initiative to implement strategic pricing in all business units worldwide. Over next few years SPA implements Strategic Pricing in all of Parker Hannifin’s business units worldwide (over 90 manufacturing businesses and 30 company-owned trading subsidiaries).

2003

  • Parker Hannifin and SPA launch a pilot Strategic Pricing Workshop program for Parker Hannifin’s distributors to implement Strategic Pricing; over the next five years the program is implemented in over 60 Parker distributor businesses.

2004

  • SPA begins working with ThermoFisher Scientific, SPA’s largest distributor client to date.

2005

  • ThermoFisher Scientific expands its SPA Strategic Pricing program to a four-year initiative, encompassing all manufacturing and distribution businesses.
  • Dolores Bauders joins SPA, leading the rapidly growing analytics function after a successful 12 year career at Parker Hannifin, including leadership of the Strategic Pricing Initiative and other Marketing departments. She also ran her own consulting practice prior to joining SPA.
  • SPA forms alliances with ExxonMobil, Mitsubishi-Caterpillar, Rockwell and other manufacturers to deploy Strategic Pricing into their distribution bases.

2006

  • SPA forms cross-industry Strategic Pricing workshops and develops new tools to automate pricing analysis.

2007

  • SPA and Activant Solutions (now Epicor) form an alliance to build tools to deploy SPA’s pricing analytics in Prophet 21, Eclipse, and Prelude ERP systems.

2008

  • SPA hosts its first Strategic Pricing Strategy Seminar in Miami, Florida, bringing together experts in pricing, marketing, sales force management, technology and capital markets to share best practices. To date, over 15 sessions have been held, serving several hundred clients.
  • SPA begins to add new analyst, project management, development and sales personnel and resources to address burgeoning demand for services.

2009

  • SPA achieves over 100 Epicor clients.

2010

  • SPA and Epicor introduce expanded analytics functionality to integrate SPA’s Gold and Platinum services.

2011

  • SPA initiates new analytical services to address the growing market for sales force measurement and compensation, as well as vitality metrics.

2012

  • SPA becomes a significant provider of Strategic Pricing analytics to clients on Infor platforms such as Sxe and A+.

2013

  • SPA launches new cloud-based analytics tools to support clients across a broad variety of ERP platforms.
  • SPA celebrates 20 years in business, having served over 350 distribution businesses and over 200 manufacturing businesses.

2014

  • Strategic Pricing Associates has helped over 400 distributors build a profit-boosting pricing process.

About SPA

SPA is the leading provider of pricing analytics to complex companies of all types: manufacturing, distribution, equipment, services, and software/technology products. Since 1993, we’ve built a strong platform of proprietary analytics to quickly and efficiently help companies convert their own invoice data into pricing architectures that maximize their pricing performance and competitive position. Our typical client applies our pricing architecture and improves profitability by two to four percent of sales: $2 to $4 million per $100 million of affected revenue. The benefits are staggering; and they are typically accomplished in less than 90 days.

SPA Clients include over 200 manufacturing companies including Parker Hannifin, Rockwell,GEExxon Mobil, Caterpillar as well as over 400 distributors including Harry Cooper Supply Company, Industrial Distribution Group, AH Harris, and ThermoFisher Scientific.

Click here to read SPA Client Testimonials.

Follow SPA

To easily keep us with the latest SPA announcements, events and resources you can subscribe to our Strategic Pricing Pays blog or follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

Upcoming Events

September 11

Learn How Strategic Pricing Tools Can Help You Identify and Capture Available Margin Premiums

Register to attend our webcast that starts at 2:00 PM EST where an SPA Client will share their journey to pricing excellence and how they are leveraging science-based strategic pricing tools to increase prices and margins without losing sales. During this 60-minute webcast, they will share their experiences and advice that will provide you with a wealth of practical knowledge!SPA’s Dave Lienert will also discuss how our solutions, which leverage experience from working with hundreds of companies to drive 2-4 margin point gains on affected revenue with minimal customer pushback, can help your company.

Click here to register

Strategic Pricing Newsletter – August 2014

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Inside this edition:

  • President’s Message
  • Recent Articles
  • Case Studies
  • Upcoming Events
  • Past Event Highlights

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Message from SPA President, David Bauders

What happens when a salesperson does not capture price increase?

Lately distributors are reporting a new flurry of price increases from their supply-partners. Each iteration requires a decision. Do we risk rocking the boat and pass the price increase on to the customer? Or, do we hold the customer price and absorb a meager couple of percent hit to our margin? Whether you realize it or not this decision is a pivotal moment in profitability.

For just a moment let’s think about the decision to absorb the price increase. First, it requires no action of the seller; do nothing, margin drops a just a couple of bucks and the salesperson goes on with routine sales activity. Further, absorbing the increase maintains the status quo. The purchasing folks aren’t riled. Nobody questions past performance. And, the competition is held at bay. But, just below the surface, bad things happen.

Distribution is a 2-4 percent net income business. Absorbing just a small price increase negates a portion of your hard won profitability. It’s not just about gross margin, “holding the price line” at a customer is akin to handing over a slice of shareholder equity. Let me state this harshly for effect: your company is subsidizing the customer. Absorbing a vendor’s 2 percent increase, if done pervasively, reduces operating profit by 50 percent for the average distributor. Adding insult to injury, a salesperson compensated via GM-based commission is still rewarded (though slightly less) for a transaction that reduced his company’s profits. SPA’s experience with hundreds of clients shows that, far from being a rare event, absorbing vendor price increases is a major drain on profitability for most organizations.

How does one come to grips with the practice? By establishing a high-quality pricing process based on tools, metrics, and incentives. Salespeople must be trained to understand the real value their company provides, and the tools to manage pricing effectively. Measuring and incenting the effectiveness of pricing decision-makers is crucial. And, everybody in the organization has to understand the financial impact of price cutting.

Strategic Pricing Associates has helped over 400 distributors build a profit-boosting pricing process. Our clients have gone on record with statements like, “SPA is the best investment in distribution.” We at SPA would love to talk about how you could join the ranks of progressive distributors enjoying higher gross margins and more robust bottom lines. We can help you drive greater effectiveness at capturing vendor increases while sharpening your competitive position.

The following are recent articles, case studies, upcoming strategic pricing events, and highlights from our recent seminars that will help you on your way to achieving pricing excellence in your organization.

Recent Articles

Inside SPA – An Interview with Brad Mack

Gain valuable pricing process insights from SPA’s Implementation Leader, Brad Mack, a distribution industry veteran who knows the business needs of a distributor. Brad has leveraged his project management and process building skill-set to help hundreds of distribution businesses improve their pricing function.

Are We Crazy or What? 2014 Pricing Strategy

Now is the time for distributors to put some discipline into their pricing process. If you don’t have a scientifically developed and well defined pricing process, you need one. The process you select should feature not only analytics, but documentation, training and ongoing metrics.

Are You a Discount Shop?

Read our article about the keys to not being pressured into using discounting for all customers to appease your price-sensitive ones.

Strategic Pricing Tools Unlock Significant Hidden Profits

Are you interested to learn about the Strategic Pricing approach to increasing margins and the strategy that can lead to pricing excellence? Are you new on the journey to pricing excellence and need more information on how to leverage science-based tools to increase margins significantly?

The Best Payback in the Distribution World

SPA was featured in an article authored by Frank E. Hurtte Jr. who has 28 years of distribution industry experience and a lifetime in sales. It describes how strategic pricing initiatives can have a very fast ROI.

Product Training, Sales Training, Price Training?

SPA was featured in the latest article on The Distributor Channel blog – “Product Training, Sales Training, Price Training?”. It describes how the way distributors view training is skewed.

Click here to read more articles.

Case Studies

IEC Supply – Pricing Process and the Specialty Distributor

After considering a number of options, IEC Supply selected Strategic Pricing Associates based on what they considered to be one of the smoothest implementation processes on the market. In just slightly over 90 days from signing the initial agreement, SPA came live with the IEC organization.

In distribution, the most innovative companies are quite often the best connected. They share best practices with a cadre of others. They build de facto cartels for exploring new concepts. Read how Livingston & Haven literally radiates the attitude of networking, innovation and teamwork and how it lead to implementing strategic pricing processes and tools that improved their margins.

Upcoming Events

August 19 

Learn How Strategic Pricing Tools Can Help You Improve Sales Reps’ Confidence in Prices

Register to attend our webcast that starts at 2:00 PM EST where SPA Client Livingston & Haven will share their journey to pricing excellence and how they are leveraging science-based strategic pricing tools to increase prices and margins without losing sales.Bob Decker, Vice-President of Product & Technology, will discuss their change management lessons learned, benefits realized by implementing strategic pricing, and their success in getting the sales team to focus on selling value and increasing their confidence in the prices they present to clients.To help maximize profits, they turned to SPA to implement a proven strategic pricing initiative founded on SPA’s powerful pricing analytics tools. During this 60-minute webcast, they will share their experiences and advice that will provide you with a wealth of practical knowledge!

Click here to register 

September 11

Learn How Strategic Pricing Tools Can Help You Identify and Capture Available Margin Premiums

Register to attend our webcast that starts at 2:00 PM EST where an SPA Client will share their journey to pricing excellence and how they are leveraging science-based strategic pricing tools to increase prices and margins without losing sales. During this 60-minute webcast, they will share their experiences and advice that will provide you with a wealth of practical knowledge!SPA’s Dave Lienert will also discuss how our solutions, which leverage experience from working with hundreds of companies to drive 2-4 margin point gains on affected revenue with minimal customer pushback, can help your company.

Click here to register

September 17-19

SPA will be participating in the Eclipse User Group Conference in Atlanta, GA.

September 21-23

SPA will be participating in the Prophet 21 User Group  Connect 2014 Conference in Dallas, TX.

Event Highlights

June 6

SPA Mastering Strategic Pricing in a New Economy Seminar in Chicago, IL

We have compiled highlights and data points shared by distribution and manufacturing leaders as well as industry experts for those of you that were not able to attend this informative event.

The event focused on strategic topics of importance to the owners, CEOs, CFOs, and general managers of distribution and manufacturing companies. Experts addressed the topics essential to accelerating the customer value proposition, competitive positioning and market value of any distribution or manufacturing business. Their presentations addressed the strategic, analytical, process and cultural issues that are fundamental to maximizing shareholder value and on the high-level, strategic and structural issues that are easily neglected in the hustle and bustle of daily business demands.

Attendees learned best-practice strategies and tactics to:

  • Achieve faster growth and market-leading profitability
  • Develop stronger customer relationships
  • Maximize your company’s valuation
  • Drive real change in sales force culture
  • Break the cycle of undisciplined pricing
  • Build a sales process based on customer value
  • Quantify and Communicate Customer Value
  • Achieve pricing flexibility with discipline
  • Improve operational efficiency with reporting and analytics

May 1

SPA Strategic Pricing Conference in Las Vegas, NV

We have compiled highlights, comments, and data points shared by distribution and manufacturing leaders as well as industry experts for those of you that were not able to attend this informative event. The no cost sessions are focused on distribution and manufacturing leaders’ concerns and conducted in a way that encourages networking. If you haven’t been to one, we encourage you to do so.

Normally, the catch phrase is, “What happens in Vegas stays in Vegas.” But this time, we thought we would share a few words of wisdom that were shared during one of the panel discussions at the event. The panel consisted of executives from four high profile wholesalers representing the Electrical, HVAC, and Plumbing Supply industry.

We also share some key insights for you to think about that were shared by Tom Gale, President of Gale Media and Publisher of Modern Distribution Management magazine, who shared data from the latest MDM/NetSuite Wholesale Distribution Outlook Report. According to the survey respondents nearly 66% of the Distributors surveyed are optimistic about the coming year. And, they are investing in technology. The investments will rev up your own thoughts on this whole growth thing.

Archived Webcasts

You can sign in or click here to register on our website to view our library of past webinars which covers a variety of strategic pricing topics.

About SPA

SPA is the leading provider of pricing analytics to complex companies of all types: manufacturing, distribution, equipment, services, and software/technology products. Since 1993, we’ve built a strong platform of proprietary analytics to quickly and efficiently help companies convert their own invoice data into pricing architectures that maximize their pricing performance and competitive position. Our typical client applies our pricing architecture and improves profitability by two to four percent of sales: $2 to $4 million per $100 million of affected revenue. The benefits are staggering; and they are typically accomplished in less than 90 days.

SPA Clients include over 200 manufacturing companies including Parker Hannifin, Rockwell,GEExxon Mobil, Caterpillar as well as over 400 distributors including Harry Cooper Supply Company, Industrial Distribution Group, AH Harris, and ThermoFisher Scientific.Click here to read SPA Client Testimonials.

Follow SPA

To easily keep us with the latest SPA announcements, events and resources you can subscribe to our Strategic Pricing Pays blog or follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.