Data & Analytics

National Manufacturing Company | Operating Income Improvement Analytics

A national manufacturer experienced a period of rapid growth creating a gap in their pricing models. The Liberty team was able to quickly identify the gaps and develop new processes to ensure accuracy going forward.

Impact At A Glance

$500k

Annual cost savings recovered due to pricing errors

5%

Gross revenue improvement

6.3%

Improvement in sales prices

Project Overview

After a period of rapid growth, a national manufacturer was having difficulty maintaining pricing models leading to lost revenue and operational inefficiencies. The Liberty team was able to apply an analytics based approach to remediate pricing gaps and increase revenue.

The Business Problem

Over the past 10 years our client, a family owned manufacturing company, experienced rapid growth adding new customers and products to their portfolio. As the company grew, the processes to support Customer, Product and Vendor data could not keep pace. Pricing models and processes that supported the business when it was relatively small could not support the current and future business. Old pricing model’s were difficult to identify and update in the ERP system. Price book updates and job quotes demanded multiple excel spreadsheets and tribal knowledge, requiring extensive manpower hours, facilitating mistakes and unnecessarily leaving money on table in the form of excessive discounting in the field.

The Outcome

Liberty worked with the client’s sales management, CFO and CEO to develop pricing yield management processes and toolsets that leveraged their transaction data to generate focused management reports to identify areas to increase pricing across products, customers, and regions. The analytics are focused on sales price, not gross profit, making the data easily shared with the independent sales representatives. Liberty established pricing baselines and the client set goals for every customer and product line. Together we introduced new “continuous improvement” processes and KPI’s to monitor progress. The tools and improved processes are enabling the company to quickly achieve price changes in the market – realizing price increases and cash rather than deeper discounts. The approach instills sales representative discipline through fact-based management helping the client increase sales prices and improve operating income selling the same products, to the same customers, at the same volume.

After improving data quality, running analytics to identify pricing improvement opportunities and conducting on-going training with the RSM’s and independent sales representatives, the client experienced sales price improvements of 4% in Q1, 4.6% in Q2, 6.2% in Q3 and 6.3% in Q4.

Utilizing transactional data, leveraging analytics and reinforcing pricing improvement processes, ongoing benefits have been realized including better pricing decisions, reducing defective prices, managing net prices to the customer and reducing system errors.

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