Posted by Dawn Aldwinckle on March 28th, 2011
There are many differing pricing methods in use across many different industries, although one of the most varied – especially in terms of promotional or time-limited pricing – consistently seems to be the food and beverage industry. Much of this is derived by the final pricing methods employed by “the big 4” and other multiples – but anything offered to the customer invariably finds its way all the way back up the supply chain requiring you, the supplier, to be able to manage the various methods across the whole of your business.
How can ERP help?
A robust standard pricing method caters for several variations such as list pricing for groups of clients, customer specific and quantity or value based discounting. It needs, however, to be coupled with ease of use in terms of administrative setup; this can take the form of data import routines, allowing the user to easily export, manipulate data and re-import it into the system with ease, although the key thing is to allow the user to do this (far) in advance of the price change coming into effect, ensuring the administration and testing is done prior to the start date.
The place where many ERP systems fall down though, is the ability to cope with the dreaded promotions, the time based pricing methods designed to drive an increase in sales sufficient to cover the reduction in margin. For the back office staff, the ability to store and utilise these pricing methods is often as much of a black hole as analysing the results, requiring much use of spreadsheets and manual price lists. The answer to this is, of course, a promotions module.
A good promotions system will not only allow you to store the many intricate pricing methods employed such as BOGOF or bonus products, off-invoice pricing discount % or amounts and the retrospective rebates but also cater for the financial accruals and reporting required. Rebates tend to be especially difficult to manage with potential complications such as tiered systems based on revenue limits or product exclusions or any combination thereof. There is also the situation where multiple promotions run concurrently so a discounted price may also have a BOGOF attached to it – again, a nightmare for a manual system to cope with.
- Reduction in manual pricing overrides
- Less credit notes
- Improved payment profile/cash flow
- System generated accruals for rebates
- Data import routines
- Transparent data for reconciliation and reporting
To find our more visit: Lakeview
Author: Chris Hems, Product Director at Lakeview Computers