2009 Innovation Insight Awards: Getting pricing right

MOST INNOVATIVE PROCESS ¦ FOURTH PLACE Having exhausted most of their ideas for cutting operating costs, a growing number of corporate executives are looking at how the prices they charge for products and services impact the bottom line. Zilliant, a supplier of price optimization software, is glad to be a part of such discussions.



Having exhausted most of their ideas for cutting operating costs, a growing number of corporate executives are looking at how the prices they charge for products and services impact the bottom line. Zilliant, a supplier of price optimization software, is glad to be a part of such discussions. One of its customers, a building products maker, boosted profit margins simply by using Zilliant's software to inject discipline into its pricing process.

The method used to get this manufacturer to see the value of a price optimization strategy earned Zilliant a fourth place award in MBT's 2009 Innovation Insight Awards competition.

In conducting a Six Sigma review, the building products manufacturer discovered that its pricing process was complex, poorly understood by its workforce, and ultimately relied to heavily on undocumented "tribal knowledge." This resulted in salespeople offering customers a broad range of prices on similar products, with as many as 50 percent of sales orders transacted below lowest-approved prices.

By analyzing the manufacturer's historical sales and order data, the Zilliant software identified roughly 6,000 price segments—clusters of homogeneous transactions that demonstrated a similar price response. For each of these segments, the software produced a range of five price points: start, target, discount, deep discount, and floor.

A control group of the company's sales representatives was told to use these price points—and stick to them—when negotiating with customers. The remaining sales staff conducted business as usual.

Six months later, the group using the Zilliant price points had substantially increased its margin contribution relative to those representatives working as usual. That prompted the company to start rolling out the Zilliant tools to the entire sales force. Today, Zilliant price optimization software is embedded in a Salesforce.com based quoting application accessible in the field through handheld devices such as Palm Treos and tablet PCs.


No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Safety for 18 years, warehouse maintenance tips, Ethernet and the IIoT, GAMS 2016 recap
2016 Engineering Leaders Under 40; Future vision: Where is manufacturing headed?; Electrical distribution, redefined
Strategic outsourcing delivers efficiency; Sleeve bearing clearance; Causes of water hammer; Improve air quality; Maintenance safety; GAMS preview
SCADA at the junction, Managing risk through maintenance, Moving at the speed of data
Safety at every angle, Big Data's impact on operations, bridging the skills gap
The digital oilfield: Utilizing Big Data can yield big savings; Virtualization a real solution; Tracking SIS performance
Applying network redundancy; Overcoming loop tuning challenges; PID control and networks
Driving motor efficiency; Preventing arc flash in mission critical facilities; Integrating alternative power and existing electrical systems
Package boilers; Natural gas infrared heating; Thermal treasure; Standby generation; Natural gas supports green efforts

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
This article collection contains several articles on the vital role of plant safety and offers advice on best practices.
This article collection contains several articles on the Industrial Internet of Things (IIoT) and how it is transforming manufacturing.
This article collection contains several articles on strategic maintenance and understanding all the parts of your plant.
click me