INDUSTRIAL DISTRIBUTION: EFFECTIVE STRATEGIES TO ACHIEVE “WORLD CLASS” PRICING IN DISTRIBUTION
Industrial Distribution’s guest contributor Kim Long says, “Key elements to a successful pricing strategy include organization, strategy maps, and playbooks.”
Industrial Distribution Excerpt:
Even in good markets, distributors operate on tight margins. Continuous margin and share pressure, intense negotiations and increasing contract, price and rebate complexity put further pressure on distributor processes and margins. Protecting and increasing margins, driving attach rates and inventory turns, managing service costs and leveraging scale to drive back-office efficiency are some of a distributor’s many pricing challenges.
Distributors willing to make pricing a core competency, to take active control of price levers and processes and exploit opportunities such as segment-driven optimized price setting, informed deal negotiation, automated cost increase recovery and measurement can capture significant margin improvement, typically ranging from 75 - 200 basis points. Those price improvements flow directly to the bottom line.
Successful “World Class” pricing for distributors requires the following key components…