Client: Chemical Company
Problem:
A leader in the production of value-added downstream products based on phosphoric acid needed a new comprehensive pricing strategy. The company produces a wide range of products targeted at many different customer groups, including phosphate salts, food additives, hygiene products, phosphorus derivatives and
fire retardants.
Scope of Work:
Develop an auditable and reproducable method for accurately assessing and quantifying all off-invoice costs and discounts to each customer. Off-invoice costs included freight (both “on” and “off” invoice), credits upon proof of sale, and various other rebates and discounts.
What Quantalyst Did:
- Analyzed customer databases and extracted statistics to accurately assign all off-invoice costs to both the customer and the product.
- Created and implemented auditable methods for maintaining this cost data in the client's accounting systems.
- Segmented customers to allow peer-to-peer comparisons.
- Produced graphical comparative “net net” (an internal term) or “pocket price” reports for each product and each customer to identify pricing disparities.
- Audited discount pricing databases to identify disparities that existed between negotiated pricing/discounts and actual system implementation.
Results:
- The firm developed pricing strategies for each customer segment that ensured equitable customer treatment and consistent implementation in the field.
- Identified pricing disparities and developed customer-specific actions to be implemented as existing contracts expire.
- Quantified the potential improvement in bottom line results. The profitability increases are substantial, with the largest gain for a single customer forecast at $50,000.
- The system audit confirmed validity of the internal processes and provided credibility for the system changes to the sales force and operations personnel in the field.
