CRAVING HIGHER MARGINS?
PROACTIVE PRICING FOR
THE FOOD INDUSTRY
Unlock Your Data • Unleash Your Sales
FOOD AND CONSUMABLES
CRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERSCRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERS
32
• ARE YOU IN A PRICE TAKER
MARKET?
• ARE YOU BEING
PRESSURED TO REDUCE
PRICES EVEN WHEN YOUR
COSTS ARE RISING?
• DO YOU FEEL LIMITED IN
YOUR ABILITY TO CHANGE
PRICES?
• ARE YOUR LARGE
CUSTOMERS DICTATING
MOST OF THE TERMS?
• ARE YOU FORCED TO
REACT TO THE MARKET
AND TO DEMANDING
CUSTOMERS RATHER THAN
DRIVE THE BEST DEAL ON
YOUR TERMS?
CRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERSCRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERS
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Most food manufacturers and distributors feel
this way. Whether it’s constantly changing
commodity prices, rising energy costs, powerful
customers or ever-present competitors, your
pricing strategy and margins are under constant
pressure. Innovative food manufacturers such as
McCain, BRF, Cargill and FSA are taking back the
reins and applying a new, proactive approach to
their entire pricing process.
PROS mission is to help food manufacturers and
distributors create a proactive pricing process
that will deliver millions in value to the bottom
line. With PROS, manufacturers can improve their
bottom line by 1 to 3 % of sales. To illustrate, a
typical manufacturer with $1 billion in revenue
could improve margins by $30 million. In addition
to the immediate financial benefits, adopting
a more proactive pricing process will lead to
improved customer relationships and more
predictable earnings.
A few of the questions that are very difficult to
answer with existing systems and processes
include:
Q What is the most profitable ratio between
long-term and short-term contracts? Is
a specific contract a good deal for my
company? How can I evaluate the value
of incremental business?
Q What is the impact of a price change?
Will I sell more at lower prices? What if I
raise prices?
Q What other products in the category will
be affected by a price change? Will I sell
more or less of these products?
Q What is the impact of my supply costs
on profitability? Can I pass through rising
costs to my end item prices? Should I
change my product mix?
Q What should I promote this week to
drive more profits for my company? Can
we fulfill the increased demand? Can
I increase sales with different pricing
strategies?
CRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERSCRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERS
54
X
Y
Z
X
Y
Z
X
Y
Z
1
2
3
3Y
3Z
3X
2Y
2Z
2X
1Y
1Z
1X
Supply Raw Input Processes Products CustomersPricing
SUPPLY ISSUES
• Fluctuating
commodity costs
• Commodity prices
visible to your
customers
• Long term supply
contracts
• Variable ingredient
options
• Capacity utilization
concerns
DEMAND ISSUES
• Price impact varies
across products,
channels, and
customers
• Large customers are
more powerful than
ever.
• Price and supply are
tightly linked.
• Long-term contracts
are hard to evaluate.
• Discounts and trade
deals add to
complexity.
The PROS solution optimizes margins within complex
supply chain environments by balancing price and
demand within operational constraints.
The result is predictive insights for buy, make, and sell
decisions, seamlessly integrated with price and quote
execution.
PROS HELPS MANUFACTURERS LOOK FOR PRICING
OPPORTUNITIES CREATED BY THE INHERENT COMPLEXITY
OF THE FOOD MANUFACTURING INDUSTRY
CRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERSCRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERS
54
Pricing is one of the last disciplines where major
decisions are made with gut feel, intuition,
and spreadsheets. While pricing and sales
professionals are making the best decisions
possible with existing tools and information,
PROS can help. PROS solutions help food
manufacturers and distributors make better
decisions across the entire pricing process, by
dynamically supporting decisions such as:
1 Setting Initial List Prices
2 Pricing Strategic Contracts With Large
Customers
3 Negotiating Trade Discounts And
Promotional Events
4 Tactically Optimizing Short-Term Spot Or
Market Prices
A MORE PROACTIVE AND PROFITABLE APPROACH
With better automation and intelligence,
we are able to respond more accurately
to customer requests by channel and
region, and manage seasonal demand
for our products. PROS pricing solutions
and strong customer references set
them apart from their competitors.
From the start, they took time to learn
what was important to our business and
demonstrated their commitment to our
success.”
Fabio Freitas
Pricing Manager
BRF
CRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERSCRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERS
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PROS has the expertise to address the unique
pricing challenges of food manufacturers and
distributors, honed through years of working with
some of the largest companies in the industry.
PROS helps the food industry improve product
pricing and quoting opportunities throughout
their business. Our solutions help the food
industry target price changes where they will be
most effective in driving top-line revenue while
simultaneously maintaining margin requirements.
To address the total solution to this problem,
PROS offers the integration of analytical, Ph.D.-
level talent, the food industry expertise, and
specific supply chain domain knowledge. These
combined factors provide the unique foundation
required to solve the complex problems within
the food industry today.
PROS DELIVERS RESULTS TO FOOD MANUFACTURERS
PROS PUTS YOU BACK IN THE
DRIVER’S SEAT.
PROS CUSTOMERS HAVE DISTINCT
ADVANTAGES. THEY CAN:
• Analyze every item, daily, to
understand which price drives overall
profitability and sales.
• Understand customers’ reactions and
sales impact to the pricing actions of
every item.
• Adjust prices dynamically to account
for shifts in underlying commodity
prices, changes in market conditions,
and up-to-date supply information.
• Highlight opportunities for price
adjustments, trade deals, and other
promotions by having more visibility
into supply and inventory.
• Know what adds value to the
business, whether it’s deals,
discounts, or promotions.
DEMAND
SUPPLY COSTS
PRICE
CRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERSCRAVING HIGHER MARGINS? PROACTIVE PRICING FOR FOOD MANUFACTURERS
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PROS helps the food industry look for
pricing opportunities created by the inherent
complexity of the business environment.
1 Supply Chain Experience
• Constraint-based optimization
experience
• Knowledge of formula-based
manufacturing
• Innovative techniques to understand
product profitability
2 Analytical Expertise
• Expertise in price analytics, elasticity,
cannibalization, and other complex
customer responses
• Expertise in determining best fit
mathematical algorithms for handling
complex functions
3 Food and CPG Manufacturing Knowledge
• Knowledge of industry issues
• Critical understanding of decision
processes and approaches
• Understanding of unique
organizational and process constraints
“PROS took an impressive role in the
initial engagement and demonstrated
a keen understanding of our business
needs and requirements. The
consultative approach with our team
built credibility, backed by working
models and outstanding references, all
of which were differentiators. Now PROS
is backing it up with a successful project
delivery.”
Ian Crawford
Commercial Director Bidvest 3663
A successful Price Optimization &
Management implementation can
increase margins by 50 basis points or
more, and increase revenue by 2% to 4%.
Gartner
About PROS
PROS.com
Copyright © 2015, PROS Inc. All rights reserved. This document is provided for information purposes only and the contents hereof are subject to change without notice. This
document is not warranted to be error -free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and
conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are formed
either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose,
without our prior written permission.
PROS Holdings, Inc. (NYSE: PRO) is a big data software company that
helps customers outperform in their markets by using big data to sell
more effectively. We apply years of data science experience to unlock
buying patterns and preferences within transaction data to reveal which
opportunities are most likely to close, which offers are most likely to sell
and which prices are most likely to win. PROS offers cloud solutions to
optimize sales, pricing, quoting, rebates and revenue management
across more than 40 industries. PROS has completed over 800
implementations of its solutions in more than 55 countries. The PROS
team comprises approximately 1,000 professionals around the world.
To learn more, visit pros.com.
Craving Higher Margins? Proactive Pricing For The Food Industry
Most food manufacturers and distributors feel this way. Whether it’s constantly changing commodity prices, rising energy costs, powerful customers or over-present competitors, your pricing strategy and margins are under constant pressure. Innovative food manufacturers such as McCain, BRF, Cargill and FSA are taking back the reins and applying a new, proactive approach to their entire pricing process.