Supply Chain

Return to sender – how intelligent, automated pricing can help manufacturers and wholesalers withstand demand highs, lows and cancellations

Today’s shopper is as unpredictable as the global economy. In times gone by, businesses could draw on historic data to create a solid forecast for the months ahead, but the pandemic, resulting supply chain disruption and record levels of inflation wreaked havoc, and upended the planning process with major consequences for wholesalers and manufacturers.

Most retailers went into peak not knowing what to expect. Many were still struggling with excess inventory, and shaky consumer confidence led to lower shopper turnout. The result was huge volumes of canceled orders. The supply disruption and demand volatility of the last two years has created hyper-reactive buying patterns which have a significant downstream impact, shifting the problem from retailer to supplier.

While everyone across the industry wants to achieve more steady and predictable flows, that’s not looking likely with a global recession looming. To cope with erratic buying and the potential for more order cancellations, manufacturers, wholesalers, and distributors need to focus their attention on pricing and rebate management to ensure these financial cornerstones are managed to withstand more volatility.

Complexity

For manufacturers, wholesalers, and distributors, order volatility and the potential for returns when coupled with already high transport and warehousing costs, means that pricing needs to be bulletproof, based on real input costs with guaranteed margin built in.

The complexity of managing buy-side and sell-side pricing, with its matrix of individual promotions and rebates, has been a long-term challenge but today’s pressures should make it a priority focus.

For most businesses, the time spent managing dozens of pricing and rebate spreadsheets is a major drain on resources and it’s almost impossible to get a real-time view of profitability. By moving to intelligent, automated pricing from Flintfox, that complexity is taken away. Cost data is automatically linked to pricing, enabling businesses to instantly see where margins are being achieved, or where pricing needs to be changed to improve revenue or profitability, by customer, channel, all the way through to product line.

Pricing can be easily set according to pre-determined rules, for instance, with adjustments linked to payment or return terms. Intelligent automated pricing eliminates the risk of human error of underpricing which is costing the average manufacturer and wholesaler millions each year.

Control

At a time when margins are precarious, the sales function needs to be armed with the right information. Sales performance can’t be based on deal value alone when that revenue could be unstable and subject to cancellation. By giving sales agents the ability to model deals on the spot through the Flintfox Intelligent Pricing Platform they can ensure they’re committing to a price that will deliver the margins needed and terms that reduce risk.

Access to automated pricing reduces the amount of time that teams spend on pricing administration, and because changes can be made quickly and are applied immediately, sales teams have more time to get out to meet customers.

Staying on top of rebates

Rebate management is one of the most unwieldy aspects of manufacturing and wholesale financial management. And today’s volatility is causing even more challenges – on average, £2.65m is lost in unclaimed rebates every year.

With Flintfox, manufacturers and wholesalers can eliminate lost revenue by calculating and claiming or paying whenever the payment is due. It can also reduce the number of days rebates are outstanding by making a claim as soon as an amount is owed, improving vital cashflow. 

Manufacturers and wholesalers can visualize rebate revenue on a daily basis by recognizing revenue as being earned rather than when it is received so it can instantly be factored into pricing decisions. Meanwhile, accurate and detailed claim reports can improve collections by making it easier for suppliers to give approvals. 

Building financial resilience 

After a tumultuous three years, the prospect of a recession feels like a kick in the teeth for businesses that have navigated a pandemic, supply chain chaos, record levels of inflation, and chaotic buying behavior. But before retrenching into cost-saving measures, taking time to review and rethink fundamental business practices could deliver much more significant results without compromising future growth. Moving on from manual, time-consuming, and error-prone pricing and rebate management will cut revenue leakage, improve margins and deliver major efficiency gains, helping to build the financial resilience needed to tackle the unpredictability of the year ahead.