Partner session Blue Ridge Global | S&OP Vendor Day 2021

During S&OP Vendor Day 2021 Maarten Baltussen, Executive Vice President in the software and IT industry, presented his solutions in the break-out session ”S&OP: Don’t forget product pricing”.

Supply chain management, forecasting and planning go hand in hand with sales and the pricing strategy. Therefore, the technology behind all these aspects must be tightly interconnected if the organization wants to transition from a reactive position into a unified, proactive, agile company. For many supply chain professionals, product prices are a given – but supply chain software vendor Blue Ridge disagrees, “pricing can be used to influence both demand and supply”.

Sales & Operations Planning (S&OP) – the ongoing process of aligning supply and demand – tops the investment list for supply chain professionals. S&OP plays a crucial role in many companies, as it brings together colleagues from supply chain and commerce to make joint plans. But one factor they almost always fail to consider is product pricing, even though the price affects the balance between supply and demand.

Dynamic pricing

Anyone who has ever booked an airline ticket or hotel room online is familiar with the concept of dynamic pricing, but it is still hardly being used in retail at the moment. Often, the sales team will establish promotional pricing on a certain item, but that pricing strategy fails to consider the company’s ability to actually keep those items in stock. In another instance, there may be an overpriced item sitting in stock, keeping working capital stuck on the shelves. This causes supply chain breakdowns, slow market response, disappointed customers and loss of profitability.

Thinking about prices in this way reveals new opportunities for optimization. For example, by raising the price of items that are in short supply throughout the chain, companies can decrease the demand and avoid failing to meet their service level agreements with existing customers. Price can also be used to prevent excess inventory, of course. Supply chain professionals need to realize that the price doesn’t have to be a given.

Missed this session?

The recorded session is available on the YouTube channel of Supply Chain Movement. The slide deck is available for download below.