Checklist for Planning and Pricing Optimization

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.

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.

Supply chain software vendor Blue Ridge and Supply Chain Media have created a checklist to help you explore the relevance of pricing optimization for your organization. Answer these 10 questions and find out whether your company’s pricing optimization capabilities are optimal, reasonable or below par.