Part 1: PROS on supply chain sales and data, what to do next?
By Sebastian Mamro, General Manager, EMEA, PROS
Sell solutions not just products
In part #1 of this article, I covered how companies are starting to use their existing big data in order to sell more effectively. In this part, I’ll cover how this ability to analyse sales and pricing more accurately can be beneficial for sider business performance.
Once you start looking at pricing as a company-wide skill, it can deliver greater returns. Far too many companies with global supply chains still rely on traditional cost-plus models when pricing their products. The problem with this approach is obvious when you consider that the cost of materials and labour that make up a product item are only a part of the total value delivered to a customer. Payment terms, packaging and bundling, freight charges, and even currency exchange rates all play a part in the benefit provided to a customer and should be reflected in the price. The challenge comes from incorporating all these factors into a practical system that sales can use in the field when pricing products as part of contracts or negotiated deals.
Organisations can change the sales force mindset from selling a product strictly on price to selling a solution with added value by integrating “cost to serve” calculations into pricing for negotiations and deals. On-site quoting software that utilises the big data from customer systems can give sales people the information needed to properly price a set of products and services for each individual customer in order to maximise value and profitability.
This can significantly improve sales negotiation effectiveness by giving sales people the information they need to genuinely sell a solution. It allows them to construct the highest value deal within a disciplined framework that enables them to combine or unbundle products, make substitutions, change payment terms, adjust currency exchange rates and upsell and cross-sell more products, all to suit the individual customer’s situation. Most important, it gives the sales force the ability to demonstrate why a certain price is justified based on the specific value it delivers to the customer.
Give your sales force timely, useful information
We are seeing more companies than ever before build internal teams that focus on pricing across their organisations. This includes appointing Chief Pricing Officers to make the link between procurement and sales teams and investing in technology that enables them to outperform their competition in creating the vital connection between data and sales effectiveness.
By implementing strategies such as the Leader-Follower pricing approach and selling products as solutions incorporating the concept of “cost-to-serve,” organisations can unlock the potential of big data they already collect through procurement and customer management systems. Insights gained from these strategies can then be delivered to the sales force at the point of negotiation so they can be much more knowledgeable---and therefore much more effective---in securing better prices and margins.
Elon Musk's Boring Co. planning wider tunnels for freight
Elon Musk’s drilling outfit The Boring Company could be shifting its focus towards subterranean freight and logistics solutions, according to reports.
A Boring Co. pitch deck seen and shared by Bloomberg depicts plans to construct wider tunnels designed to accommodate shipping containers.
Founded by Tesla CEO Musk in 2016, the company initially stated its mission was to offer safer, faster point-to-point transport for people, particularly in cities plagued by traffic congestion. It also planned longer tunnels to ferry passengers between popular destinations across the US.
The Boring Co. completed its first commercial project earlier this year in April. The 1.7m tunnel system is designed to move professionals between convention centres in Las Vegas using Tesla EVs. It says the Las Vegas Convention Centre Loop can cut travel time between venues from 45 minutes to just two.
Boring Co.'s new freight tunnels
The Boring Co.'s new tunnel designs would allow freight to be transported on purpose built platforms, labelled as “battery-powered freight carriers”. The document shows that, though the containers could technically fit within its current 12-foot tunnels, wider tunnels would be more efficient. Designs for a new tunnel, 21 feet in diameter, show that they can comfortably accommodate two containers side-by-side, with a one-foot gap between them.
The Boring Co.’s new drilling machine, dubbed Prufrock, can tunnel at a rate of one mile per week, which is six times faster than its previous machine, and is designed to ‘porpoise’ - mimicking the marine animal by ‘diving’ below ground and reemerging once the tunnel is complete.
Tesla’s supply chain woes
Tesla is facing its own supply chain and logistic issues. The EV manufacturer has raised the price of its vehicles, with CEO Musk confirming the incremental hike was a result of “major supply chain pressure”. Musk replied to a disgruntled Twitter user, confused as to why prices were rising while features were being removed from the cars, saying the “raw materials especially” were a big issue.
Car manufacturing continues to be one of the industries hit hardest by a global shortage in semiconductor chips. While China’s chip manufacturing levels hit an all-time high in May, and the US is proposing a 25% tax credit for chip manufacturers, demand still outstrips supply. Automakers including Volkswagen and Audi have again said they expect reduced vehicle output in the next quarter due to a lack of semiconductors, with more factory downtime likely.
Top Image credit: The Boring Company / @boringcompany