Managing Automation :: Technology Solutions for Progressive Manufacturers Sign in or register  |  Advertise |  Subscribe to MA Magazine  | Newsletters |   My Profile

Managing Automation® Magazine

Editorial from the May 2007 issue of Managing Automation

Plugging Revenue Leaks(Plugging Leaks)

                                  Digg This Article   Add to Delicious

Abstract:Every customer may be important, but not every customer is profitable, and manufacturers are beginning to realize the detrimental effect of signing a deal at any price.
Relevant Links:

Most people will endure the drip of a leaky pipe for only so long before they call a plumber. Manufacturers, on the other hand, have tolerated leaks for years, and few have sought professional help.

In this case, the leakage is revenue, and the principal driver, analysts say, is faulty pricing. Products sold for less than optimal prices cut into profit margins, and when a company lacks the discipline to plug these leaks, they become part of the corporate culture, and the dripping goes unchecked.

Comprehensive price management has a relatively short history in the manufacturing sector. In progressive businesses, price managers and analysts have conducted manual excavations of past deals and other sources of pricing insight, and then used that data to establish more profitable pricing. In less-developed companies, salespeople have made concessions and offered discounts that have little to do with the deal's profitability and much to do with increasing sales commissions.

[Click to continue]