Automotive

Use case: Automotive OEM increases profitability significantly by hitting right price to optimize margins at transaction level

Context

  • Premium automotive OEM with 60k+ SKU portfolio managed manually
  • Many slow-moving parts
  • Proprietary parts not capturing margin potential, other parts prices uncompetitive

Approach

1

Identified primary drivers of price realization in past price / volume data

2

Developed target margin logic, based on limited number of parts, characteristics most predictive of pricing PO, e.g

  • Competitive availability
  • Competitor pricing
  • Criticality of part for operation
3

Developed automated price maintenance tool – allows active price management for "long tail" of low-volume parts

Impact

+1%

Average price increase

+5%

EBIT increase through combined price / volume effect