Optimizing Gross Margin & Pricing over continuously cleansed and up to date product data

Using Product Information to Optimize Gross Profit www.epacube.com

Optimizing Gross Margin & Pricing Optimizing Gross Margin & Pricing over continuously cleansed and over continuously cleansed and

up to date product dataup to date product data

Product DataProduct DataCleansingCleansing

Data Data SynchronizationSynchronization

DataDataGovernance RulesGovernance Rules

MasterMasterProductProduct

DatabaseDatabase

Margin ManagerMargin Manager

DataDataMappingMapping

epaCUBE


epaCUBE Agenda

• New Pig Pricing Process SummaryNew Pig Pricing Process Summary

Major Goals & Objectives of Pricing ProjectMajor Goals & Objectives of Pricing Project

• epaCUBE Margin Manager DemonstrationepaCUBE Margin Manager Demonstration

• epaCUBE Architecture & Trend IntegrationepaCUBE Architecture & Trend Integration


New Pig New Pig

Pricing Process SummaryPricing Process Summary

Major Goals & ObjectivesMajor Goals & Objectives


TrendPricing/CostingSpreadsheets

Created/Updated

Divisions

FinalDomestic

DirectPricing

SharedDirectory

Of Pricing/CostingSpreadsheets

Cost/PriceUpdatesChanges

PMPricingProcess

New Pig – Current Pricing Process Summarized

ReviewBy Price Type

Customer

DIVPricingProcess

FinalDivisionPricing

New PigSPORT

Vendor CostUpdates


Trend epaCUBE

DomesticDirect

Pricing

DivisionalPricing

New Pig SPORT

Major Goals:

Pricing Management Flow with epaCUBE

• Build on/Learn from Current Pricing Process

• Reduce time, labor cost in Pricing Process

– Create Parallel Processes where possible

• Create On-Line System to Automate & Streamline Process

• Model the “EFFECT OF CHANGE” - before LIVE System Processing

• Add Flexibility to Process

• Add Visibility to Process (at all levels) for Better Decision Making


epaCUBE Architecture Overview and DemonstrationepaCUBE Architecture Overview and Demonstration


(3) Critical IngredientsCritical Ingredients for Accurate Cost, Price and Margin Modeling

TrendSPORT

VendorsContent ProvidersYour Own Systems

Mergers & Acquisitions

Costing Ingredients

Tre

nd Data

Whse

Trend – Sales ManagerTrend – Data Warehouse

Forecast – Excel Spreadsheet

Unit Quantities

Tre

nd

Trend - Price Discount RecordsTrend - Rebate RecordTrend – Price Sheets

Competitive Pricing – ExcelProposed Customer Pricing from Excel

Pricing Ingredients

•Cost & Price Calculation Engine

•Impact Analytics

•What if Modeling

•Price Matrix/Book Creation

FlexibilityScalabilityVisibility


PM’s Strategy

•Each PM was responsible for their line and product pricing. PM suggestions were review by upper management before final price for an items was determined

•Depending on product the prices could be different within product lines, marketing strategy, competitor pricing, etc

•Domestic Direct (NPC) information only reviewed

Pricing Criteria for looking at products/Product Lines

•Cost Increase/Decrease•Estimated Cost increases•Current Margins•Margins raising prices•What Competitors are doing•Competitors pricing for Exact products current year•Competitors pricing for similar products current year•Direction from Domestic Direct (Increase sls by 300k, buy raisingprices)

•Where we are in the market•Market Trends (cost of steel, cost of oil)• Information from vendors (suggest list price)•Sales trends•Customer trends•Do we stock the item or drop-ship•Exclusive to New Pig•Better quality products

Division Pricing Process

By Price type and/or CustomerDepending on what the price type or customer is, divisions involved are

Corp Sls, Blue Ribbon, SK, IDD, INTL, 77 different price types

•Cost Increase/Decrease•Current Price•Current Margins•Affect of raising prices•What Competitors are offering•Notes from previous year•Competitors pricing for Exact products current year•Competitors pricing for similar products current year•Customer trends•Customer’s input•Customers Increase•Contracted prices frozen•Contracted agreements•Compare price types against other Price types•Are we offering the customer the correct price discount•Special pricing on accounts•Special pricing on Price types•Price vs. Listed Prices•Acceptable Margins Company/Division

New Pig Pricing Strategy Ingredients


Ingredients RecipeEnd

Result

WHATWHAT HOWHOW WHAT YOU GETWHAT YOU GET

Flexibility of epaCUBE Architecture

Cost Ingredients

Rebate Ingredients

Pricing Ingredients

Customer Ingredients

Vendor Ingredients

Competitive information

Product Attribute Ingredients

Actual vs. Forecasted Sales

• Impact Analytics

• What If Modeling

• Price Matrix/BookCreation

Vendor(s)Customer(s)Customer Type(s)Product Price Type(s)Sales – Actual/ForecastedOver what Time Period

etc.

Selection of Ingredients(Which Ones & How Much)


POTENTIAL COST INGREDIENTS

Job SOURCE Vendor(s) Vendor Name Product Cat(s) Effective Date Prod Lines(s)1 Tend/ICSW ALL ALL ALL ALL ALL2 SPORT ALL ALL ALL 1/1/2008 ALL

POTENTIAL PRICING INGREDIENTS

Job SOURCE Customer(s) Vendor(s) Product Line(s) Effective Date Product Cat(s)Customer SIC

Code Cust TypeProd Price

Types

PD Record

Type1 Trend ALL ALL ALL ALL ALL ALL ALL ALL ALL

epaCUBE Flexibility: Different Ingredients–Different Results

POTENTIAL QUANTITY INGREDIENTS



Types1 Trend/Data Whse ALL ALL ALL ALL ALL ALL ALL ALL

CALCULATION SCENARIO: All the Ingredients to Analyze the IMPACT of…CALCULATION SCENARIO: All the Ingredients to Analyze the IMPACT of…

ALL Supplier Cost ChangesALL Supplier Cost ChangesALL ProductsALL Products

ALL CustomersALL Customers


POTENTIAL COST INGREDIENTS

Job SOURCE Vendor Name Product Cat(s) Effective Date Prod Lines(s)1 ICSW ACME SUPPLIER ALL ALL ALL2 SPORT ACME SUPPLIER ALL 1/1/2008 ALL3 Supplier Update ABC Supplier ALL ALL ALL4 Supplier Update ACME Supplier 1100, 2200, 3300 7/1/2007 ALL5 Supplier Estimate Wilson Supplier ALL 9/1/2007 ALL6 Supplier Estimate ACME Supplier 3450 ALL ALL

POTENTIAL PRICING INGREDIENTS



Types

PD Record

Type1 SXE ALL ALL ALL ALL ALL ALL ALL ALL ALL2 SXE ALL ALL ALL ALL ALL ALL ALL ALL 43 SXE 12999 ALL ALL 9/1/2007 ALL ALL ALL ALL ALL4 EXCEL 12999 COMPETITOR 110,022,003,300 7/1/2007 ALL 8909-900 BLUE RIBBON ALL 45 EXCEL ALL ACME SUPPLIER ALL ALL ALL ALL INTL ALL ALL

epaCUBE Flexibility: Different Ingredients–Different Results

POTENTIAL QUANTITY INGREDIENTS



Types1 SXE/DW 12999 ALL ALL ALL ALL ALL ALL ALL2 EXCEL FORECAST ALL ALL PL009 ALL ALL ALL ALL ALL3 EXCEL FORECAST 12999 ALL PL010 9/1/2007 ALL ALL ALL ALL4 EXCEL FORECAST 12999 ALL ALL 7/1/2007 ALL 8909-900 BLUE RIBBOB ALL5 EXCEL FORECAST ALL ACME SUPPLIER ALL ALL ALL ALL INTL ALL

CALCULATION SCENARIO: All the Ingredients to Analyze the IMPACT of…CALCULATION SCENARIO: All the Ingredients to Analyze the IMPACT of…

ACME Supplier Cost ChangesACME Supplier Cost ChangesOn Customer 12999 with Competitive Pricing & On Customer 12999 with Competitive Pricing &

Forecasted QuantitiesForecasted Quantities


ACME VENDOR/ CUST 12999

ALL VENDORS/ALL CUSTOMER

ACME VENDOR/ALL CUSTOMER

VISIBILITY into the IMPACT of CHANGE on Pricing,

Rebates/SPA, Costs, and Gross Margin based on Past, Current

or Future Effective Dates

End Result – Calculation Scenarios


25

AB VENDOR/ CUST 12999


epaCUBE Architecture & epaCUBE Architecture &

Trend IntegrationTrend Integration


Tre

nd

/SX

EC

on

nec

tor

Trend/SX.eepaCUBEMS SQL

Database

epaCUBESynchronizer

epaCUBEMargin Manager

epaCUBE/Trend Data Flow

Costing/Pricing Records

ICSP, ICSW, ICSCPDSC & PDSR – CHUI

PDSP – GUIPrice Sheets

Custom Pricing

Sources of Product & Costing

Data

- Cost & Price Records loaded

- Vendor Cost Changes loaded

- Results of Margin Manager loadedinto Trend/SX.e

Final Prices loadedInto Production

NewPig

SPORT

epaCUBEProduct Information

Manager(MS-SQL)

Sy

nc

hro

niz

er

- Impact & What If Analysis

ICSW CostsPDSCPDSR

Custom

ICSW CostsPDSCPDSR

Custom

-Other Ingredients Loaded (i.e. Forecast, Competitive Pricing)


New Pig New Pig

Phased Approach toPhased Approach to

epaCUBEepaCUBE

ImplementationImplementation


JUNE JULY AUG SEPT OCT NOV DEC

Domestic DirectPricing Process

Divisional PricingProcess

Trend

Costing/Unit Sales

epaC

UB

EC

on

nec

tor

epaCUBEMargin Manager

epaCUBE Synchronizer & Product Manager Database

Pricing

“Domestic Impact/What If Visibility by Prod Line/Prod”

BS PM

Phased/Parallel Approach to epaCUBE ImplementationPhase 1: Impact/What If VISIBILITY-No Change to Process

DIV

“Divisional Impact/What If Visibility by Cust/Cust Type/

Prod Price Type/Prod Line/Market, etc”

PMCHANGES

WA/JP

DIVCHANGES


JUNE JULY AUG SEPT OCT NOV DEC

Domestic DirectPricing Process

Divisional PricingProcess

Trend

Phased/Parallel Approach to epaCUBE ImplementationPhase 2: Impact/What If Visibility-Process Change

Costing/PricingUnit Sales

epaC

UB

EC

on

nec

tor

MarginManager

Synchronizer

“Domestic Impact/What If Visibility by Prod Line/Prod”

“Divisional Impact/What If Visibility by Cust/Cust Type/

Prod Price Type/Prod Line/Market, etc”

Analytics Maintenance MaintenanceAnalytics


Price Management by PM/Category & DIV by Category

PM 1 X Cat CAT 1 CAT 2 CAT 3 CAT 4




ALL CATALOG

PRICE ANALYSIS

DIV/CAT CAT 1 CAT 2 CAT 3 CAT 4




ALL DIV

PRICE ANALYSIS

Time

Parallel Processes:i.e. Price Management by (PM X Category) & (Division X Category X Customer)


New Pig Benefits…

• Build on/Learn from Current Pricing Process

• Reduce time, labor cost in Pricing Process

• Create On-Line System Automate & Streamline Process

• Model the “EFFECT OF CHANGE” - before LIVE System Processing

• Add Flexibility to Process

• Add Visibility to Process (at all levels) for Better Decision Making

• Create Parallel Processes where possible


Optimizing Gross Margin & Pricing Optimizing Gross Margin & Pricing over continuously cleansed and over continuously cleansed and

up to date product dataup to date product data

Product DataProduct DataCleansingCleansing

Data Data SynchronizationSynchronization

DataDataGovernance RulesGovernance Rules

MasterMasterProductProduct

DatabaseDatabase

Margin ManagerMargin Manager

DataDataMappingMapping

epaCUBE

Documents

Optimizing Gross Margin & Pricing over continuously cleansed and up to date product data