How an international food corporation drove a 2% margin improvement with real-time, AI-powered Quoting and Pricing
This customer holds the largest corporate stake in the North American Food & Consumables industry. The company is involved in global food products processing, production, marketing, and distribution.
Amidst many complexities, the company forecasted growth in their edible oils sector. To capture this additional market share and achieve their goal of growth, the company knew they had to optimize their pricing strategies, time to value, and their data segmentation methodologies throughout the corporation. This included moving away from spreadsheet and email-based pricing, and modernizing legacy systems.
3 key challenges preventing adaptability
The corporation had 3 key challenges that were preventing them from keeping up with fluctuating commodity prices and customer demands.
Challenge #1: handling complex industry and real-time market factors in pricing
In edible oils, product cost alone can account for over 700 discrete data points. Additionally, a bottle of edible oil can consist of a blend of up to 10 different types of oil, sourced from different parts of the world before it makes it to the customer. Then there’s the cost of production materials, delivery time, volume, currency exchange rates, and market speculation, which also contribute to pricing.
“Our pricing was ad hoc, with lots of individual spreadsheets and emails,” says the company’s Marketing and Pricing Director. They needed a streamlined process to create real-time quotes that included all commodity price inputs, including forward speculated prices, to quickly deliver accurate pricing recommendations to their customers.
Challenge #2: managing substitute pricing and product choice
For companies like these, maximizing already razor-thin margins means combining the right components from the best and least expensive sources to create a cost-effective, but high-quality, end product. Because the edible oils market is based on consumer demand for high-quality products, they cannot afford to substitute with substandard products simply based on price, so they need a tool that can quickly compare pricing and choose the most optimal substitute from the most high-quality oils from multiple sources.
Challenge #3: legacy system limitations and segmentation
Thousands of account managers used the company’s legacy systems and processes of rummaging through spreadsheets, commodity market data, and past transaction data to estimate the best price for customers in over 125 countries. These methods were slowing them down and causing margin leakage.
Additionally, the legacy systems were not geared for the precise segmentation of products, customer groups, and different industrial factors, providing poor and incomplete data for global analysis and detailed insights. “We could only do about four or five segments, and the application itself was very difficult to use. Measurement and execution on those segments were really tough,” says the company’s Strategic Pricing Manager.
So, having seen PROS work in other parts of the organization, they turned to PROS to drive their pricing and sales transformation with a science-backed approach.
A long history of innovation with PROS
When the first division of the company first approached PROS in 2014 while looking for a pricing solution, they were facing similar challenges to the edible oils division. Pricing was ad hoc, with lots of individual spreadsheets causing error and efficiencies. People had to search through multiple documents and make guesses at relevant prices for each division of the business.
After the deployment of the PROS Platform in the first division, the international food corporation’s President and Group Leader said “PROS was the right vendor and right partner.” With PROS, the first division alone realized a 5% top-line revenue improvement.
The partnership that started with “a grain of salt” has become one of continuous innovation, enabling the company to use their data in new and smarter ways to outperform and cut through the complexities of doing business in the modern world. As a data-driven company that trades commodities, they know the importance of accuracy and sophisticated modeling, which is why they recognized the value of PROS AI leadership and pricing science innovation.
The power of PROS integration
After the implementation in the first division, the international food corporation decided to expand PROS reach. The company deployed AI-powered Quoting and Pricing by PROS to the edible oils division to deliver:
- AI-powered pricing optimization for personalized pricing on highly complex products that include real-time commodity futures variables through PROS AI-powered pricing
- Streamlined and automated quoting and pricing processes for their account managers through PROS AI-powered quoting
- Embedded analytics on their contracts and comparison analysis against physical delivery that empowers the sales team to quickly make more data-driven decisions
- Product mix analysis to determine the right product at the right time, for the right price
- An integrated CPQ solution within their existing Salesforce CRM
How PROS Platform decisions delivered
With PROS Platform solutions, the company has realized a 2% margin improvement in its edible oils division—an impressive gain by food industry standards. Partnering with PROS has enabled them to stay on track to meet their goal of gaining additional market share, adapting to changing customer needs, and offering the right products at the right price, to the right customer segments.
“PROS has made our pricing process much more seamless, and our salespeople have information at their fingertips,” says the Strategic Pricing Manager.
Delivering on the call for real-time prices
Today, the company’s account managers create quotes using AI-powered Quoting by PROS from their Salesforce CRM. The PROS Platform calculates over 1,000 pricing benchmarks and more than 150 lookups every time a salesperson produces a quote.
When creating quotes, the solution makes a real-time call for futures pricingfrom the Thomson Reuters data feed, which is then passed to AI-powered Pricing by PROS. The PROS Real-Time Pricing Engine (RTPE) also integrates relevant SAP data, including contacts, customers, products, and plants. Lastly, the solution crunches the data and sends pricing recommendations and margin guidance for the quote to AI-powered Quoting by PROS for sales to use.
The entire process happens in an instant, putting incredible power at the fingertips of account managers. No other quoting or pricing provider can consistently deliver this level of support for their global business.
“We have a large global reach, operating in 70 countries, so having a partner that can go abroad with us was really important from a geographic perspective,” says the Marketing and Pricing Director. “We have complex needs that PROS can deliver on.”
The PROS technology aligns perfectly with the company’s customer-driven strategy and will help them get there faster. As the organization looks to transform their business, there are 3 core reasons why the PROS Platform has been the best and most efficient technology for their complex, global business, which are: simplified user experience, cross-quoting capabilities, and analytics and intelligence to make data driven business decisions.
“AI-powered Quoting and Pricing by PROS are foundational technologies, like SAP. You just need it,” says Anonymous, Global CPQ Lead.
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