Volatile Market Fluctuations Challenge Pricing Analysts

Every day, the pricing analysts in the refining and marketing division of this major oil company faced the challenge of pricing billions of gallons of petroleum products in several hundred terminals. It was a daunting task given the size and dynamic nature of information that had to be considered in making pricing decisions.

Relying on multiple, non-integrated legacy IT systems, the company’s pricing analysts often had to manually compile disparate information, such as volatile commodities market fluctuations, competition, product inventories, wholesale and street margins—as well as factoring in freight and other costs. Because critical information was not readily available in consolidated form or accessible during extremely short pricing windows, pricing analysts lacked the resources to perform detailed analysis essential to maximizing margins and profitability.

PROS Phased Implementation Delivers Immediate Actionable Insights

To capitalize on rapidly-shifting margin opportunities, PROS automated the collection and processing of key information. This enabled pricing analysts to take advantage of changing market conditions, rather than having to use data from multiple systems to conduct time-consuming analyses. Given the competitive commodity market for petroleum products, PROS technology incorporated both competitive positioning and impact on demand into pricing decisions. In addition, PROS provided executives with comprehensive reporting tools that showed the profitability of different channels, plants and products.

PROS Solution Advantages

• Automated the collection of key information so that   pricing analysts can react quickly to changing    market conditions.
• Incorporated both competitive positioning and impact on demand into pricing decisions.
• Provided reporting insight into the profitability of different channels, plants and products.
• Supplied alerts to notify analysts of low inventory, potential containment issues, degrading margins,   price changes by competitors, and changing product differentials.

To provide the greatest ROI in the shortest time, PROS implemented a phased approach. In the initial phase, PROS delivered critical pricing information to pricing analysts when they needed it most – at the time they made pricing decisions. The PROS solution also sent analysts alerts throughout the day to notify them of conditions that could require a rapid pricing response such as low inventory, potential containment issues, degrading margins, significant price changes by competitors, and changing product differentials.

PROS enabled pricing analysts to analyze the relationship between the company’s prices and competitor prices and how changes in each affected demand throughout the day, a beneficial process due to competitor and volume lift information changing many times throughout the day. Powerful reporting capabilities with PROS, such as a comprehensive price waterfall, supported consolidated views of the entire business portfolio and facilitated executive analysis.

$3 Million Margin Improvement in the First Six Months

PROS pricing solutions nearly tripled the margin improvements projected by the executive management team at the oil company – generating more than $3 million in the first six months and over $8 million in the first year.