Aerospace Parts Distributor
Transforming Pricing Strategy for Long-Term Growth
Transforming Pricing Strategy: Building Capabilities to Drive Margin Growth
A global aerospace parts distributor implemented a dynamic pricing engine and streamlined its quoting process, achieving $85M in price and cash impact over three years.
For a global aerospace parts distributor, outdated pricing models and manual quoting processes resulted in missed margin opportunities and inconsistent pricing logic. The company faced significant pricing variation across customer segments, leading to margin inversion and lower win rates. To address these challenges, the company partnered on a multi-year pricing transformation initiative. By implementing a dynamic pricing engine, creating a custom deal management application, and optimizing quoting workflows, the distributor improved pricing consistency, increased win rates, and generated $85M in price and cash impact over three years.
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Situation
Outdated Pricing and Manual Quoting Led to Margin Leakage and Inefficiencies
- Independent distributor & global provider of innovative supply chain solutions with a strong customer service culture
- The quote-to-order process was lengthy and manual, with inconsistent pricing logic; Relying on last price paid often led to missed margin opportunities and a lower win rate
- Limited pricing and discounting controls caused significant variation within customer segments, leading to margin inversion across customer-product tiers
- Pricing was outdated, disconnected from replacement costs, and lacked dynamic margin targets hindering competitiveness and profitability
Dynamic Pricing Model
Approach
Implementing Dynamic Pricing and Streamlined Quoting for Scalable Growth
- Developed a dynamic pricing engine that leverages customer and order attributes for differentiated pricing, enabling the implementation of scalable pricing and cash flow initiatives
- Created a custom deal management application that supports the entire pricing process, offering consistent guidance and valuable analytics to inform decision-making
- Streamlined the quoting process by consolidating multiple steps, reducing handoffs, and improving consistency across outcomes
- Encouraged usage and adoption of the pricing engine’s recommendations to increase quote speed, directing low-value quotes/customers to alternative channels, ultimately boosting win rates and operational efficiency
Key Performance Indicators
- Win Rate
- Margin Percentage
- Price Impact
- Usage/Compliance
Additional Outcomes
- Reduced variation & price leakage
- Change management
- Team adoption
- Increased quote speed & win rate
KPI Reporting
Reporting provided on a regular cadence to pricing and commercial teams, focusing on price recommendation usage/compliance
Audience:
Pricing & sales managers
Key Data:
Pricing engine recommendation usage and compliance rates by region
Audience:
Pricing & sales managers
Key Data:
Quote performance by region, highest quoted part numbers, factors influencing performance
Audience:
Pricing & sales managers
Key Data
Products with high E-Commerce sales
Customers who utilize E-Commerce platforms most frequently
Audience:
Pricing team
Key Data:
Frequency and degree of deviation from model’s recommended price
