For illustration, consider manufacturer Intel, and one of its major customers for computer chips, Dell Inc. One might observe information externalities affecting Intel when Dell makes its earnings announcements. Analysts who follow Dell probably ask questions about why the company reported lower operating income than expected. But other analysts-who don’t follow Dell-would still listen carefully because they want to pick up clues about what Dell’s news means to the companies they do follow.

What’s remarkable isn’t that humans can intuit these connections, but that the market behaves in a way that takes into account these finer relationships. Continuing the example, Zach said, consider what could happen to Intel after Dell makes its earnings statement.

“The supplier, in this case Intel, is likely to be affected when the customer announces increased revenues or decreased operating income. What’s more, the tighter the economic bond between customer and supplier, the stronger the impact,” Zach said. “Dell accounted for approximately 19 percent of Intel’s sales in 2005. If more people bought Dell computers in a given year, then Intel is going to benefit as well because Intel produces the chips for Dell’s computers.”
Not all announcements are good news, however.

“Consider the costs of the customer,” Zach said. “If Dell announces its costs have gone up, that’s obviously bad news for Dell. But it’s not necessarily bad news for Intel. Dell’s costs might have gone up because Intel was able to raise its prices. This could be a positive signal for Intel’s shareholders.”

Zach’s research examines various types of accounting announcements and evaluates whether the information-transfer flows consistently depending on the kind of news. In particular, Zach looked at earnings reports, management forecasts and conference calls—whether those calls are related to earnings or not.

Investors aren’t the only ones that can benefit from understanding the connection of supplier and customer through what Zach calls “information externalities.” If there is a lot of competition in a supplier’s industry, then any relationship the supplier has with a major customer is going to be affected by announcements of the company’s well being.

More information on the study, co-written by Zach with accounting professor Shail Pandit at The Ohio State University and Charles Wasley, professor of business administration at the University of Rochester on the study is available through www.wustl.edu.

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ASC’s partnership with PPI offers ASC Trac customers a safe, secure and reliable payment processing solution that integrates seamlessly with the ACS solution. The combined solution has demonstrated capabilities for high volume credit card transactions in mission critical environments.
The PPI PayMover payment gateway integrates with ASC’s warehouse management suite, ASC Trac V6, a modular software solution that supports functions in warehouse distribution, manufacturing and third-party operations. The integrated solution provides both POS and e-commerce functionality -enabling full credit card support for both card present and card not-present transactions as well as off-line debit card and batch settlement payments. The solution manages ACH transactions through a single clientless solution. Enhanced security functionality has also been added to the PPI PayMover for ASC Trac V6 solution. PPI PayMover is PCI compliant and ASC customers receive free consultation and fraud monitoring from PPI’s in-house Risk Management Team

The PPI PayMover integration provides a comprehensive solution allowing ASC to easily integrate real-time payment processing into its application. By optimizing its order processing through a single resource technology, merchant account services and extensive technical support strategy, ASC expects to streamline its operations and reduce its support costs. Addition expected benefits includes relief from the challenges and cost of maintaining, upgrading and troubleshooting an in-house transaction processing application.

ABOUT PAYMENT PROCESSING, INC.
Payment Processing, Inc. (www.paypros.com) is the industry leader for integrated payment solutions. PPI provides software developers with a full range of services for integrating electronic payments including gateway services, integration support, merchant support and services, and PABP/PCI security assistance. Additionally, PPI provides software developers with the ability to generate additional revenue while substantially reducing their support costs for integrated payments.
Today, PPI is the most successful company in the world focused on integrated payment processing, supporting over 600 software developers and more than 15,000 merchants with efficient, cost-effective payment solutions. In 2006, PPI anticipates processing over $3 billion in Visa® and MasterCard® payments.
ABOUT ASC, INC.
Headquartered in Dayton, Ohio, ASC, Inc. (www.ascsoftware.com), develops and supports state of the art software and hardware solutions including warehouse management systems, manufacturing systems, route delivery systems and other custom wireless tracking applications for customers seeking supply chain solutions. Their customers include General Mills, Daimler-Chrysler, Ford, Dean Foods, Standard Register, Consumers Energy, and GlaxoSmithKline.
In 2005, ASC won a Microsoft Pinnacle Award for Innovation at the Microsoft Convergence show for their ASC Trac WMS software customer website.
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Oracle Production Scheduling helps manufacturers to optimize process, semiconductor and discrete manufacturing shop floor operations through out-of-the-box integration with Oracle Discrete Manufacturing, Oracle Process Manufacturing, and Oracle Shop Floor Management. Customers can create highly detailed shop floor schedules that automatically detect floating bottlenecks, simulate corrective actions and measure shop floor performance improvements. This gives companies the ability to pre-empt supply chain disruptions and maximize shop-floor efficiency and throughput while minimizing cost.

Oracle Production Scheduling and Oracle Strategic Network Optimization can be leveraged as part of the Oracle E-Business Suite or as a stand-alone product.

Source: Oracle 27-NOV-2006

Quite often a small- or medium-sized business (SMB) that is looking to gain a competitive advantage within its supply chain will do so by improving its products and streamlining operations. Decision makers often look toward product design technology such as product lifecycle management (PLM) to support these changes. By implementing a product lifecycle management system, companies can simplify and shorten each phase of the product development process. Selecting new technology is a challenge for any organization but can be especially difficult for the SMB, since most software (particularly PLM software) is designed to meet the needs of a large enterprise.

To begin the selection process the SMB first needs to understand what the PLM system should accomplish for its organization. PLM can provide key functionality to streamline each phase of a product’s lifecycle, from product conception and design to manufacturing and support, while improving communication across both internal and external constituencies.

Case in Point

Fabric7 Systems, which designs and builds enterprise servers that integrate computer and networking technologies into a dynamic fabric of information technology resources for the core of the datacenter, implemented a PLM system to accelerate new product introduction, decrease product costs and reduce waste and rework.

Once a company determines that PLM software will address the challenges within its organization, the question then becomes which PLM software is best suited for the company. For Fabric7 Systems, the company needed a PLM system that would alleviate the challenges of its start-up environment of heavy workloads and limited resources. “We were a small team wearing many different hats,” stated Wayne Firsty, vice president, Manufacturing Operations for Fabric7. “Putting a discipline in place to establish a single point of data for engineering releases and product builds across our internal and external sites was a crucial process.”

Typically, since the SMB operates with a smaller cash flow, develops fewer products, and has a smaller customer and supplier base as compared to a large enterprise, the PLM system needs to be tailored for these distinct requirements. The increasing emphasis on outsourcing has dramatically changed the operational landscape of the SMB and must be a key consideration when choosing the correct PLM system. The SMB must select a solution that allows secure yet easy access to product data for its outsourcing partners. For Fabric7 Systems, a method to relieve the communication obstacle with its manufacturing partner was imperative. Since Fabric7 outsources its manufacturing to a contract manufacturer (CM) the company needed to ensure the CM no longer received inaccurate bills of materials (BOMs) and outdated product data that resulted in lengthy new product turnaround time.

Too often the SMB will select a PLM system that includes broad functionality but fails to drill down into the daily challenges of engineers and developers, and also embrace the need to share product data outside the SMB’s four walls. Fabric7 Systems knew this challenge all too well, which is why the company sought out and purchased a solution that would allow its engineers and developers to manage product data in a single, secure location and could be easily accessed by multiple sites within Fabric7 and with external vendors and partners, particularly their CM. “The ability to manage our detailed BOMs, all engineering changes and vault documents in a single repository was a necessity,” said Firsty.

PLM solutions designed for the large enterprise often overlook the need to automate tasks and address challenges that the SMB faces early in the development/design process, such as with new part requests and design component selection. The PLM solution should also provide an environment that understands the dynamics of the prototyping phase. For the smaller business looking to improve products, the process must begin with the engineers who face issues with data management, obtaining the best design elements and easily accessing essential product data to ensure specifications are met. In order to manage complex hardware design and to share reliable information with its manufacturing partners, Fabric7 Systems selected a PLM product that could manage all of its BOMs, engineering changes and documentation, as well as offer secure access for its internal and external teams. “We now have an environment to capture engineering changes in a disciplined manner and ensure our CM has access to clean documentation,” stated Firsty.

Another key factor to consider in today’s compliance-driven market is the ability of the PLM solution to inherently support evolving regulatory compliance and quality standards. Compliance with the Restriction of Hazardous Substances (RoHS) mandate has become a major concern for all manufacturers shipping products into restricted regions. The impact is more profound on smaller manufacturers, who generally do not have the same amount of resources to dedicate to sourcing all of the required compliance data, and whose product costs will have a greater impact due to the volume and margins on which the SMB operates. Small companies need to rely on a PLM solution that can store complete part classification information and vendor-supplied documentation, provide full product analysis features, and allow users to easily extract the necessary data during audits.

A common misconception is that large PLM vendors with monolithic software systems are the only vendors that can address all product development needs. In reality, many of these large systems, which have been designed with large enterprises such as automobile manufacturers in mind, include functionality that is irrelevant to the development needs of a small organization. Further, the SMB, with its limited cash flow, is paying for functionality that will likely never apply to its product design process. “In our search for a PLM solution, we found that many offerings were too complex for the quick implementation and training required by a fast-paced company like Fabric7,” added Firsty.

SMBs should be equally attentive when considering an on-demand or hosted PLM solution. Although on-demand solutions are an appealing option due to the “instant on” capability and attractive price point, the SMB should consider the functionality, scalability and security issues associated with on-demand solutions. Fabric7 Systems researched on-demand PLM solutions and found that they presented security risks to which the company did not want to expose its sensitive intellectual property.

According to an AMR report “Midmarket Manufacturing Needs PLM” by Kevin O’Marah, only 8 percent of mid-market companies now have a PLM system from a large enterprise software vendor. What this means is that many smaller companies are beginning to look toward implementing PLM software designed for their market segment.

Many large PLM and ERP vendors are attempting to “scale down” their products to address the PLM needs of the SMB. Unfortunately, because these systems are typically built on legacy foundations, their heredity does not allow them to adapt easily to the evolving needs of the smaller organization. Moreover, these systems still require lengthy (and costly) implementation phases. For Fabric7 Systems, constraints on time and resources demanded a PLM system that was easy-to-use, quick to implement and required a short learning curve. As a result of limited IT staff, they sought a PLM solution built on the Microsoft SQL Server platform for easy and cost-effective maintenance. “We require that our I/S solutions are best of breed and integrate with SQL, which is less cumbersome and expensive than Oracle,” continued Firsty.

A flexible solution that can easily integrate with a small company’s existing environments is essential. Most large vendors cannot share data “out-of-the-box” with the engineering tools and/or business systems that are already in place. This capability typically requires an additional product or consulting purchase that increases the acquisition price for the SMB.

Implementation time and costs are critical factors for the SMB to consider when selecting a PLM system. SMBs cannot afford to reassign their valuable resources to long PLM implementation projects. Most software designed for the large enterprises have considerably lengthy implementation processes of more than six months. Alternatively, software designed for the SMB has a quicker implementation process and can have the company up and running within days or weeks, depending upon the vendor and level of integration with other systems. Quick training and implementation time allowed Fabric7 engineers to continue designing product with minimal interruption in their work. “We selected a very intuitive PLM system that is easy to use and learn — new users were up and running with less than 30 minutes of training,” continued Firsty.

SMBs often have a competitive advantage over their larger competitors when it comes to customer support and responsiveness. They can often react quicker to the evolving needs of their customers and target market, with intimate support and new or enhanced products. This should also be an important consideration for the SMB when choosing a PLM system. SMBs should consider such purchases to be a “partnership” with the vendor. For the SMB, a PLM system needs to be easy to use, have a low total cost of ownership (TCO) and be from a vendor who is dedicated to the success of that SMB.

Finally, companies frequently overlook the importance of employee buy-in when selecting a new PLM application. If it is necessary for employees to learn an encyclopedia of information before using the software there will be more pushback from staff, and improving the product development process will be a greater challenge. In order to see a quicker return on investment (ROI) employees need a user-friendly PLM tool that requires limited ramp-up-time. Within a smaller business employees are expected to take on multiple functions, so it is likely they will need to understand many aspects of the software. If a software is easy to learn and easy to use on a daily basis companies will see a greater and quicker transformation across the development process.

Selecting a PLM system can be a challenge if a company is not aware of the options available within the marketplace. But if an organization starts the process by understanding what the technology should address, and further understand the needs of its unique business and market segment, it can select a PLM tool that will allow the organization to develop products more efficiently. “Due to the efficient processes put in place via our PLM solution, Fabric7 has been able to develop and deliver more products in a timely fashion and grow sales without having to make any additions to personnel in either the hardware development or manufacturing operations functions,” concluded Firsty

About the Author: Chuck Cimalore, chief technology officer, Omnify Software, is an expert in business-ready PLM solutions and has helped original equipment manufacturers streamline development cycles, accelerate product innovation and improve bottom-line profitability. Cimalore can be reached at 978-988-3800 or ccimalore@omnifysoft.com.

Yet the 65-year-old factory in the city of Szekesfehervar isn’t the dinosaur it appears to be. Those brutish Russian machines, long since retrofitted with computer controls and precision rollers, need just 15 minutes to reduce an ingot the size of a sofa to a roll of sheeting a few millimeters thick. In fact, Alcoa Inc. is so pleased with its Hungarian operations that it’s spending $83m to add more modern equipment to the plant and make more sophisticated products. “The investment projects show our long-term commitment,” says Bela Forgo, Alcoa’s country manager for Hungary.

Across Central Europe, U.S. companies are getting great mileage out of old factories they bought on the cheap. That these soot-stained giants are worth something may come as a surprise to anyone who has spent much time in the former Warsaw Pact region. The countryside is still littered with the carcasses of factories that didn’t survive the transition to market economics. But some were always more competitive than they looked.
Business Week

When it comes to taking a disciplined approach to reducing defects in manufacturing, many companies may say they are practicing Six Sigma, yet few are actually doing it as rigorously as they should be. That’s according to a new report from the Boston-based IT research firm Aberdeen Group, which also says that companies that fully implement Six Sigma produce on average 40 percent more savings than other companies, including those that say they are implementing Six Sigma.

The research group defines companies that are “truly” implementing Six Sigma as ones that have a formal Six Sigma program; have adopted Define, Measure, Analyze, Improve, and Control (DMAIC) methodology; require employees with Black Belt status to produce results for certification; and require business impact projects to be formally validated by the Finance department. Six Sigma is a disciplined approach to reducing defects and producing measurable financial results. Six Sigma is rooted in statistical engineering and is often associated with lean manufacturing, which strives to reduce waste. In fact, 37 percent of the study’s respondents said their company had both lean and Six Sigma initiatives. A common goal of Six Sigma is to reduce the rate of defects to no more than 3.4 defects per million opportunities.

The report, which examined the practices of 418 manufacturing enterprises in a variety of industries, also makes the following recommendations to improve performance:

-Implement a corporate wide training program to educate employees; implement Six Sigma throughout the organization, not just manufacturing.

-Identify employees who will be dedicated and trained as Black Belts.

-Implement DMAIC methodologies.

-Identify and prioritize business impact projects according to anticipated savings and improved throughput.

-Identify process and project owners who will accept ownership and accountability of the improvement process.

-Use flow charts to map processes.

The report also recommends companies should integrate data collection with analysis, and connect potentially disparate sources of data.

Mexico’s position as a world-class manufacturer of moderate to high value-added goods continues to strengthen. Mexico offers a strategic competitive advantage over other Low Cost Countries in the world. It shares a 2,000 mile border with the U.S., offers a highly developed logistics infrastructure that facilitates global trade, has 12 free trade agreements with 42 countries, a stable currency and economy, a healthy climate for investment and a strong competitive labor force. These factors make Mexico a logical choice for sourcing and OEM outsourcing supply chain strategies.

Logistics infrastructure

Mexico’s logistics infrastructure has improved significantly over the last 10 years due to the privatization of maritime ports, railroads, airports and toll highways. Foreign Direct Investment (FDI) by global logistics companies has played a major role in these developments. Most of the world’s largest logistics companies already have significant assets and operations in Mexico. This competitive environment has served to reduce the costs of transporting goods.

Free trade agreements

Mexico has signed 12 free trade agreements with 42 countries over three continents. Well-known NAFTA covers the U.S. & Canada, while LAFTA covers Latin American countries, and FTA covers the European Union. These FTAs offer companies that source from and/or have operations in Mexico preferential access to 870 million consumers worldwide. Mexico has become one of the world’s primary trade hubs.

Global production and quality standards

Mexico’s increasing productivity, efficiency and quality standards have transformed the country into one of the world’s leading manufacturing nations. Manufacturing labor productivity has averaged 4.98% during the years 1987–2005. Productivity growth in 2005 was 4% according to Banco de Mexico.

Stable economic and political environment

Economic figures indicate a well established and sustainable economic program aimed at growth. Mexico offers a liberal government policy toward FDI, while macroeconomic policies provide a stable economic, social and political environment sought by investors worldwide. Mexico received over $18 billion in FDI in 2005, making it the number-one recipient of FDI in Latin America.

Skilled workforce

Mexico’s labor forces is young (60% under age 25), abundant, skilled and well educated (90% of the population is literate). The working population has consistently demonstrated that it can perform any job it has been asked to perform by foreign investors. The Mexican government is committed to satisfying industries specialized needs by structuring and funding training programs and working in close coordination with businesses.

Source: SupplyMex, Inc. an International Trade consultancy

Logistics Management has a new article titled – How does your warehouse stack up? by Maida Napolitano. The survey was conducted jointly by Logistics Management and Gross & Associates, a consulting firm specializing in materials handling and logistics – First Annual Warehousing Trends Survey.

The survey was designed to help today’s warehouse managers get a clearer picture of the challenges they face today and give them an opportunity to see how their warehouse operations compare with the industry average.

The composition of the survey involved:

The results of the Warehouse & DC Trends Study are based on the responses of 485 participants involved in making warehouse-operations decisions at North American companies.

The key findings of the survey are broken down along the following lines:

Typical Characteristics
-Goals
-Need for speed
-Operations
-Finding a solution
-Technology

Typical Characteristics of an American Warehouse

A typical North American warehouse
-is privately owned (77 percent) with either an end consumer (32 percent) or a manufacturer (26 percent) as its primary customer.
-is less than 250,000 square feet
-receives and ships a wide variety of products, such as electronics, computers and software (25 percent); paper, packaging, and office supplies (24 percent); and chemicals and raw materials (21 percent).
-the most common units handled are pallets (87 percent) and cartons (79 percent), with rack storage (86 percent) as the primary storage module, followed by floor storage (62 percent).
-Over 90 percent of warehouses still pick orders manually using carts and pallet jacks, while 20 percent have evolved to some form of mechanized picking to a conveyor.
-3 percent of warehouses have fully automated picking requiring no human intervention. The typical warehouse uses some form of warehouse management system (WMS).
-Thirty six percent of respondents developed their WMS in-house, 22 percent purchased a stand-alone package, and another 22 percent purchased their WMS as part of an ERP module.
-Surprisingly, 23 percent of all warehouses still have no WMS, relying mostly on spreadsheets and order-pick sheets.
-35 percent of respondents have annual budgets of less than $25,000 for continuous improvement programs and 8 percent don’t even have such a budget.
-Of the warehouse managers who have a budget of less than $100,000 (59 percent of all respondents), 37 percent said they would spend some of it on materials handling equipment, while 23 percent planned to invest in information management systems.
-Warehouse managers with budgets of $1 million or more (7 percent of total respondents) focused more of their spending on IT. Of the respondents in this category, 41 percent reported that they would spend on information management systems, while only 21 percent planned to buy materials handling equipment.

Goals
So what are American warehouse managers’ goals?
-The top objective pursued by warehouse decision-makers this year was increasing customer satisfaction (40 percent).
-Reducing costs came in second at 32 percent, validating the continuing cost-control burden on today’s warehouse manager.
-Only 7 percent of respondents reported that they were expanding their operations,
-1 percent said they primarily focused on maximizing efficiency by buying new equipment and systems.

And what are customer’s expectation of warehouse providers?
-97 percent of respondents said order accuracy was most important.
-On-time delivery came in second at 94 percent,
damage-free shipment was in third place with 91 percent.
-Need for speed

As seen from the above customer expectation where on-time delivery was a key customer demand (94% of the time)
-82 percent can ship orders in one day or less
-an impressive 23 percent said they can ship in less than four hours
4- percent of warehouse managers reported that they are still taking more than one week to ship merchandise
The key differentiator between players who are able to respond fast to orders seems to be technology – WMS, bar coding and RF technology (RFID?)

Operations
When surveyed about operational challenges and issues, the survey was further divided into:

-Receiving and shipping
ability to depend on truckers being at the appropriate dock door when needed-was deemed most critical by 43 percent of respondents
40 percent reported that shipping productivity was another critical issue
-Picking accuracy
the majority of respondents (64 percent) rated order accuracy as a highly critical issue for picking
-Metrics
42 percent of respondents said that they track the percentage of orders with errors
40 percent track the percentage of orders shipped complete
value-added services, such as ticketing and customization, were rated as very critical by only 19 percent of respondents
-Overall issues
warehouse safety was considered most critical by 44 percent of survey respondents,
warehouse security (32 percent)
-Finding a solution

How do warehouse managers plan to solve their problems?
-46 percent of respondents said they had purchased materials handling equipment.
-40 percent purged obsolete/overstock inventory

Technology
So what are the technology issues and solutions high up on a warehouse manager’s list of things?

-Bar coding led the way with 52 percent
-WMS followed closely with 48 percent of respondents

Continuous improvement is also making an appearance in the warehousing space if it hasn’t been there for a while already.
-56 percent of respondents reporting that they have implemented this strategy
-24 percent saying that they are making implementation plans.

Strong interest in relatively new strategies such as “lean” warehousing (34 percent), RFID (33 percent), and Six Sigma certification (30 percent) is apparent, yet few reported implementing these strategies or technologies. Many warehouse managers are adopting a “wait and see” attitude regarding new concepts, and are waiting for further proof of their value for their own warehouses.

I found this survey of warehousing to be quite illuminative in that it highlights what is going well in the warehouse space, the goals that are being formulated and the different programs and technologies employed to meet and/or surpass customer expectations.

Manufacturers are leaving money on the table by not paying attention to bringing more accurate and timely pricing into their quotes.

In discussions with dozens of manufacturers, a simple truth emerges: Quoting systems, even the most manual, are the lifeblood of any sales pipeline. Pricing has become the competitive weapon of choice in many industries; however, it’s the last differentiator in several consolidating markets.
With such a critical role in defining profitability, pricing is getting much attention this year, from the CEO level down.

Amazingly even CIOs who have at times fought re-defining selling systems in favor of spending IT money and time on consolidating ERP systems, databases, or portals, are being driven to make selling systems a priority by CEOs, Sales VPs, and General Managers who all see margin being sacrificed due to pricing inaccuracies and disconnects on quotes. The combination of accurate pricing and quoting is emerging as a priority in 2006, and it’s because so many manufacturers realize that thousands if not millions of dollars are being left on the table due to pricing inaccuracies.

The First Step: Re-defining Quotes With Pricing in Mind
When sales are up and times are good, it’s easy to ignore the occasional pricing
mistake on a quote, or solve it through a quick phone call or even a follow-up visit.
When times get tough, pricing gets micromanaged because margin on every deal
needs to deliver in order for a manufacturer to stay profitable. In reality,
manufacturers experiencing rapid growth yet complacent enough to let pricing be
managed some of the time, checked for accuracy maybe once a month, and
rationalizing all this with “we’ll make it up on volume or that big OEM deal” doesn’t
cut it anymore.

Their competitors can sense this on deals where prospects share pricing data and
pounce when they find you, their competitor, maybe out of sync with the going price
by even 5% to 7%. Competitors are watching, your prospects and customers are
watching, and if you’re publicly held in the United States, even the SEC is watching
through Sarbanes-Oxley compliance. All of these factors and more are making
pricing the competitive weapon of choice in selling and also the most important but
least managed part of a quote.

The Second Step: Knowing a Good Deal When You Sell It
For those fortunate manufacturers that have growing businesses, there’s a tendency
to use rules of thumb, or what many call the assumption base of their companies to
make quick decisions on what price to put on quotes as well. This is different than
pricing accuracy, which is the point of the first step, as this step deals with analyzing
the mix of customized products, services, and margin to determine if the deal the
quote is meant to bring in will in fact be profitable or not. When it comes to this
point, manufacturers need to quit relying exclusively on the intuition of their sales
managers and executives and truly know if the deal they are trying to get through a
quote is truly profitable or not. Only by integrating quoting and pricing along with the
necessary tools to figure out margin can a manufacturer hope to charge prices that
will deliver the highest margin possible.

The Third Step: Unleashing Pricing on New Products
Manufacturers spoken with regarding the payoff of bringing pricing into quoting
remark that their biggest payoffs come from being able to quickly launch new
products and pricing together, even into their dealer and distributor channels. Once
the connection between pricing and quoting systems have been made, one truck
manufacturer has been able to both define custom configurations of its products and
pricing for each component within five weeks – a remarkable accomplishment when
one considers these trucks are highly specialized and have thousands of parts and
components. The lag time for one storage products vendor in pricing updates for
their quoting and online sales systems was solved through brute force on the part of
marketing directors spending all weekend long every three months loading up pricing
tables and ensuring they were loaded and working right.

New product introductions are very tough to align with pricing, especially in to-order
customized products sold through channels where each channel partner has a
different pricing table. Yet if you are looking for a reason to get your quoting systems
aligned with pricing, product strategies and turn them into a selling competitive
advantage, the next product introduction is reason enough to look for improving how
these systems work in your company. Quotes are literally just the beginning, and the
integration of pricing and product customization, when managed to a series of goals
is what helps to transform how companies are profitably selling today.

The Bottom Line: When sales drop off, many companies put their prices into freefall,
sacrificing millions in margins. When sales are up, margins aren’t looked at
closely and as a result, even greater opportunities for profits are lost. What’s needed
isn’t the start of a price war or premium pricing. What’s needed is the synchronizing
of quoting, pricing and product strategies, making selling the competitive strategy
and not just price.

About Louis Columbus: Former Senior Analyst at AMR Research and manager at Gateway
and Ingram Micro, Louis Columbus has published 15 technology books. Currently a manufacturing business consultant with Cincom Systems, Columbus is a weekly columnist for CRMBuyer.com and
Informit.com and gives graduate-level international business and marketing courses for Webster Loyola-Marymount University. He can be reached at lcolumbus@cincom.com.