Optimizing pricing in CPG: Leveraging Visualfabriq for seamless adjustments

Agreeing pricing with retail partners is one of the most important challenges a consumer-packaged goods (CPG) manufacturer faces. But the hard work of optimizing pricing in CPG doesn’t quite stop there. 

In an ideal world, you will have deployed your full range of expertise and tooling to work out a deal that meets your organization’s targets, while also delivering value to the retailer. 

You could be forgiven for breathing a sigh of relief, before focusing on how results are playing out in the short term, and ways in which pricing and programs can be optimized. Then, in time, you begin to think about next year’s negotiations and how to continue evolving a more holistic trade spend strategy in CPG. 

But are you sure the deals you’ve struck have been fully approved, and all the implications have been worked through? And is the data accurately reflected in the ERP system which sits at the heart of your organization? 

In this blog we’ll examine the aftercare a CPG should have in place post negotiations, highlighting the potential traps that could throw your plans off course. And we’ll show how integrated software can ensure pricing information is approved and shared, adjustments are made accurately and swiftly, and the implications are fully understood by all stakeholders.

Strategic pricing in CPG: from negotiation to implementation 

Pricing negotiations in CPG can be intense. Senior management and finance will have set the overall financial targets for the company. But it is account managers and other frontline professionals who will have pored over historic data, analyzed current market and economic conditions, and evolved a range of forecasts to prepare a bulletproof pricing strategy ahead of sitting down with retailers for negotiations.  

They will also have taken into account the needs of their individual retail partners to ensure that they are delivering value to all stakeholders.  

Unsurprisingly, these negotiations can run right to the wire. But when they’re done, they’re done. The frontline team will probably enjoy a brief respite before turning their attention to the next round of negotiations. 

It’s all too easy to feel that once you’ve agreed a deal in principle with a retailer, the hard work is behind you. But those adjustments still need to cascade through the company, so that all stakeholders are aware of them and their potential impact.  

Adjustments and discounts will need to be calculated for each account and each product. And these must all be tracked, approved, and signed off. 

Ultimately, they need to be reflected in the organization’s ERP system. Accurately and precisely. 

After the rush of the planning and negotiation phase, this pricing adjustment phase can feel like an afterthought. But until completed, with the relevant details in the ERP system, the manufacturer cannot begin invoicing. And other frontline staffers cannot begin planning for the year ahead – and the year after that. 

It’s tempting to think this is purely an administrative process. What could possibly go wrong? 

Overcoming pricing challenges in CPG 

A lot depends on the software tools CPG professionals rely on.  

Let’s assume the teams negotiating with retailers still rely on bespoke models based on spreadsheets or other disconnected tools. In that case, they may need to transfer data and make adjustments by hand. Vital information could even be dispersed through multiple email chains. 

And that’s before we consider the ERP system itself. The agreed pricing in CPG has to end up here. Simply issuing invoices and taking orders becomes impossible otherwise, never mind the broader impact on supply chain management. 

But legacy systems can be a problem if they offer limited, or no, connectivity to other platforms in the organization. Somehow, that vital pricing information must jump this air gap. This can mean more manual or semi-manual work, meaning more delay and, potentially, more mistakes. 

But this is just one of the challenges. 

Wherever they are, those price structures, discounts, and deals, need approvals. Again, with manual or semi-manual systems, this could mean distributing spreadsheets or other documents throughout the organization. Each move, query, or check is another possibility for delay or loss. Every edit or recalculation is a chance for an error to find its way in. Workflows and chains of approval become impossible to track.

From approvals to ERP

Only when those deals have been approved, can the information be added to the ERP system. 

For an organization with many products and partners, that is an awful lot more keying in. Each digit presents another opportunity for a typo or transposition or a miscalculation. 

And that raises the prospect of replicating mistakes throughout the supply chain. Like attaching an individual item price to a box, or a pallet, for example. 

Such mistakes can cause friction between CPGs and their stakeholders. Sure, a good relationship between manufacturer and retailer will help smooth things over. But this still reduces the amount of time and goodwill available to collaborate on optimizing programs and planning for a more mutually beneficial future. 

Simplifying pricing adjustments in CPG 

Mutual trust is crucial in CPG. As we’ve seen, a good relationship between partners, backed up by clear contractual terms, can resolve the occasional pricing mistake without too much drama. 

But it is clearly far, far better to simply not run into this sort of problem in the first place. And that is a question of governance, visibility, and workflows. 

When different teams are using different, unconnected tools, sharing information becomes difficult before, during, and after a presentation. 

A single source of truth

A common platform on the contrary connects multiple teams and ensures they are working on a single version of the truth. This also allows a CPG organization to tie them into clear workflows and chains of responsibility. 

So, when frontline teams reach an agreement with their retail counterparts, they can seamlessly share the appropriate prices and discounts with their supervisors for approval. No need for batch transfers of cut-and-pasted information or, even worse, keying in data by hand. 

And once approved, that information doesn’t have to leap a virtual or even physical airgap into the ERP system. Rather, it is reflected there and cascades into the systems of other relevant departments, including finance and the C-suite. Any changes – and any mistakes – can be identified and tracked. The entire organization can have far more confidence in the numbers they are seeing and in governance overall. 

The data is also immediately available for teams planning for the next period, providing fuel for AI-powered forecasting tools. Forecasters and planners can be confident they are working with accurate, up-to-date data. So that they do not have to constantly second-guess themselves. 

Previously, the close relationship between CPG companies and retailers was crucial for ironing out occasional mistakes. Now, accurate and up-to-date data serves as the foundation for collaboration. This shift from relationship-based problem-solving to data-driven collaboration allows both parties to work together more effectively, optimizing plans and developing innovative programs for the future.

How does Visualfabriq help with pricing? 

Visualfabriq’s Trade Spend Master pulls together the full array of data and tooling that CPG teams need to establish accurate forecasts, build trade spend management and promotion plans, and plan marketing programs. 

That integrated software enables companies to evolve and collaborate on a single version of the truth. It also allows them to build tailored workflows to share data and approve plans, before, during and after negotiations. 

As well as setting approval chains, notifications for key stakeholders can be set and enforced, removing the possibility of delays. And once approved, the data can flow effortlessly into your ERP system. No manual work, no mistakes. 

So, instead of pricing adjustments in CPG being at best an afterthought, at worst a chore, they become just another seamless, auditable workflow. 

The result is that following a successful negotiation, price adjustments are approved and distributed, swiftly and accurately. They not only highlight current performance, but also provide a solid foundation for planning for the future. 

Takeaways 

Pricing adjustments and approval processes are an inescapable part of doing business for CPGs. The sooner they are reflected in company systems, particularly ERP systems, the sooner the organization can get on with business.  

But too often CPG teams treat them as a chore, after the excitement of pricing negotiations. Siloed and legacy systems, which cause delays and raise the possibility of errors, can further complicate the issue.

Visualfabriq’s software helps CPG professionals prepare for pricing negotiations. And, once concluded, it smooths the path to approving and updating prices quickly and accurately. This means that sales professionals and other CPG specialists can get back to business quickly. But it also means that they are working with exact, up-to-date information as they prepare for future negotiations. 

To discuss how trade spend optimization can help your organization develop a sustainable, holistic pricing strategy into the future, get in touch to arrange a demo.