Have you Standardized your Price Lists? Is it Import Ready?

This is a special report for the International Manufacturing Technology Show exhibitors
If you are selling through a distribution channel then the DISTRIBUTORs are the FIRST customer who’s needs you should meet. I’ve seen many manufacturer’s who have great products, great catalogs, and yet they can’t figure out why they are not selling more.  Somewhere there is a hurdle.  Sometimes the hurdle is in the last place you might expect because you don’t see it every day or feels it’s effects personally.

You’ve paid for the catalog, you’ve paid for the marketing, you’ve found a good distributor, you had a great sales meeting and the outside salespeople are excited to go show their customers your product.

What happens next?

The end-user customer asks for a quote. Now that goes directly to the inside people at the distributor. They now have to create a quote, and when they do it,  they don’t want to have to enter the same information over and over again. If one customer wants something “just like my buddy Joe got at his place” they have to standardize.

Here’s a couple of cases where the manufacturer slipped up:

PDF issues: The Old Established Company
These folks have a great product and printed price list. They’ve been in business for many years and have a great printed price list. Because they’ve been in business such a long time their part numbers and descriptions where entered years ago at the advent of databases when distributors first embraced computers.

Example of NOT READY for import

They supply their price list in a PDF format. Creating price lists in PDF or MSWord is great for printing but we live in an world of databases. If there is no way to import the fields then everything has to be manually entered or was entered manually. Internally the inside sales people within the manufacturer knew that when they got the purchase orders from a particular distributor the part numbers looked different. One may have in their database “part# 32.476.198” while another had “part# 32-476-198” and still another had “part# 32 476198”. Human beings reading a fax can understand that. However, as more and more larger distributors move to EDI or other forms of electronic order entry this inconsistency can become a big problem. Computers understand spaces, “-” and “.” as different items.

Remember, “Garbage In, Garbage Out” If you want consistency and standards don’t let it up to an inside salesperson at a distributor, who is rushing to enter and order to get to a customer, to enter your part number, description and pricing.
We are going to see more and more electronic databases being used. If you have not standardized your price lists yet you may want to get started so you have time to think it out and plan accordingly. You don’t want to be put into a position of rushing to complete only to discover you should have created it differently.

Older Software: The Storage Company
This manufacturer created the price list In excel, but, it just would not load: There was a problem with importing. Something seemed incorrect. When the distributor contacted the manufacturer their comment was “Well, everyone with a Mac has a problem. You should get a PC.” As it turns out the excel was a trainwreck: Several people had worked on the file over time. The first person did not have a good working knowledge of excel and collapsed some columns. Column B was collapsed at some point in the creation of the file and some of the product descriptions where there while other product descriptions where in Column C. In addition to that there was a mixed standard of descriptions. As an example, one description read “Cabinet Tall 36″” while another read “Tall Cabinet 36” but they both had different part numbers. Once again, inside sales people who are in a rush to enter orders become quickly disenchanted with vendors who make their life difficult. If it’s not easy and intuitive, you can have the best product in the world, the best sales force, the perfect price point but you will lose orders because you’ll be branded as “They’re just tough to work with”

The “non standard” Standard
Distributors work with many many manufacturers and are very familiar with how jobs are “routed” through a facility. So when a distributor talks to a vendor and the vendor says “If you want it in black just add a “B” to the part number at the end. If you want it in Gray – just add a “G” There is no charge extra for that either, just add a “G” to the end. That’s what our guy use on the floor”

Aside from the above discussion about how computers would understand a “-G” vs. a “.g” there is a larger perception problem in play here. What may seem like a rather simple way to designate what color you want actually raises a big red flag for the distributor. They know that the way one person writes a “G” could look like a “B” to another person. Even if the “guys on the floor” know enough to ask someone to double check, distributors know how important accurate information on the floor of a plant is to efficient delivers. It’s the real basis of “lean” “SPC” “ISO” etc. Again, what the manufacturer perceives as a “simple easy to use, ‘just add a letter’ system” what the distributor hears is “Our shop routing process is a real mess so this vendor is probably going to be late or mess up an order at some point. I’ve got to keep an eye on them”

The Future: UNSPSC

As we get deeper and deeper into a global economy there are some things you should be aware of that are developing.

UNSPSC is the acronym for the United Nations Standard Products and Services Code, it is a coding system to classify both products and services for use in the eCommerce. The UNSPSC was jointly developed by the United Nations Development Programme (UNDP) and Dun & Bradstreet Corporation in 1998 and is currently managed by GS1 US, which is responsible for overseeing code change requests, revising the codes and issuing regularly scheduled updates to the code, as well as managing special projects and initiatives.UNSPSC is the acronym for the United Nations Standard Products and Services Code, it is a coding system to classify both products and services for use in the eCommerce. The UNSPSC was jointly developed by the United Nations Development Programme (UNDP) and Dun & Bradstreet Corporation in 1998 and is currently managed by GS1 US, which is responsible for overseeing code change requests, revising the codes and issuing regularly scheduled updates to the code, as well as managing special projects and initiatives.
Eventually, you are going to have to attach a UNSPSC code to all of your products.  Take a peek at the link above to understand it a bit better.

Labor Costs

“We’ve been doing it this way for years and no one else has complained”  If I’ve heard that once I heard it a thousand times.  Maybe, they stopped complaining years ago and maybe, just maybe, your never even heard the complaint.  Let’s look at some dollar and cents.

If someone at an end user keys in an order and faxes it to a distributor, that distributor keys in the order and faxes it into the manufacturer.  The manufacturer keys it into their system.  The product ships and a hard copy of the invoice is sent to the distributor who must key in some more information,  then the manufacturer sends out a printed copy of the invoices to their agents.  The agents then key in the sales again.  That’s an awful lot of repetitive keystrokes folks.  It’s pretty easy to see why moving to electronic databases and communication is happening and is going to move to a standard

Standards

So what are the field names you should use if you don’t have something already?  Here’s a rough outline:

  • Upload Ready Files… or are they?

    Part Number

  • Description 1
  • Description 2
  • Package Quantity
  • Retail/List Price
  • Distributor Net/Discount from List/ and/or multiplier from list

Those are good column headings for your spreadsheet.  Outside of THOSE headings there should NOT be any other row that describes something about a set of items.  If there is information that applies to the entire group of items (rows) then each item should have that same information. To the right you will see an example of something that is ready for import.  Notice how it is different from the spreadsheet pictured above.  There is one column heading throughout.  This is really not for viewing but for importing.

Details Details

But there is ONE error in the picture. Can you see what it is?  To be honest, you would probably not even catch the error.  Take a look at the FORMULA in the highlighted cell.  It’s a formula and not text.  The pricing columns all have dollar signs in them.  That’s a nice thing to do if people are going to read it but the computer has to import it.

There have been cases where distributors said “Wow this is a great file and ready to import!”  but then the import went south with strange errors.  It wasn’t the dollar signs,  it was the rounding.  There was multiple column pricing for quantity breaks.  Everything was a formula and when it was converted to text it had numbers that where out 6 decimal places. Because the formula’s where all based upon one cell as a baseline, the rounding errors got bigger and bigger and when the import happened the pricing was up to .27 cents off on certain items.  That can add up if they standard package quanity is 144 pieces. Why did it happen? Because when the import was done it only imported the first two decimal places.

Once you’ve completed your spreadsheet save all of the fields as TEXT and this problem will go away.

Details Details Details

Some other things to consider: What software system do your distributors use to run THEIR BUSINESS?  It’s a good idea to ask.  You may have field length issues when importing.  If you have a Description 1 field that is 100 characters long but the field in the software only permits 43 characters, with the rest being parsed, that information IS NOT going to be in the database.  If you have one critical dimension at the end of the description and upon import an entire group of items is parsed all of the part numbers will be different but the descriptions will all be the same.

Well, we can’t make 100’s of special prices list for EVERY distributor” you say.  You don’t have to.  Just find out what the software is at your key distributors and accommodate them.

“Again, no one has really complained about this before so we don’t think it’s a big issue”

When do you update price lists? When you introduce a new product or have a price increase. Right?

Now, what does a good outside sales force do when there is a change?  They have a sales meeting with the distributors to review the new products (and new catalog) and get the distributor salespeople pumped up to go out and sell.  In many cases this is happening as soon as the new price list is put out… in some cases your sales force is brining it with them.

Is the IT person in the room for the meeting?  Generally the answer is no.  Does your outside sales force commonly work with the IT people at a distributor?  Do they even know who does it if you ask them?  Generally, the answer is no.  When the IT person gets the file, if they discover it’s going to take some time to clean up it gets put on the backburner, especially if their primary responsibility is accounting or other back office work.

So what happens in the field? Your salespeople go out, make calls with the distributor salespeople and get some orders.  They place the orders.  The price list isn’t updated so they spend the next couple of days fielding questions, dealing with distributor inside salespeople and your customer service people.  They aren’t selling.  You’re losing money and you’re getting a “difficult” to deal with reputation.

Take Aways

  • Take a look at your price lists.  Are they easy to import?
  • What software are your distributors using?  Are your price lists easy to import?
  • Have you ever called your distributors and asked them what they would like to see improved or changed in you price lists to make their job easier?

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