Finding the "Right" Price

e-Procurement promises to lower costs for buyers. But for suppliers, that sounds suspiciously like lower prices and tighter margins. Now, new sell-side applications purport to let suppliers manage their pricing more strategically.



Taming Maverick Selling


Sales request response time, price consistency and margin pressure were the issues for Eaton Corp., a $9 billion global company that manufactures highly engineered products for the industrial, vehicle, construction, commercial, aerospace and semiconductor markets. At Cutler-Hammer, Eaton's electrical control and power distribution product division, the pricing team (about 60 people) was using a variety of internal data sources and in-house applications to manually process about 200,000 sales requests annually. With critical information spread among disparate systems, and some data available only in hard-copy form, the pricing team sometimes required as long as five days to process requests.


Eaton initially sought to speed request processing by developing a proprietary system. But during the 18 months that the company worked on its in-house software, e-business took off, increasing the number of orders coming into the company and making speed a more acute issue in the processing of sales requests. In the meantime, third-party software developers were bringing sell-side applications to market. Cutler-Hammer chose to implement an application from Palo Alto, Calif.-based Metreo. The software, called SR2 (for Supplier Response), deployed over 12 weeks, draws information from inventory, production and sales systems in real-time to generate a score for each incoming sales request, based on pre-defined criteria such as the value of the customer, expected impact on key strategic performance metrics, competitive environment, product availability, and plant capacity. The application allows the company to aggregate orders coming in over various sales channels and routes the scored requests to the appropriate pricing managers as a way to ensure pricing consistency.


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