DISC, Users Develop Margin Management Strategies

Software developer brings distributors in on project planning

Software developer brings distributors in on project planning

Farmington, CN — February 17, 2004 — Software developer Distributor Information Systems Corp. (DISC) said it has launched an initiative to help distributors increase their profitability by implementing new pricing strategies.

According to Bobbie Warner, operations manager of DISC's Customer Services group, the catalyst for the initiative was a request by a company that uses DISC's enterprise resource planning (ERP) software. The distributorship wanted DISC's help in finding a way to manage its margins. When DISC executives discussed the idea casually with the presidents of other firms, the response was strong: These specialty industrial distributors were clearly concerned about eroding gross margins and unprofitable customers.

"What we're developing is not a traditional software product, in the sense of a one-size-fits-most tool, but one that achieves a customized, strategic solution for each distributor, with the potential for some shared implementation and monitoring tools," Warner said.

In keeping with its customer-driven development procedure, DISC kicked off its margin management initiative by inviting users to join a customer advisory group. Warner explained that during the latter half of 2003 DISC surveyed its customer advisory group twice to gain insight into some of the problems encountered by distributors who have already tried to implement strategic pricing.

"Among other things, we determined that opinions were mixed with regard to activity-based costing (ABC)," Warner recalled. "Some executives considered it critical to the project, while others felt it was too complicated for their people. Given that split, we decided to implement margin management both with and without ABC, to give our customers a choice."

DISC's customer advisory group will be involved throughout the four phases of the margin management project.