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📽️ Check out a video demonstration for this use case, here. |
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Use Case Situation Description |
Real-time market/cost/value pricing models enhance spot price target achievement in the process industry by optimizing pricing decisions. These models utilize up-to-the-minute market data and cost analysis, leading to accurate pricing adjustments. This improves profitability by maximizing revenue during price fluctuations and minimizing losses. Additionally, it enhances competitiveness, fosters better customer relations, and supports data-driven strategic planning, ultimately resulting in improved financial performance and overall operational efficiency.
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Prescriptive Design Requirements |
Primary:
As a Pricing Analyst / Manager, I sometimes have to use spot-pricing with customers who either:
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| title | Scope Validation and Project Readiness |
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During scope validation process we are ensuring that the project deliverables are completed according to the agreed scope and quality standard by asking the following questions: Scope Validation and Project Readiness Workshop – Validation Questions & Answers: | Q1: A1: | Q2: A2: | Q3: A3: | Q4: A4: | Q5: A5: |
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LEARN MORE: For more information on scope validation and project readiness, click here. |
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The following showcase the user stories for this use case.
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| title | Epic: Goal Seeking Functionality in LPG |
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As a Pricing Manager/Pricing Administrator, I want to use the goal seeking functionality in my LPG. User Story Name - Configure the “Revenue Change By” setting for goal seeking I want to: Define the appropriate dimension in my goal seeking setting so I can: Use the goal seeking functionality in a relevant way Acceptance Criteria: Any LPG output field can be used and will show in the drop down list for the user to choose from |
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Core Pricing Data Requirements
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LPG fields | Calculation logics | Data Source | Product ID | | Product master data | Product Name | | Product master data | Market Area | | Secondary Key for the LPG | Business Unit | | Product master data | Product Group | | Product master data | Packaging Type | | Product master data | Cost per ton | = (quantity Ammonia x index Ammonia of this month) + (quantity Cyclohexane x index Cyclohexane of this month) + (quantity Natural Gas x index Natural Gas of this month) + (quantity Propylene Polymer Grade x index Propylene Polymer Grade of this month) | quantities of raw material coming from BoM Data | Base Price | = cost per ton x (ton packaging weight) | Ton packaging weight coming from the “TonPackaging Weight” Company Parameters table | Change in Price | = Result price this month - Result price previous month | | Change in Price (% ) | = ((Result price this month - Result price previous month) / Result price previous month ) x100 | | Current Calculation Month date | Index MM-YY | | Raw Material Baseline - Ammonia | index Ammonia of this month | Index for Raw material Baseline coming from the “RawMaterialIndex” Company Parameters table | Raw Material Baseline - Cyclohexane | index Cyclohexane of this month | Raw Material Baseline - Natural Gas | index Natural Gas of this month | Raw Material Baseline - Propylene Polymer Grade | index Propylene Polymer of this month | Change in Raw Materials | = Base price this month - Base price previous month | | Change in Raw Materials (% ) | = ((Base price this month - Base price previous month) / Base price previous month ) x100 | | Warehousing costs | = Base price x warehousing costs percentage | Warehousing Costs percentage coming from the “WarehousingCosts” Company Parameters table | Packaging costs | = Base price x packaging costs percentage | Packaging Costs percentage coming from the “PackagingCosts” Company Parameters table | Total Variable costs | =(Base price + warehousing costs + packaging cost) | | Result Price | =Total Variable Cost + strategy selection | Strategy Selection coming from the “StrategySelection” Company Parameters table | Margin | = Result Price - Total Variable Costs | | Result Price Chemicals | = Result price + market area adjustment | Market area adjustment coming from the “MarketAreaAdjustment” Company Parameters table | Margin Chemicals | Result Price Chemicals - Total Variable Costs | | Result Price - Floor Price | = result price chemicals + Floor adjustment | Floor adjustment coming from the “ManualPriceGuidance” Company Parameters table | Margin - Floor Price | = “Result Price - Floor Price” - Total Variable Costs | | Result Price - Target Price | = result price chemicals + Target adjustment | Target adjustment coming from the “ManualPriceGuidance” Company Parameters table | Margin - Target Price | = “Result Price - Target Price” - Total Variable Costs | | Result Price - Stretch Price | = result price chemicals + Stretch adjustment | Stretch adjustment coming from the “ManualPriceGuidance” Company Parameters table | Margin - Stretch Price | = “Result Price - Stretch Price” - Total Variable Costs | |
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NOTE: There have been no out-of-scope functions or features identified at this time.
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Core to this use case is the concept that there is no established pricing agreement in place for the prices that are being managed. Essentially the pricing for these scenarios is not covered by contracts or other existing deals, and pricing may be based on a formula (and must be to allow automated price changes) or may not be and may be set based on some arbitrary concepts.
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