Process Area : General
Best Practice Scenario:SC1080
Report on price overrides are monitored and approvals are tracked. Analytics are reviewed to address productivity and business outcomes.
Scenario Detail :
The Price Overrides Report is a management tool for monitoring changes made to the authorized base selling prices/ price master during sales order entry.
The report aims to track special prices, both higher or lower than the base price, given by sales representatives who override the authorized prices beyond the per unit or percentage tolerance entered. The report lists the names of the sales personnel, customer, product, reason for override, the time the price was overridden, sales order number and the old, new, and per unit change amounts.
Price overrides is a key measure of pricing effectiveness. Firms must ensure that they track number of price overrides by sales representative, region, channel and product.
Analytics helps firms determine the quality of pricing and number of pricing errors and corrections. It enables the firm to manage profitability and maintain a consistent price range within a particular market, channel and product.
They provide a check on a firm’s pricing execution capability. Too many price overrides may indicate poor deal or contract management or a gap in the price execution practices.
Too many price overrides in a particular region or by a sales representative may indicate poor adherence to policies and processes.
Similarly, a high number of pricing errors can indicate inadequate staff training or poor quality assurance processes.
Firms must use analytics to determine if training is required or processes need to be modified to increase oversight of pricing data and to reduce errors.
Benefits of price override reports are increased profitability margins and consistency in pricing strategy and execution.
Metrics Impacted :