Situation
A common problem faced by executive leadership teams is how a business funds transformational activities when they are operating in challenging global markets with complex supply chains and relatively narrow margins. Knowing you need to transform, modernise and accelerate digitalisation is one thing – paying for it is another.
This was the challenge facing the executive leadership of an automotive manufacturer in Europe. They understood the issues: the business had a low data maturity, operated on disconnected systems, which manifested in poor data quality, reporting issues and high operational costs.
Approach
To begin this wider transformation, the business needed to deliver cash and increase EBIDTA to support investment funding from group and engaged with Valcon’s Commercial Excellence team to consider the options available that could have an immediate impact. Following an initial review, it was identified that there was a significant opportunity to deliver increased profit – both immediately and on-going – by optimising their Spare Parts Pricing.
The Valcon team have deep expertise in Pricing Strategy and an established track record in Parts Pricing Optimisation across automotive OEMs, OESs and distributors. We were able to bring our robust methodology to this client challenge and rapidly identify the pricing levers that could be pulled to provide rapid ROI.
Results
We created an immediate impact by returning more than €5m of realised benefits in just the first 6 weeks of the project, with a with a further ~€8m of annualised EBITDA uplift delivered from phase 2. This rapid return on investment allowed the further investment in pricing optimisation as well as funding broader transformation across data foundations and S&OP Planning.
