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"Advanced functionality to manage costs, sell prices, promotions,
discounts, chargebacks, and other key attributes while
optimizing gross profits."
Source : epaCUBE
Optimizing Gross Margin over Continously Cleansed Data
Product Data is also known as :
Product Data Analyst,
Product Data Base,
Product Data Feed,
Product Data File,
Product Data Information,
Product Data Mastering,
Product Data Services,
Product Data Solutions,
Product Data Specialist,
Product Data Standards,
Advanced Data Products,
Associated Data Products,
Best Data Product,
Company Product Data,
Consumer Product Data,
Corporate Data Products,
Data Analysis Products,
Data Backup Products,
Data Business Products,
Data Computer Products,
Data Display Product,
Data Loss Prevention Product,
Data Management Products,
Data Media Products,
Data Presentation Products,
Data Product Development,
Data Product Manager,
Data Products Corporation,
Data Products Plus,
Data Products Sales,
Data Recovery Product,
Data Replication Products,
Data Services Products,
Data Technology Products,
Data Visualization Products,
Dropship Product Data Feed,
Extreme Data Products,
General Data Products,
Gross State Product Data,
Information Data Products,
Integrated Data Products,
International Data Products,
Market Data Products.
EXECUTIVE SUMMARY
Distributors have spent many years
implementing both technology and business
processes to reduce the cost of doing business.
Great strides and advancements in “productivity”
have been gained in the interest of profitability -
in a time of extreme margin pressures,
commoditization, and competitive forces. In fact, it
has been estimated that 25% of productivity
improvements during the 1990’s can be directly
related to the distribution channel.
As a distributor, you know that the difference
between building a thriving business -and facing
extinction - is the ability to constantly monitor
and reduce costs. Supply-chain professionals spend
billions of dollars annually to increase productivity
and reduce costs to maintain or increase the bottom
line AND provide a competitive advantage.
“Pricing Management solutions are one of
the most carefully guarded secrets of
today’s companies. Do not wait for
competitors to adopt first…In each vertical
market that has implemented a pricing
solution, one innovator has taken the lead
and seized the competitive advantage.”
Yankee Group Report
“Why Innovative Companies are Investing in Price
Optimization, Execution
and Analysis Solutions”,
March 2004
While pricing is one of the more significant
variables affecting a distributor’s profitability,
relatively few dollars have been spent automating
cost and gross margin modeling and management.
Most distributors maintain extensive pricing
schemas in their operational systems and create
reports to analyze events long after the facts are
available; however, the ability to truly analyze and
model costs, sell prices, promotions, rebates,
charge backs, and other key attributes proactively –
before the facts are in -- has been more elusive.
The complexity involved is often of insurmountable
proportions. In addition, the volume of customer and vendor price agreements, their
constantly changing nature and lack of accurate,
unblemished , makes the task of modeling an
almost impossible task for any distributor.
McKinsey and Company estimates that a one
percent improvement in price can provide as
much as an 11 percent increase in margin. One
does not need an advanced degree in mathematics
to understand the highly leveraged relationship
between pricing and margin. However, anyone
who has spent time in distribution knows
“improving gross margin” is much easier said than
done. Until now, tools that give the distributor a
fighting chance to seriously analyze costing and
pricing information to target specific opportunities
for improvement have just not been available.
As distribution executives focus on revenue and
profit growth, margin and price optimization
software is the perfect tool to finally help get them
there. The Yankee Group found that enterprise
investment in PMPO (Price Management and Price
Optimization) results in 10 to 20 percent profit
improvements at a rate unlike any other packaged
software solutions on the market. In addition,
enterprises experience an improved margin
contribution and revenue uplift, as well as bettermanaged
market volatility and supply balance.
Millions of dollars have been spent on data
management projects, with the ultimate goal of
accurate and consistent product data”. Companies
have found that without normalized and
standardized data, many other corporate initiatives
(including pricing and gross margin management)
can never get off the ground.
epaCUBE was founded on the premise that “real
dollars” could be reclaimed in the supply chain by
starting with the very basics – making certain that
every byte of product information is accurate and
synchronized internally and externally – then
optimizing gross margin over continuously
cleansed and up-to-date product data. Gross
margin optimization starts with clean product data.
THE IMPACT OF CLEAN PRODUCT DATA
Imperfect data is more than just an unnecessary
tax on your business. Without clean, accurate
data, other operational systems can fail and lead to
dangerously costly, time-consuming or even fatal
problems.
Imperfect data is more than just an unnecessary
tax on your business. Without clean, accurate
data, other operational systems can fail and lead to
dangerously costly, time-consuming or even fatal
problems.
“As companies try to publish and
subscribe their product information to
share with partners, they are finding that
achieving a consistent and accurate view
of product data inside the organization is
a more strategic undertaking than
originally thought.”
The Yankee Group
AMR Research summarized the “Seven Common
Complaints Tied to Master Data.”
- ERP rollouts are delayed and
production lost because new systems
require more complete and consistent
product data.
- More than 80% of support calls for
supply chain planning can be traced
to master data problems.
- Procurement of common materials
can’t be managed globally because of
data inconsistencies.
- Customer service suffers due to a
fragmented view across channels and
geographies.
- Partnerships and partner strategies
suffer because companies can’t total
how much they buy from or sell to
partners.
- Synergies from mergers and
acquisitions aren’t realized because
data can’t be synchronized.
- Even after master data is cleaned up,
it can decay over time as duplication
and incorrect values creep in
For years, distributors have experienced the
problems and consequences of “dirty product data”. Other operational applications are
susceptible to costly problems when product
information is missing or inaccurate. “Dirty data”
affects every aspect of a distributor’s operation.
Many distributors realize the full impact of “bad
data” when they venture out to the web for the
first time. Upon embarking on a web storefront
initiative, distributors quickly realize that product
content is often the “Achilles heel” -limiting the
success of the project.
All aspects of product data management,
including product numbers, descriptions,
attributes, cost, and price, are critical to a
distributor’s business. If not managed tightly and
with the right tools, these variables can have a
negative impact - potentially costing companies
tens of thousands of dollars (and more) annually.
Distributors need “one version of the truth” when
dealing with product data. While inaccurate data
can adversely affect many areas, its consequences
can be particularly detrimental when distributors
analyze cost changes and their affect on complex
customer price matrices and gross margin.
Without clean, accurate data, other operational
systems can fail and lead to costly and timeconsuming
problems. Examples include:
Your customer can’t find a particular
product.
Often your customers or your own
sales or service representatives can’t find products
in the database because the description is not
consistent with other like products. At best, this
translates into “poor customer service.” At worst
(and more likely), this can lead to lost sales and
lost customers. Often the application software is
deemed to be “not working” when it is really all
about “bad data”.
Your customer gets the wrong price.
You invoice the customer with the wrong price
because an increase or decrease was not properly
brought into your ERP system. Not only does this
mean poor customer service, companies also incur
the cost associated with correcting the invoice.
Often the cause of the problem is never fixed and
the same issues repeatedly occur. Again, the result can be frustrated customers, additional costs to fix
the errors, and the potential for lost sales and
customers.
- 75% of the companies surveyed
reported significant problems as a
result of defective data
- 50% had incurred added costs due to
the need for external or internal
reconciliations
- 33% had been forced to delay or scrap
new systems
- 33% had failed to bill or collect
receivables
- 20% had failed to meet a contractual or
service level commitment
Price Waterhouse Coopers
“Addressing Data Quality”, IDEA
February 8, 2006
You pay the wrong price. Cost increases
and decreases are not correct in your back office
system. Often your customer pricing system is
based on a calculation involving costs. Margins
can be misstated and additional costs are incurred
to correct your system or the supplier invoices,
and then reconcile financial systems. Often,
margin is simply lost when the problem is not
detected and solved.
Rebates are not properly collected. The
full value of rebates earned may not be collected
from your vendors when product attributes are
wrong or missing, or when products that qualify
for rebates are identified differently across
multiple warehouses or branches.
Margin problems are caught “after the
fact”. Distributors often suffer from 20/20
hindsight. Cost changes that affect customer
pricing are not highlighted until after the product
is shipped and the customer disputes the invoice.The opportunity to proactively manage your
pricing is lost when the impact of cost changes is
found, or not completely understood, until afterthe-
fact. Right or wrong, without a “buffer zone”
to analyze and manage cost changes, whatever the
vendor sends you goes into production. Either the
problem is found when the customer calls and
complains or when gross margin losses become
large enough to have their own visibility.
Duplicates in the database an
operational nightmare for distributors.
When distributor’s back office systems were
primarily internal-facing, employees provided a
buffer to the outside world for many data
problems. Now, this data must be exposed to the
outside world for a variety of reasons. The ability
to sell products over the web has been and will
continue to be a major focus for distributors.
Distributors have a tremendous opportunity to
decrease costs, increase efficiencies, and remain
competitive through expanded use of electronic
commerce (EDI, XML, private and public trading
exchanges, integration to customers purchasing
management systems like Ariba, SAP, etc.). These
projects often fall dramatically short of their
potential, or fail altogether due to lack of accurate
and consistent product data.
New product introductions can be
confusing without consistent delivery
of information. A great deal of time and
money is spent in the distribution channel either
relaying information about new products or
regarding changes/updates to existing products.
Shipping the wrong products because
of bad data. Mismatching product data creates
a trickle down effect throughout your entire buy
and sell cycle. Shipping or receiving the wrong
product can cost a great deal of money when you
consider the time spent reconciling invoices, labor
wasted in the warehouse, product delivery, and
customer service costs associated with solving the
problem and reconciling with the customer and/or
vendor. Again, shipping errors due to bad data
have the potential of creating lost sales or worse
- lost customers.
Lost opportunity can often be directly
related to bad data. Failed electronic
communication projects (EDI, XML, etc), that are
unable to take advantage of content feeds from
data sources, vendors or customers - and the cost
of employee time and effort spent cleaning up
errors - can mean business opportunities lost to
competition. Many industries have created
standards to facilitate the exchange of
information…as in, “How does your data quality
stack up against these standards?” Without a
proper “internal” process for cleansing, bad data
will continue to re-surface and limit your ability to
take advantage of new opportunities.
IT’S A DIRTY JOB
While product data cleansing is essential to
success, it often becomes labeled a “dirty job” that
is difficult to address. The idea of cleansing
thousands (and often one million or more) items
can be a daunting and seemingly impossible task
for most companies to tackle. Cleansing projects
relying on “outside sources” for content, or those
simply implementing a database, have exposed
the magnitude of the problem.
While these initiatives are great starts, solving
your internal requirement for truly cleansed data,
ready for your company’s use, is not a single leak
with a quick fix. Rather, a holistic approach is
required to address all aspects -including
aggregating data from all potential sources (backend
ERP systems, suppliers, marketing systems,
3rd party content providers and vendors) and
establishing business rules to automatically and
manually cleanse data. Also, distributors must
address the complexities of data transformation
and publication to other operational systems and
trading partners.
In today’s business environment, clean and
accurate data is an ongoing requirement for
collaborating with all points of your supply chain.
Ask yourself these questions:
- Have you ever been involved in a VMI
relationship that failed or was less
profitable due to lack of synchronized
product data between systems?
- Has the launch of your website been
disappointing for customers due to lack of
accurate and updated product content?
- Have EDI projects not quite gotten off the
ground with trading partners because data
synchronization is just too expensive to
accomplish manually?
- Have you used analytical tools and made
strategic decisions based on erroneous
data?
- Are you ready for the looming RFID
customer-mandated initiatives?
- Have you acquired a company and
experienced an unexpected, extremely
high cost to consolidate or synchronize
product data
DIRTY JOBS REQUIRE HEAVY DUTY EQUIPMENT
Today’s business environment has created a
heightened awareness of the consequences and
lost opportunities due to bad data. Companies
have determined that “heavy-duty equipment” is
required to approach the job of “continually”
cleaning data. Data cleansing has moved into the
realm of a strategic initiative rather than a onetime
quick fix project. With both the volume of
product data and its “constantly changing nature”,
cleansing is an impossible task without the right
tools. epaCUBE forms the “buffer zone” between
your production systems and your employees,
content providers, suppliers and customers. All
new sources of product data are introduced first
into this “buffer zone” for
cleaning and quarantine BEFORE being passed on
for production and analytical functions.
The epaCUBE Product Data Management Suite consumes product data (description, pricing, costing
information, etc.) from a variety of sources (outside content providers, your suppliers, your ERP system,
etc.) and continually cleans and prepares it for use by other systems (ERP, electronic catalog for web
storefronts, other PIMs, or any other database requiring accurate product data). The epaCUBE software
includes a series of powerful engines that constantly ensure product information is accurate, free of
duplicates, and consistent across all other applications and databases (i.e. ERP, web storefront, etc.),
which need good data to function properly.
epaCUBE's automatic data cleansing business rules system can be utilized to consistently fix data errors
and prepare for publication to other operational systems. Beyond these powerful, automatic cleansing
functions, epaCUBE helps establish the business processes necessary for long-term success with data
cleansing. The epaCUBE system provides the capability to set up workflows to automatically route data
cleansing issues and problems to the assigned user role responsible for fixing the issue. Workflow guides
the users and changes the business process from a “one-time clean-up event” to establishing an ongoing process to ensure your organization is continually working on cleaning up data. The epaCUBE software
suite focuses on the core issue of cleaning product data (including both pricing and costing) so other
application software can actually do the job for which it was intended.
THE EPACUBE PRODUCT DATA MANAGEMENT SUITE
The epaCUBE Product Data Management suite
consists of two primary components with an
underlying workflow event system. The Data
Cleanser function includes a powerful datamatching
engine with algorithms to eliminate
duplicate products from multiple sources. The
Synchronizer portion of the suite publishes and
synchronizes data to other operational systems,
vendors, customers, or other trading partners.
In addition, the Synchronizer function enables
companies to evaluate changes to their product
data before processing into production. It is a
flexible solution that streamlines integration with
internal systems, databases, and outside trading
partners. Thorough online audit capabilities of all
external data will help companies comply with
Sarbanes-Oxley legislation in ways otherwise
thought not possible.
The epaCUBE Product Data Management suite
includes a “business rules and event management
engine” to automatically identify and fix data
problems that could negatively affect downstream
operational systems or databases. Once
established, these “business rules” automatically
clean the data, eliminating the need to constantly
re-fix the same problem each time new updates
are introduced into your system.
Data clean-up projects often fail when the
responsibility is relegated to one or two people in
your organization. Often, they don’t have the
knowledge required to solve data clean-up issues.
With epaCUBE, an “event management engine” is
used to route issues to the appropriate end-user
(pricing manager, purchasing, sales, finance,
product manager, brand manager, etc.) for further
data clean up. This allows the “right people”,with the “right expertise” to be involved in
cleaning up product data elements relevant to their
responsibility within your company.
Through an easily deployed web browser
interface, end users are notified (based on job
function) of data conditions requiring their intervention. End-users can easily fix these “out of
bound” data errors, making the product data ready
for use by other operational systems. With the
epaCUBE suite, an established continuous
cleansing process eliminates the problems
associated with fighting bad data.
Once the epaCUBE suite is fully implemented,
your company will benefit as a result of having
clean data ready for publication to other
operational systems.
CLEAN DATA….CHECK OUT THE BENEFITS!
Customer Service
- Reduce the number of calls related to order or invoice discrepancies
- Save your salespeople’s time resolving disputes or communicating basic product information to
customers
- Reduce time spent by customer service reps regarding basic product information
- Reduce the number of web site email questions regarding product data
- Enhance your customers’ service with timely and accurate shipments, and fewer billing errors
Finance and Accounting
- Reduce invoice errors that result in write-offs, deductions, and lost productivity
- Reduce number of invoices requiring adjustments
- Reduce number of product returns due to wrong shipments
- Reduce invoice write-offs incurred as a result of data errors
- Reduce time spent with vendors on purchase order errors
Sales and Marketing
- Save time spent in providing product information to customers
- Save hours in communicating production promotions to customers
- Increase sales based on improved relationships with your customers by providing accurate, up-todate
product information
- Improve your customer loyalty
Inventory Management and Warehousing
- Save labor in processing incorrect shipments
- Reduce cost due to fewer inaccuracies about product shipped
- Reduce time spent correcting errors
- Increase productivity of purchasing, demand planning and logistics by reducing bad data
Other Operational Benefits
- No Duplicate Items in your Item Master
- Consolidation of multiple Item Masters into one as you acquire other companies
- Save time by dramatically reducing manual input of product data
- Complete Item Data, including vendor part numbers, product attributes, and UPC’s (where
available)
- Product dimensions, weight, size, cube, etc., enabling warehouse automation
- Proper abbreviations in Brand and Description fields
- Accurate and up to date costing and pricing data
- Keeping item data in sync with vendors, 3rd party content services, customers and other
applications or databases within your enterprise.
- Eliminating bad item data provided by vendors, including costs
- Ability to evaluate the “effects of changes” before live production
- Improved categorization of products
- The knowledge to refuse/renegotiate inappropriate changes
- Manage Item Data across multiple disparate systems (valuable when you acquire another
company)
- Discreet views available to validate, update, and manage specific information - by warehouse,
product grouping, product line, product price type, etc.
A JOURNEY NOT A DESTINATION
With the volume of product information to
consider, data problems can be overwhelming to
an organization. One-time, data clean-up projects
have fallen short of fixing the long-term need to
continuously clean product information. Often,
the real problem is ignored and left to be dealt
with later - resulting in time spent fixing errors
at the transaction level, frustrated customers, and
lost margin.
In addition, new product data is constantly being
introduced into your systems. With the epaCUBE
Product Data Management suite, your
organization can now easily establish automatic and event-triggered business processes to manage
these data issues. No more wasted hours on onetime
data clean-up projects. Dramatically reduce
the costs associated with fixing errors resulting
from missing or erroneous product data. Increase
customer satisfaction by consistently delivering
quality product information.
The epaCUBE Product Data Management suite
provides the “heavy-duty equipment” necessary to
ensure your company is realizing the time and
cost benefits of continuously cleansing product
data.
OPTIMIZING GROSS MARGIN OVER CONTINUOSLY CLEANSED DATA
Now that your product data is cleansed and
synchronized using the epaCUBE Product Data
Management suite, bottom-line benefits can be
achieved through gross margin optimization and
analysis. epaCUBE’s Margin Manager module
provides users and management with tools and
analytics to drive gross profit improvement.
Do you want to find answers to these
questions?
- Where am I not making appropriate
margin in my price matrices and special
price agreements?
- What effect will current vendor prices
changes have on my gross profit?
- What items have not had any changes in
the last year?
- Am I really taking advantage of rebates?
- If I make an adjustment to my pricing
formulas that affect a specific matrix or
group of products, what affect will that
have on my overall gross profit dollars?
- If an adjustment leads to a margin
increase, what will be my sales breakeven
point? (i.e., how much will my sales have
to decline before the effects of the margin
increase are neutralized?)
Margin Manager streamlines pricing matrix and
contract management. Utilizing epaCUBE’s
internal category management structures, or
external structures already in use by your back
office system, Margin Manager helps optimize the
sell prices spanning all levels from national
contracts, SPA’s, store specific prices,
promotions, and rebates.
"Pricing is a more subtle game than
setting list prices or even tracking invoice
prices. By consciously and assiduously
managing all elements of the pocket price
waterfall, companies can often find and
capture an additional one percent or more
in their realized prices.”
The McKinsey Quarterly
epaCUBE’s Pricing Engine mimics your system’s
transaction pricing system to bring together all the
formulas you use. It knows what your sell price
would have been to any customer in the past, what
they are today, and what they will be tomorrow.
Margin Manager leverages the cleansed data from
epaCUBE’s Product Data Management suite to ensure information is accurate and in sync with
your operational pricing system.
Margin Manager is designed to handle advertising
performance and off-invoice allowances as well as
2-way and 3-way contracts. This powerful tool
also enforces user-defined business rules to
convert allowances from the “buy” to the “sell”
side. In addition, epaCUBE’s Margin Manager
provides visibility and control of manufacturer
rebates and accurately tracks charge-backs and
accruals across the enterprise.
Not only can the analytics provide the necessary
information to analyze price and cost changes
before they hit the distributor’s system, but the
knowledge gained will increase the pricing skills
of all involved in your organization.
With epaCUBE’s Margin Manager dashboard,
users can now:
- View detailed gross profit opportunities
- Manage rebates, off-invoice allowances,
pricing contracts, special pricing
agreements
- Model “what-if” scenarios to determine
the impact of multiple cost changes to
their pricing matrix
- Conduct breakeven analyses
- Compare Margin vs. Volume
- Review bottom line opportunities
- View actionable tasks to
process/approve/reject
- Realize gross profit optimization
As your company first implements the epaCUBE
Margin Manager system, your entire item mix
(with all cost and sell metrics that exist throughout
the enterprise) is copied into one place and open
for analysis. This creates a tremendous
opportunity for one-time corrections that will have
a long-term, positive impact on gross profit.
New vendor product data changes can be
evaluated as they are continually entered into the
Margin Manager system. The user has the
opportunity to approve the change, place on hold
for further review, or reject and renegotiate with
the vendor.
FACE THE CHALLENGE AND GAIN A COMPETITIVE ADVANTAGE
The challenges and pressures in the business environment of today’s distributor are greater then ever.
Competitive advantage is increasingly dependent on one of your newest and most powerful assets -
Product Information. Whether you need to continuously clean incoming product data or want to better
analyze your gross margin at the product level, epaCUBE offers innovative technology to help you reach
your goal of increasing the competitive advantage position of your company.
For more information, please contact
Randy Hughes, VP of Sales & Marketing,
epaCUBE, Inc. at
rhughes@epacube.com
or 719.930.4074.
epaCUBE Technology Center
3948 S. 3rd Street Suite 376
Jacksonville Beach, FL 32250-3056
904.246.8845
epaCUBE Corporate Offices
8352 Dallas Pkwy Suite 136-392
Dallas, TX 75287
972.931-8423