Pricing Department and Strategic Profitability Essay

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From a supply chain standpoint, pricing departments must also create a high level of communication and collaboration across a business as well. Their role is to be the orchestrators of internal effort to manage suppliers to pricing and margin levels, ensuring consistency and focus on share goals. This is one of the primary reasons pricing has now become a strategic initiative within many businesses. For change to occur in how companies do their pricing strategies, it often takes a senior executive to manage the change in processes and systems to ensure pricing becomes strategy and shifts away from being tactical in focus (Marn, Roegner, Zawada, 26).

From the sell-side or the distribution and selling channels standpoint, pricing has never been more critically important to a company's profitability. The continued consolidation of industries and commoditization of products making tracking pricing elasticity by product category critical, especially when they are sold through distribution channels (Krishna, Feinberg, Zhang, 1410).

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The sell-side of any business must also focus on the three strategic areas of pricing execution, pricing enforcement and pricing optimization. These three strategic areas are what provide the insights necessary for making the S&OP process as efficient and profitable as possible (Carricano, Trinquecoste, Mondejar, 468). Pricing execution is the consistency of how price is introduced by channel, pricing enforcement is the defining of compliance levels of pricing strategies and pricing optimization is the use of data analytics to define the optimal price point of a given product. All three are critical for the successful integration of pricing insights into strategies of any business. They all must also be integrated back to the S&OP process to make sure the entire business functions efficiently based on the best pricing data available. Pricing is now a strategic-level department in many companies and will continue to grow in importance in the future......

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