Fresh Food Distributor

From Manual Spreadsheets to Automated, Market-Responsive Pricing

Transforming a fresh food distributor’s pricing to enable scalability, speed, and profitable growth.

A national fresh food distributor needed to set and dynamically adjust market-based pricing due to frequent commodity-driven cost changes. However, the business relied on a highly manual, spreadsheet-based process with significant sales autonomy to make pricing decisions which slowed market response and increased price leaks. The distributor needed a centralized pricing strategy, clear segmentation, and a data-driven dynamic pricing model to enable profitable pricing decisions and support growth through acquisitions.

INSIGHT designed and implemented a data-driven dynamic pricing model based on strong segmentation and value drivers, such as costs, freight, seasonality, and customer factors. The model is refreshed up to daily to deliver market-based price recommendations through a tailored, centralized, and integrated Price Management Application. This streamlined approvals and automated pricing updates across multiple systems, creating an almost entirely touchless process that improved accuracy, speed, and margin discipline.

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Situation

Inconsistent Pricing Held Back Growth and Agility

Manual processes, decentralized decision-making, and lack of pricing strategy created barriers to scaling and reacting to daily market shifts.

Highly manual pricing process using spreadsheets and hand-typed inputs
High sales autonomy to make pricing decisions without a dynamic, data-driven pricing model or segmentation

Desire to grow through acquisitions, but limited centralized pricing strategy was an obstacle to successfully scale
Need to be reactive in setting market-based pricing – selling a perishable good that is heavily tied to commodities where costs can change daily

Pricing Opportunity Focus Areas

Strategic pricing levers for growth, bringing efficiency & transparency

1. Re-Position Customers

Segment customers based on key factors including margin $, channel, product breadth, frequency of purchases, regional competitiveness, and relative profitability
Differentiate customer-commodity target prices based on importance to customer

2. Set Best Price Recommendations

Create an algorithm that recommends the most competitive price point per SKU weekly; factors include cost change, sales adherence, volume trends, & seasonality
Design tailored software application that’s integrated into ERP and used for price setting
Combine recommended price with customer model to assign customer-SKUs to a price level

3. Standardize Freight Surcharge

Standardize freight surcharge into price recommendations via a model that incorporates distance from warehouse and average price/pallet of commodity
Recover projected $12M annual expense though proactive inclusion of freight charges

4. Address Margin Outliers

Review opportunities where margins are significantly below peers as well as those where cost change has outpaced price change over the last 18 months
Identified 70+ opportunities with the sales team actively working to bring prices more in line with market reality

Approach

Automated Pricing Engine Powers Smarter, Market-Driven Decisions

A tailored pricing model and application streamlined price setting, enabling weekly updates, mid-week adjustments, and integration across systems

Built a custom, dynamic pricing model that determines a target price based on cost, freight, seasonality, and customer factors
Pricing model runs weekly to provide refreshed price recommendations, with cost inputs updated daily for mid-week changes

Developed and deployed a tailored Price Management Application for users to manage and approve prices
Automated entire pricing process across multiple systems, including an industry-specific ERP, creating an essentially touchless price management and review process

Pricing Framework

Aggregated and automated multiple data sources to create a dynamic price management engine that establishes a target customer-SKU price

Pricing Model

Target price is set for every product every week, where previously there was no established target price

Technology Solution

Customized solution to efficiently manage ongoing price optimization

Price Management Application: Tailor-built application to quickly and centrally view, adjust, and approve price changes en masse

Pricing Systems Flow: Multiple data files with thousands of rows flow through 3 primary systems (INSIGHT Pricing Engine, Price Management App, and ERP) to facilitate and automate the pricing process