“World food prices rose for a second consecutive month in September to reach a 10-year peak, driven by gains for cereals and vegetable oils,” according to a report from Reuters. The article continued, “FAO's (Food and Agriculture Organization) food price index, which tracks international prices of the most globally traded food commodities, averaged 130.0 points last month, the highest reading since September 2011, according to the agency's data.”
Volatile raw commodity exchanges present a major pricing challenge for food production and manufacturing, which is already a complex, dynamic and highly volatile industry. In today’s economic landscape, including a still-simmering pandemic, quickly, efficiently, and intelligently responding to commodity price changes is more critical than ever for food producers.
But volatile commodity markets aren’t the only pricing challenges that hamper the food production industry. Future price indices, capacity allocation, overhead costs, increased competition, and data sparsity within a contract-heavy environment make effective pricing quite complex. The result is that pricing teams at food production companies often must get creative to arrive the right price for each customer to secure a profitable contract in an industry that typically sees razor thin margins. Furthermore, long periods of over- and under-supply exacerbate cost and pricing decisions, and another layer of complexity is added when pricing teams rely on manual processes such as cumbersome spreadsheets.
How Price Optimization and Management Software Helps Food Producers
The traditional approach to pricing – using manual tools such as spreadsheets or discrete BI tools – in the dynamic food production industry is no longer working. It’s now critical for companies to respond faster to commodity price moves and institutionalize pricing across the business in order to compete effectively. Price optimization and management software that leverages the latest science and data can help move the needle.
When it comes to responding to commodity price moves, price optimization and management software can dynamically bring in new data as costs change, centralize the pass-through process, automate price changes, and update customer-specific agreements in mass. Price optimization software can also institutionalize pricing across a global business. It allows pricing teams to set up dynamic pricing, streamline the price build elements, and gain pricing control across business units.
Resources to Power Intelligent Commerce in the Food Production Industry
As the 2021 IDC MarketScape for B2B Price Optimization & Management Applications proved, Zilliant is a leader when it comes to powering intelligent commerce for B2B companies through cloud-native pricing and sales software. Our solution set has evolved through continuous innovation to meet B2B needs across the pricing and sales spectrum, in all channels and in real-time, and enables companies to respond quickly to triggers in their industry.
Here are a few food production and manufacturing resources that can help put companies on the right track when it comes to connecting commercial strategies with effective execution:
This whitepaper explores why spreadsheet-based models and other do-it-yourself approaches aren’t up to the task and how, by making capacity decisions price-aware, manufacturers can widen the gap between price and cost to optimize profits and strategically drive their business.
A vast amount of challenges within the food production industry makes widening the gap between price and cost a constant juggling act. This infographic offers new path forward when it comes to moving away from traditional approaches and instead leveraging advances in pricing science and software.
The pricing team at one business unit within a global food manufacturing company faced many complexities, including a range of commodity to specialized products with different cost structures that made pricing effectively a moving target. Learn how the team implemented Zilliant Price IQ™ and was able to overcome data sparsity issues and enable faster price guidance updates in this case study.
One of the largest misconceptions about pricing is that price optimization cannot be applied within commodity-driven industries. In this webinar, Zilliant Principal Pricing Scientist Kevin Pierson discussed not only how it is possible, but how to deal with data sparsity and how to dynamically bring cost data into your pricing model.
Contact us today to learn more about how price optimization and management software helps food producers quickly respond to pricing triggers and power intelligent commerce.