CFO Talk - How CFOs Can Reclaim Pricing Power with Lynn Guinn
In this episode of CFO Talk, “How CFOs Can Reclaim Pricing Power” strategic pricing expert, Lynn Guinn, describes how CFOs are leaving millions on the table from suboptimal pricing!
If you’re a CFO, finance leader, or anyone responsible for driving profitability, this conversation is a must-watch / must-listen. Lynn uncovers how outdated costing techniques and blind reliance on ERP systems may be costing your business millions in lost opportunity and why now is the time to rethink inventory valuation, pricing, and your customer segmentation strategy.
Quotes from Lynn Guinn:
• “In businesses that use cost-plus pricing strategy, to price products correctly it is imperative they actually understand what their costs are..”
• If you’re relying only on ERP and Excel for pricing, you’re leaving money on the table. The right tools and mindset can be transformational.”
• “What I’ve found in multiple instances is that businesses become over-reliant on the cost structures that are being reported out of their ERP systems to then drive what they’re selling and their pricing into the marketplace as, which is very suboptimal.”
• “I’ve seen these costing issues in Oracle ERP systems. I’ve seen it in SAP ERP systems. I’ve seen it in Microsoft Dynamics ERP systems. So it’s not the ERP system that is causing it. It truly circles back to your audience. A large part of the time it’s the finance executives who are setting the policies around inventory valuation.”
• “The other thing that I’m recommending over and over to these businesses, look, don’t mess your ERP. Put these other systems in place that are well designed to improve pricing. Do the work outside the ERP.”
• “From the finance perspective, one of the things that should be immediately apparent, but I would ask your operational folks right off the bat, say, what is it that we have more of than we shouldn’t? Just ask them that. What do we have more of than that we shouldn’t? It’s a simple question because it’ll point you in the right direction.”
• “They [pricing tools] are consumers of data. That doesn’t mean they have to use it all in the same way. And the reconciliation between a commercial ecosystem and an ERP system, I think, is a futile effort.”
• “Some of the simplest questions of your core business people reveal the inefficiencies. It could be the same thing on your sales side, your commercial side. It could be your finance. What are we doing that doesn’t make as much sense as it should?”
• “Talking to people to highlight what the opportunity is, then come back and support it with the data and the facts. That’s the best combination.”
Quotes from Steve Rosvold:
• “And I wonder if the CFOs training isn’t part of the problem. For example, when lower of cost or market inventory valuation becomes gospel we’ve already taken our eye off the innovation ball. Just because we’ve learned it doesn’t mean it’s right.”
• “FP&A is forward looking and gets a lot of credit, while accounting measures what has happened so course corrections can help you get to the best result.
• “Interesting that we seem to have lost the deep understanding of inventory valuation and how cost allocation impacts decision making . We’ve lost this technology because “the ERP is going to do it.” We’re going to automate everything, and the knowledge base will dissipate if we aren’t mindful of these implications .”
• “CFOs support pricing in a lot of places. Rarely are they the price setter, but they’re supporting prices with information tools and highly capable staff.”
• “If your costs aren’t right, it’s really hard to get the pricing right. Likewise, if you don’t know the customer and can segment the customer, you’re not able to optimize pricing.”
Chapters in this CFO Talk:
00:00 “Addressing Pricing Strategy Challenges”
05:58 “Challenges in Corn ERP Valuation”
07:01 “Cost-Plus Pricing Risks Profitability”
11:48 “Value Growth in Manufacturing”
14:22 “Reviving Activity-Based Costing”
20:12 “C-Suite-Driven Business Solutions”
22:46 “Strategic Customer Investment Insights”
25:39 “Customer Value and Investments”
30:20 “Effective Inventory Valuation Practices”
32:48 “Decisions Based on Future Facts”
35:19 “Addressing Operational Inefficiencies”
38:00 “Lynn: Strategic Pricing Expert”
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