Episode 59
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Optimizing OMS + Pricing for Wholesale Distribution

Many wholesale distributors have been running SAP for decades. While most of them started simple, over time they’ve introduced new requirements (read: complexities) into their order system. At the same time, many are behind the curve on modern approaches to price optimization and management. In an industry with such thin margins, this is a troubling combination, especially in our new age of inflation and supply constraints.

Three-time guest Pete Eppele makes his hosting debut, interviewing DataXstream CEO Tim Yates about how the company’s transformative OMS+ platform streamlines order management for wholesale distributors in today’s consumer-driven economy, and why the industry leaders are pairing OMS+ with AI-driven price optimization and a real-time pricing engine.

Tim Yates

Tim Yates

With margins being so thin for wholesale distributors, without having control over your pricing, you don't have control over your margin and especially with the sands shifting like they are right now - it's nearly impossible to do that with traditional tools.
- Tim Yates

Episode Transcript

Tim Yates: To me, I think they're leaving money on the table. I think that's the biggest thing with margins being so thin for wholesale distributors, without having control over your pricing, you don't have control over your margin and especially with the sands shifting like they are right now. It's nearly impossible to do that with traditional tools.

So, I think that's the biggest risk. I think at least from a tactical perspective, I think at a higher level, you're risking your business because these are the sort of things that will make and break an organization. Especially wholesalers.

Pete Eppele: Hello everyone. My name is Pete Eppele. I'm the senior vice president of products and science at Zilliant. You may recognize me from one of my guest appearances on the show, but today I'm here to host the podcast for the first time and very excited. Joining me today is Tim Yates, CEO of our strategic partner DataXstream. Tim, welcome to B2B Reimagined.

Tim Yates: Thanks Pete, for having me.

Pete Eppele: Hey Tim, if you could just please tell us something that we can't learn about you from your LinkedIn profile. It's maybe something surprising or an interesting fact about yourself.

Tim Yates: So something that you really can't see from a LinkedIn profile is that in high school, I [00:02:00] worked for a builder building houses.

And I kind of caught the bug, really liked the trade. And so I'm an accomplished carpenter, electrician and plumber. I could probably build a house by myself, but I haven't quite taken on that bigger project yet. And so, that's something I like to do in my free time when I'm not working, but just on stuff I like doing.

Pete Eppele: Fantastic. So it's great to hear it, instead of building houses, I guess you're now spending your time building successful software companies. So fantastic to hear that one. Thanks for spending the time with us today to discuss the interplay between order management and pricing, particularly as it pertains to SAP wholesale distribution customers.

To start off, the first question for you is can you give our audience an overview of DataXstream and what you do for your customers?

Tim Yates: Sure. So, DataXstream is an SAP software partner. We commercialize our products through the SAP store.

We help customers sell better with their SAP solutions. So that's kind of an overview of the organization, we've been doing the SAP thing for nearly 25 years now. And we've got quite a bit of experience in this space.

Pete Eppele: That's fantastic. And so how do you help with OMS plus meet the needs of your wholesale distributors that run SAP?

Tim Yates: Yep. So as I stated earlier, OMS+ helps our customers sell better and there's kind of three things that we're really doing for them. The first is we're taking all the data that they need to execute end sales process, and we're aggregating that, we're taking that aggregated data and we're presenting it in a consumable format.

And then we're automating the pieces of the puzzle to really streamline and make the end to end sales process efficient. One of the challenges when you're engaging with a customer is being able to quickly and efficiently answer their questions. The typical ones are, do you have. [00:04:00] this thing I'm looking for, is it in stock and what is the price?

And while all those things are available, typically in an SAP system that a customer might be using we make those things significantly easier to find and more consumable so that when you're actually interacting with the customer, you have a really streamlined and crisp interaction. And ultimately that leads to more efficient transactions, better customer outcomes, and generally drives more sales, better margins, all those sort of things.

Pete Eppele: That's fantastic. Consumers have changed their mindset so much in the B2B space based on what they see in B2C. It sounds like you're really kind of addressing that need, which is fantastic. Now, SAP customers, as we know, typically very large, a lot of times struggle to manage pricing effectively. When you think about the complexity going all the way from maybe list prices down to all the customer specific prices that they need to maintain and execute. What are some of the specific roadblocks to effective pricing for these [00:05:00] companies?

Tim Yates: Well, first thing is wholesalers are different than your B2C type companies or even manufacturers in that they are working with very tight margins. They come up with often quite complex ways to engage a customer, win their business.

What we've seen is there's many wholesale customers that have been running SAP for a decade and, they started off simple and they've kept gluing new requirements and complexities into their pricing procedures. So often they become very complex, unmanageable, and we see a lot of things being done without any kind of process guardrail.

So, you end up with customer service reps applying discounts, adjusting pricing, overriding pricing. There's really just a manual set of rules that are guiding them. Ultimately, this complexity from an order execution perspective on our side of the fence often ends up creating issues for us from an execution perspective.[00:06:00]

It's not uncommon for us to get into a customer. Be executing something as simple as an order line change and it's too slow and we peel back the onion and we look at the performance. We spent 200 milliseconds doing all the order maintenance stuff, and we spent four seconds chugging through the pricing procedure or calling an external pricing tool, legacy pricing tool that just isn't optimized to deal with the complexity of the rules.

Well pricing generally to OMS+ is pretty much a black box. You put something on an order and it comes back with a price and it gives you some details on how you found it. It is often one of the main areas that we spend a lot of time with the customer, trying to help them make it more efficient and more manageable.

Pete Eppele: Yeah, that's fantastic. So you touched on this a bit, but your perspective on. As it comes to pricing capabilities, what do those SAP wholesale customers need from your point of view?

Tim Yates: Well, from my personal point of view and from an OMS+ delivery perspective, that the [00:07:00] first piece is the performance piece and needs to be a pricing engine that's real time providing them the numbers, but in a quick and an efficient way so that you can tie the whole real time order process and real time pricing process together. And give them the best answers possible when they're creating that sales order, but do it in a way that is quick and efficient.

So, being able to call a tool and get me a max price, target and floor pricing all that quickly and efficiently is super important. It's also quite often we see wholesale customers wanting to do a material search before they even added the items to an order. And get the customer specific pricing for a particular delivery date in real time for hundreds of products and have it all come back subsecond.

So performance is probably my number one thing from an order execution perspective. But the other side of it that I see is quite often, customers are buried under millions of pricing [00:08:00] conditions in SAP. They don't have a great way to analyze and adjust those. I think right now it's extremely, from the perspective of, with all the inflation we're seeing and with the price of things going up and with the certain items being unavailable, it's really changing something that's been quite static for so many years.

As long as I can remember, pretty much pricing has not been that volatile as it has been in this last six months. And so the ability to analyze your pricing in real time and make adjustments I think is critical. And then ultimately, if you can price in real time, then you can minimize losing opportunities to generate more margin or not leaking profit because you can create guardrails with these tools.

So I think there's a tremendous opportunity for SAP wholesalers today to really look at how they attack pricing, because the way they attacked it 10 years ago, not relevant.

Pete Eppele: Great point. I mean, to your point the [00:09:00] inflation, the volatility, like we've never seen plus combined with that, the move to eCommerce and how COVID has disrupted the selling model.

For sure. Those capabilities that were built 10 years ago, never contemplated a world that was exactly gonna look like this and certainly need to be adjusted. So maybe with that as a setup, can you talk to us a little bit more about how Zilliuant pricing and sales solution combine with OMS+ to solve these issues that wholesale distributors are facing?

Tim Yates: So, certainly we partner with Zilliant with a number of your solutions. So we clip into your real time pricing engine. We also can look at your intelligent cross sell and upsell capabilities and bring that in. But to me, it's really about bringing that pricing back in a quick and efficient way and having it be maintainable on the backside from a team perspective.

So for us, it's super important to present the options to the sales associate, to know where they should be targeted. Selling that item to a customer, what their boundaries are. So these should be your [00:10:00] natural boundaries of the sale. Don't fall below this price point and being able to look at pricing across all the lines and look at just how well are they doing and where are they giving ground and where are they making up ground to close that sale?

And to me, so important for those real time prices to be coming back quickly, efficiently, like we do with the Zilliant solution. From our perspective, there are two challenging components within optimizing order execution. The first is pricing and the second is credit card processing. And so you guys take care of one of those big problems for us.

And we have another partner that does a great job with credit card processing. So it's definitely one of those things that I think all wholesalers, if they're not looking at a pricing engine, they need to get with the program and start investigating and investing in this sort of thing.

Pete Eppele: It's a great call to action for that.

Tim, what do you see as the risks of companies who aren't [00:11:00] modernizing these processes or aren't starting to move forward on those things like streamlining ordering, credit card processing, pricing.?

Tim Yates: To me, I think they're leaving money on the table. I think that's the biggest thing with margins being so thin for wholesale distributors without having control over your pricing, you don't have control over your margin, especially with the sands shifting like they are right now, it's nearly impossible to kind of do that with the traditional tools. So I think that's the biggest risk, at least from a tactical perspective, I think at a higher level, you're risking your business because these are the sort of things that will make and break in organization, especially wholesalers.

Pete Eppele: The stakes for sure are high and great insights there. Before we leave, Tim, do you have any parting thoughts about what distributors who are struggling with these issues should do first just to get started?

Tim Yates: Yeah. I gave a presentation a few months ago for the Industrial Supply Association on unified commerce.

I've given them a call to action or kind of a three step process that [00:12:00] they need to look at for starting anything like a unified commerce project or sales order optimization project. And I think it applies here when it comes to order management and pricing. It's really a three-legged tool. The first is you need to self-assess where you're at.

Do you have the tools you need? Are you able to manage effectively your pricing regime at your organization? You probably need assistance. And the second leg would be bring in partners to help you further assess what are your options? How do you go about tackling these problems and what are other organizations doing?

And then the third one I think is super important is benchmarking, is going out and finding out what others are doing in the industry. What are their performance numbers? What are the best within your sector? What are the best margins that companies are achieving? What are the average margins?

What are the kind of the low end and where do you fall in that? That goes into the self assessment. [00:13:00] But going out there and actually understanding where you sit in the market. And I think those three things are important. You can't do it by yourself. You absolutely need partners to help you look at this from the outside in.

You need to look at it from the inside out from your perspective, and you need to go look at what are others doing with those benchmarks. And I think that's how you get started. And I think that typically will point you in the direction. Maybe we need to do some things differently than we do today.

Pete Eppele: Great insight. Thanks Tim. Thanks again for taking the time to have this conversation with us today and for sharing your perspectives with us.

Tim Yates: It's been a pleasure. Thanks.

Pete Eppele: Please refer to the episode description to find a link to a Zilliant and DataXstream demo of the joint solution. And I want to thank each of our podcast listeners for being with us.

We're committed to your success, and if you need any assistance reach out to us at Zilliant.com. And please rate and review the show as it helps us to continue to put out great free content. Until next time, have a great day.

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