Suddenly, Everything Is Different...In Data Science
In this guest blog post from Maarteen Oosten at Vistex, we understand the important role data strategy can play in bouncing back from disruption during times that can seemingly wreck business organizations.
This year started as so many others. But then.
You blinked your eyes, and suddenly everything was different. Almost overnight, your business challenges seem very different from yesterday’s.
Disruptions have happened before, of course, and often they accelerated changes that were already happening. Most of us remember the disruptions of 2001 and 2008.
When 9/11 happened, I worked for a software vendor with many customers in the airline industry. From one day to the other, forecast models for passenger demand needed to be reset. Overall volumes were down and the mix of business class and economy class passengers changed drastically.
The airline industry needed the ability to reset demand models and start updating the reset state using only the most recent information. The volumes eventually recovered, but the change in passenger mix was permanent. Perhaps that change would have happened anyway, but the market disruption accelerated the change.
During the financial crisis of 2008, the disruption hit a much wider set of industries and the business questions shifted from optimizing profits to ensuring that the companies had enough cash to make payroll the coming months.
In B2B situations, it became a quite common practice to offer selected customers a discount if they were willing to pay early, a practice that turned out most effective if it was offered at the time of ordering instead of after the service had already taken place.
Again, the markets did recover, but lessons of the importance of managing multiple objectives and incorporating risk properly into the pricing terms of agreement did leave a lasting change on pricing practices.
The economic impact of the Corona Virus is still taking shape. It is unclear how long the current travel restrictions and quarantine orders will stay in place, let alone what will come after the stay-at-home economy.
It may not be business as usual, but a six-foot-apart economy may look quite different from what was considered normal and reasonable a couple of months ago.
For some products, a lack of supply is the issue as opposed to a diminished demand. Consequently, the interest in approaches for a more resilient supply chain has grown rapidly.
Other industries experience a sudden spike in demand. Digital revenues of food, pharmaceutical products, work-at-home equipment (from headsets to office chairs), games, freezers, and do-it-yourself products have jumped up by 50% in the past two months. Sports and garden-related products also enjoyed revenue increases in the order of 10 to 20 percent. But the fashion industry is experiencing a taut time, and the demand for passenger travel has been decimated.
Plus, this market disruption may also accelerate some changes in the market structure. Quite possibly, this disruption will give the online sales channels with their new delivery mechanisms a push in the back.
There are implications upstream the supply chain.
Some of the questions our customers have been discussing with us are:
* How do we spread products with limited availability strategically over our customers?
* How do we offer discounts for early payments efficiently to raise enough cash this month?
* How can we manage base prices and discounts dynamically while selling on digital sales channels?
* How do we integrate our brand-new sales channels into our ERP?
* How do we source strategically over various vendors to diversify risk while keeping tabs on overall costs?
* On the flip side of the previous question, how do we increase our wallet share in case of agreements where, clearly, we are just one of many vendors providing the same product or service?
These questions would benefit from quick action, executing the right new prices, discounts, and rebates and integrating them into your existing processes.
In many cases, Vistex can help, with agile, purposeful, small-scale projects. Digital Transformation and Pricing.
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About Maarten Oosten:
Maarten Oosten Director, Solution Delivery – Data Science
Maarten Oosten is the Director of Data Science in the Solutions Delivery team at Vistex. Maarten brings close to 20 years of experience designing and implementing high-end pricing solutions to the team. These solutions include adv anced pricing analytics across different industries such as distribution, manufacturing, express shipping, cargo as well as travel & transportation industries. Prior to joining Vistex, Maarten has held positions as manager of pricing solutions at SAS and director of Science & Research at PROS.