“Thanks to Will Stevens for leading us from darkness into light”

Geoff Brown, Sales Director 

Late in 2001, Dow Polystyrene established three key goals for its European packaging business in 2002:

• create a new market price mechanism, reflecting real prices established by the industry’s key players

• establish a transparent pricing formula for the top seven European packaging accounts that fairly reflected cost to serve, and encouraged productivity improvements by all parties
• substitute quarterly price negotiations based upon the above for the current monthly agreements

A core component of the initiative was to create a modeling system that would translate key cost elements into a pricing formula, and to assist account managers in convincing the target accounts to sign up to the new processes.

Academy worked with the sales and marketing development groups to assemble costing data on all the top customers’ annual transactions, and to devise and facilitate workshop sessions with the top account managers.

Key outcomes of the initiative were:

• Five of the seven customers, and ICIS/Platts (the market price publishers) adopted the new market price mechanism within six months. 
• A financial modelling process was created, providing a direct link between price saving opportunities and changes in commercial terms
• Accurate price deltas were established for all seven customers 
• Most of the top seven accounts agreed to evaluate mutually beneficial cost-reduction exercises 
• Many category B accounts have taken up the offer to improve cost-to-serve