Many paper companies are feeling the pain of global competition. Whereas a few years ago, virtually all deals were done on list price, today the vast majority of deals are negotiated. Since the shift to negotiated deals has been gradual, many paper companies are unprepared to support this process profitably. In many cases, negotiations are done at all levels of the sales hierarchy from customer service reps, to sales rep, to sales manager, up the chain. Each rung on the ladder has finite levels of concessions that can be applied and it takes time to march through the process. Sometimes too much time and deals are lost to competitors.

K3 focuses on delivering value for our customers quickly. To that end, the sales and negotiation process translates easily into the K3 Suite of applications. This example looks at how a standard quote can be represented in our tool first by allowing the rep to enter product specifications with a variant configurator, then negotiate with the customer on terms established by the management team.

The product quoted is a standard product family with various grades and basis weights. Also, the manufacturer sells direct and has 3 main customers that they are able to give customer specific discounts to. The example is reviewed through the eyes of each participant in the sales process: Sales Representative, Sales Manager, Price Manager, and the Product Manager.

Walking Through the Sales and Negotiation Process
The first step in the process is for the sales person to quote the right product and price to a customer. Quoting is done through the Sales Center, which allows sales people to make product selections, see full price builds, and then even receive assistance in negotiating.

Let's take the example from above. To quote the roll, the sales person makes selections for grade, basis weight, sheeting, roll size, and other selections. They also enter information that affects pricing such as the competitor's price, product, and who the competitor is. The sales person is presented a list of grades where they make a selection. This selection in turn affects the other available selections. The sales person makes each of these selections, which are enforced by a variant configurator.

Once all the specifications are captured, the price is automatically calculated. At this point, the customer says that the price isn't good enough. To get the deal, the sales person is going to have to come down on price. So, the sales person looks at the list of concessions the customer can make. These concessions are completely customizable and can be trade-offs like length of contract, percentage of business, forecast accuracy, etc. The sales person is presented with a list of values for each concession. For example, length of contract may have 5 entries with corresponding ranges of discounts:

Say the sales person and customer jointly agree that a contract length of 4 - 5 years is fair. This allows the sales person to negotiate up to $0.75 off the price.

At this point, the customer says, "OK, I understand that is the best price you can offer me, let me think about it and I'll get back to you."

Two days later, the customer calls back and says, "I appreciate what you've done for me, but I've spoken to your competitor and they agreed to $1.25 off. I really like doing business with you and if you can meet me there by the end of the day, I'll sign the order."

So, the clock is on:

9:15 AM - The sales person doesn't have the authority to cut that deeply and needs to get his manager involved. So, he submits the quote and requests that his manager is immediately notified through his pager.

9:20 AM - The sales person's manager receives an alert on his PDA while he is on the road. Immediately, he reviews the quote and sees a comment from the sales person that a competitor has offered a better discount.

9:30 AM - The sales manager approves the quote on his PDA with a new price.

10:00 AM - The sales person comes back from a break and sees that his quote has been approved. He reviews the discount.

10:10 AM - The sales person calls back the customer and agrees to the price.

The customer comments on how quickly the issue was resolved and commits to the order.

This is one example of how the sales workflow might unfold. In the subsequent sections, we will investigate how the information for the above scenario is managed in an easy to use interface that business users can quickly tackle.

Managing Prices
Central price administration is key to providing consistency across the sales force. This includes both spot purchases and contract prices. Typically price managers, marketing managers, or sales managers perform this role at paper companies.

In the example, base prices depend on grade and basis weight and then several upcharges are applied. Upcharges exist for sheeting, roll size, and special packaging. The calculation simply adds the base price plus the upcharges.

The tables are easily managed in the Price Center in terms that a business user understands. For example, the base price is represented as a matrix:

The system looks up these values exactly as presented and stores them in the cells of the calculation when the sales person is quoting from the Sales Center.

Rebates and other tables are easily accommodated through the tables. For example, dimensions of tables can be any attribute in the system, so you can use customer categories, customer types, customer purchase quantities, quote information, sales person information, and virtually any element. Negotiation trade-offs are maintained in a similar manner.

The Price Center utilizes product information such as the attributes described: grade, width, thickness, and length. The next section drills into how the product information is managed.

Managing Product Information
Products are defined in the Product Center as well as the entry forms that are used for adding line items in the Products are defined in the Product Center as well as the entry forms that are used for adding line items in the Sales Center. To enter a line item, the sales person must enter the grade, basis weight, sheeting, roll size, and special packaging requirements.

These characteristics are represented in the Product Center. So, to start, a product catalog is defined for the paper products. Next, the attributes on the products are defined:

The list type means that there is a list of values that must be selected. A range requires a value between the minimum and maximum values and a value is a free form entry of any value. Next, the user defines a product entry form by entering the question and product attribute.

The questions of the entry form are entered in multiple languages and then associated to an attribute. Finally the question has an entry type as shown above. The drop down list is a list of values that the sales person selects from. If an entry is a field a value can be entered either bounded by a range or unbounded. Finally yes/no questions present radio buttons for each answer.

Analyzing the Results
The quotes from the Sales Center are collected into the central quote database. Then, sales managers have access to the information through standard reports or through traditional on-line analytical processing (OLAP) tools. All pricing, product, customer, and sales person data is collected and can be translated into these systems for further analysis.

Quick Time to Value
K3's software tools are easy to use. How easy? The example above was created and deployed in less than 30 minutes. More complex products and pricing is not much more difficult to establish in the system as we have geared the system to provide value quickly.

When working with customers, we first try to understand how much money you can save. If there's no business case, we leave you alone. Next, we enter the pricing and compatibility rules for one of your product lines on our secure servers. Then, you have real-time access to a fully functional price-quoting system over the Internet. Best thing is, your already tapped out IT people never have to get involved, so no infrastructure cost and no maintenance. Then, we can keep on hosting it or you can move it back to your own servers. After three months, we will come back and calculate how much money we saved you. The projects are always well managed and you pay for performance based on the project plan.