Case Study

Designing a dynamic pricing model for a chemicals manufacturer

Discover how we helped our client unlock better growth.

Opportunity/Issue

Our client, an Indian chemicals company with a global distribution network, was looking to optimize its commercial strategy by introducing dynamic pricing.

They needed a systematic procurement strategy for one of their key chemical components, acetic acid.

Additionally, sub-optimal pricing of the end product, acetic anhydride, meant they were leaving money on the table.

Approach/Solution

Our team started by identifying the key price drivers of acetic acid and understanding the current pricing framework used for acetic anhydride.

We were then able to develop a sophisticated dynamic forecasting model to predict the prices of acetic acid.

This involved testing for correlation and causation across over 25 variables. Finally, these insights were used to improve the client’s procurement and commercial strategy, as well as update their acetic anhydride pricing.

Outcome/Result

Getting the model right was just one part of the challenge.

We worked with our client to roll out the new model and strategic changes, ensuring they were embedded within the organization.

The use of the model is expected to deliver a 3.6% return on sale for our client, with the optimized strategy expected to add a 0.8% boost to ROS.

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