[Report] 72 Percent of New Products Miss Profit Targets
Despite new products being hailed as the best way to overcome price pressure, almost three quarters fail to hit their profit targets according to the Global Pricing Study 2014 by Simon-Kucher & Partners.
Only one-third of planned price increases actually get implemented in the market, the lowest rate ever for price increases. Two years ago, companies achieved on average about half their price increases.
More than 1600 directors and managers across all industries and from over 40 countries took part in the survey, with 77 percent saying that launching new products as the best new profit opportunities.
Mark Billige, Managing Partner of Simon-Kucher & Partners in London, said: "This is bad news for companies, but it is something that can be addressed. Price pressure, price wars and competition shouldn't hold businesses back from achieving the prices they want."
Across the globe, 83 percent of companies said they were suffering increasing price pressures and 58 percent admit that they are currently involved in a price war. Instead of trying to find out where things may have gone wrong internally, 89 percent point the finger at their competitors.
Either way, the respondents are not able to enforce their prices. For example, companies that wanted to raise their prices by five percent only managed 1.9 percent. In 2012, they were able to implement half of their price increases.
One-quarter of the respondents acknowledged that not a single one of their new products fulfilled its profit targets.
Despite the economic recovery and attempted price increases, 39 percent of the respondents were unable to improve their margins in the last few years, leaving the long-term profitability of companies seriously at risk.
Billige comments: "If you know the true value of your product, you can set the right price. This also means having the courage to kill new products if it becomes clear that they won't meet their profit targets. Everyone, including C-levels and project teams, should take this to heart.”
Expo 2020: SAP Ariba to Digitise and Automate Procurement
Expo 2020, a World Expo that is set to be hosted by Dubai in the United Arab Emirates (UAE), was originally scheduled to run from 20th October 2020 until 10th April 2021, but, as with just about everything in the world of supply chain, the COVID-19 pandemic forced event organisers to postpone the highly-anticipated get-together. The new date for the Expo, which will be hosted in the Dubai Exhibition Centre, spanning across a 438-hectare space, is Friday 1st October, until 31st March 2022. But, there will be limitations to who can and cannot attend the event, so SAP has stepped in to fix the problem.
What is Expo 2020?
‘Expo 2020 and SAP have run a series of onboarding summits for Expo’s valued supply chain network. As Expo’s procurement needs shift from construction to interior fit-outs, facilities management and technology services, Expo 2020 and SAP will continue to provide ongoing one-on-one support, including a dedicated helpdesk, to guide suppliers throughout the evolution to digital transactions and processes.
Expo 2020 Dubai, which will open its doors to the world from 1st October 2021 to 31st March 2022, is the first World Expo and only the second mega-event to secure a Procurement Excellence Award from the Chartered Institute of Procurement & Supply.’
SAP Ariba’s Solution
In a recent announcement, it was told that more than 25,000 of Expo 2020 Dubai’s local and global suppliers would benefit from a real-time, unified digital procurement and payment platform, thanks to technology provided by SAP, the events Innovative Enterprise Software Partner.
The solution, provided by SAP Ariba, will supposedly fully digitise and automate the procure-to-pay lifecycle, providing a streamlined digital experience for Expo 2020’s suppliers while simultaneously enhancing transparency and efficiency across the event’s global supply chain. ‘The global technology company’s cloud-based SAP Ariba procurement solutions run on its UAE public cloud data centre and connect to Ariba Network enabling buyers and suppliers to connect and transact’, according to SAP.
Mohammed AlHashmi, Chief Technology Officer, Expo 2020 Dubai, said: ‘Expo 2020 is a long-term investment in the future that aims to enhance opportunities for sustainable business connectivity and growth in both domestic and international economies. Our partnership with SAP is an example of what can be achieved with the invaluable support of our technology partners to host one of the most digitally advanced World Expos ever. The implementation of SAP Ariba solutions has transformed our end-to-end procure-to-pay cycle and helped set new standards of procurement automation for projects of this scale.’
Through SAP Ariba’s collaborative and mobile-friendly platform, any registered suppliers at Expo 2020 will be able to participate in sourcing events and the negotiation and signing of contracts; users will also be able to submit invoices and track payments in real-time. According to the platform, Expo 2020 has already transacted in excess of AED 1 billion on the platform, ‘highlighting its commitment to driving long-term business growth in the region and beyond, with a particular focus on small and medium enterprises (SMEs).’
Claudio Muruzabal, President of EMEA South, SAP, said: ‘Expo 2020 Dubai is demonstrating global best practices in digitising its procurement process with SAP Ariba solutions to help gain visibility into its spend, tighten collaboration with its suppliers, and achieve process automation, including completely paperless invoicing. Expo 2020 has already brought more than AED 1 billion in spend under management with SAP Ariba solutions.’