He says the pricing automation service has met all of Piggly Wiggly's objectives. However, "this is not inexpensive," he notes, declining to provide numbers.

Nova Chemicals Corp. is another company that found it helpful to reorganize people around the pricing function when it replaced mostly manual procedures with price management software. Nova changed pricing from a purely administrative function to part of direct commercial operations. "It was a realignment of the work, realizing that pricing was a strategic function and a strategic tool as well as an administrative one," says Bill Gaughan, director of IT in Nova's Pittsburgh office. "And it was not an IT project; it was a business project with an executive sponsor and a business project manager."

Nova rolled out two price management tools from Vendavo Inc. in Palo Alto, Calif. They helped Nova reduce labor costs and errors in maintaining a huge number of discrete prices that were the result of having 1,000 customers, 300 products, quantity discounts and rebates that varied by customer and product, and prices in multiple currencies.

The tools gave management much greater visibility into pricing practices and their consequences, Gaughan says. "We will announce a 3-cent-a-pound increase in some material, and we'd like to see a month later how much of that did I really get," he says. "Where were the competitive issues, the contractual issues, the administrative issues? The tools we used to have didn't give us the advanced analytics to see if the 3 cents really did what we needed it to do."

Tracking the results of an increase in list price in the chemical industry is not as simple as it might appear, since many discounts and price offsets lie between a price increase and the realized gain.