[blackwasp]

Accenture, a software vendor for multiple carmakers like Renault, Jaguar Land Rover (JLR) and Peugeot, has told prospective buyers how their application allows the manufacturers to raise spare part prices. The software allegedly tells the car maker the maximum price a customer will pay for a particular part. It will also warn against increasing prices of certain parts.

According to a media report, the software, known as Partneo, can disclose which part in the manufacturer's line-up could get a price bump, without affecting customer satisfaction. The facts were obtained from sales presentations prepared by Accenture during the period 2009-2015. Only JLR has admitted that it uses Partneo, while Accenture has denied the allegations and said that the software only focused on the client’s efficiency.

The presentations also say that the carmakers have increased their revenues by over US$ 1 billion over the past 10 years using complex softwares to jack up spare part prices. Renault, Jaguar Land Rover (JLR) and Peugeot said that their pricing systems are legal and are based on efficiency and availability and it did not take advantage of car owners.



Source - Reuters

Link to the Team-BHP News

[i74js]

Analytics play a major role in almost every consumer interface. Something that was used in airline pricing has come down to even railway pricing. IRCTC has started using analytics in determining pricing of railways fares.

Japanese companies have been making us of analytics for quite some time; others are joining the bandwagon now.

Does it qualifies as ethical business, I think such discussions and thoughts are far left behind in a capitalist, profit governed approach. The Accenture software is nothing but a tailor made tool that differentiates between

- Regular items / consumable (fast moving product, can be sold at less margin)
- Out of warranty parts / normal wear & tear (matters a lot to end consumer)
- Accidental damages (Covered through insurance, not much of concern for people with comprehensive or complete cover)

In addition this, the tool / software can also develop a learning curve based on sales of particular part & consumer profiling. Every car coming to ASS is essentially a data point on consumer behaviour, driving habits, km covered and part failure / replacement requirements.

Data is and will remain the most powerful tool at the hands of decision makers !

In future we can only except service by offering ourselves as a product !

[SmartCat]

I wonder what evidence Accenture Partneo software provides to justify price hikes and confidently say that it doesn't affect customer or insurance company's satisfaction? Some kind of feedback mechanism (like customer survey) perhaps?

Logically, keeping regular consumables' prices (Eg: brake pads) reasonable will keep the customer satisfied and keeping accident part prices (Eg: headlights, bumpers) reasonable will satisfy all insurance companies.

The components that rarely need replacement (Eg: AC condensor, timing belt etc) is where car companies have lots of flexibility in pricing (for maximizing profit). Customer satisfaction should not be affected much because he is led to believe that maintenance costs go up significantly with age of car.

[AVR]

Nice to read about Analytics and Data being discussed on Team-bhp. Helps me converge my hobby and my passion into one thread!

Price-elasticity is a standard thing in most consumer businesses and I wouldn't get into moral angles here since each business is out to do well for themselves and each consumer will only buy what he needs if it is affordable.

Historically, each part has had price changes occur over time and when you put it together with historical demand and sales, you can evaluate their relationship. Such relationships are modeled using regression and other math models. Additional information can include how often a customer would buy it, kind of car (luxury, mid-segment, economy), market positioning for the brand and so on. The models try to identify points where increasing price further results in decreasing sales in spite of no change in demand profile. Most companies try to steer lower of those points.

I remember helping a global major who looked at patterns in warranty requests and used that as leverage to negotiate with their vendors. Quite simple as it sounds but you'll be amazed at how silo'ed large organizations are with the left hand having no idea what the right hand!

Cheers,
Adi

[sagaranjos]

The software only tells how price impacts sales of a particular part.
Some parts would be more price sensitive (that is any increase in price could lead to a decrease in sales/satisfaction)

Some parts on the other would be less price sensitive and therefore are the best candidates for a price hike.

The software figures this out on the basis of historical data for prices and corresponding sales.

There is nothing illegal about it. This is how your bhaji waala prices his vegetables too. Every good being sold out there has a pricing engine behind it. Just because Accenture created a software doesn't make it illegal.

[Jeroen]

One million top line extra in ten years time? Time to have a serious discussion with Accenture management about the value they bring. One million in ten years is a mere drop in the ocean.

Doesn’t make any sense.

Jeroen

[Ruchitya]

Originally Posted by Jeroen

One million top line extra in ten years time? Time to have a serious discussion with Accenture management about the value they bring. One million in ten years is a mere drop in the ocean.

Doesn’t make any sense.

Jeroen

The linked article states a boost of $1 billion Typo on this thread.

After reading the article, it seems the software does enter grey areas in its operation. If it tracks what items insurers are likely tracking and avoids jacking the price on those specific items, how is it different from VW's infamous cheat device (apart from magnitude of damage of course)?

However, it is also naive to expect that OEMs/auto companies retail at a fixed profit margin. As Accenture points out, the perceived value is what matters here. And as sagaranjos mentioned, this pricing model is used everywhere, software or no software. Most companies having the capability to use such software will use it. Increasing QoQ and YoY numbers do need this sort of boost i guess.

[Jeroen]

Originally Posted by Ruchitya

The linked article states a boost of $1 billion Typo on this thread.

After reading the article, it seems the software does enter grey areas in its operation. If it tracks what items insurers are likely tracking and avoids jacking the price on those specific items, how is it different from VW's infamous cheat device (apart from magnitude of damage of course)?

However, it is also naive to expect that OEMs/auto companies retail at a fixed profit margin. As Accenture points out, the perceived value is what matters here. And as sagaranjos mentioned, this pricing model is used everywhere, software or no software. Most companies having the capability to use such software will use it. Increasing QoQ and YoY numbers do need this sort of boost i guess.

A billion in ten years isnt all that much either. Even so, nothing illegal about it. The cheat device of VW was very illegal, so that is two different things I think.

Jeroen

[roby_dk]

Good to hear my company name but I would be happy if this software was used in other way to reduce spare parts prices from a customer point of view.

This certainly is not any scandal but a way to maximize business profits.