Revenue Management in Manufacturing : State of the Art, Application and Profit Impact in the Process Industry

This book focuses on the application of revenue management in the manufacturing industry. Though previous books have extensively studied the application of revenue management in the service industry, little attention has been paid to its application in manufacturing, despite the fact that applying it in this context can be highly profitable and instrumental to corporate success. With this work, the author demonstrates that the manufacturing industry also fulfills the prerequisites for the application of revenue management. The book includes a summary of empirical studies that effectively illustrate how revenue management is currently being applied across Europe and North America, and what the profit potential is. "With a strong historical focus on Revenue Managementℓ́ℓs Origins and by placing a robust emphasis on its importance in future uses in several industries, Danilo Zattaℓ́ℓs book Revenue Management in Manufacturing will give you and your company the tools needed to improve profitability and performance.ℓ́ℓ Kevin Mitchell President, The Professional Pricing Society, Inc Foreword 8 Preface 10 Acknowledgments 12 Contents 14 List of Figures 18 List of Tables 20 Acronyms and Symbols 22 Chapter 1: Introduction 24 1.1 Importance of RM 24 1.2 Motivation and Background 25 1.3 Objectives of the Book 27 1.4 Structure 28 1.4.1 Chapter 2: Concepts and Application 28 1.4.2 Chapter 3: State of the Art and Perspectives of RM in the PI 29 1.4.3 Chapter 4: Application of RM in Europe and North America 29 1.4.4 Chapter 5: Profit Impact of RM in the PI 30 Chapter 2: Concepts and Application 31 2.1 The Concepts of RM and PI 31 2.1.1 Definition of RM 31 2.1.2 Definition of PI 32 2.2 Demand-Management Decisions 32 2.3 The Innovative Elements of Revenue Management 33 2.4 Origins of RM 35 2.4.1 Airline Industry in the 1970s 36 2.4.2 Innovations Introduced by American Airlines 37 2.4.3 Implications of the Airline Heritage 38 2.4.4 Extension to Other Service Industries 39 2.5 RM in the Manufacturing Industry 40 2.5.1 Planning Approaches 41 2.5.2 Empirical Studies 41 2.5.3 Manufacturing Alternatives: MTS vs. MTO 41 2.6 Prerequisites for the Application of RM in the Service vs. PI 42 2.6.1 Heterogeneous Demand and Customer Segmentation 42 2.6.2 Stochastic Demand 43 2.6.3 Capacity Expiration 43 2.6.4 Fixed Capacity and Dynamic Demand 44 2.6.5 High Fixed Costs and Low Marginal Costs 44 2.6.6 Pre-booking Option 44 2.6.7 Economic Freedom to Act 45 2.6.8 Data Availability and Information Systems 45 2.6.9 Corporate Culture and Management Support 45 2.7 Price and Capacity Management 46 2.8 Profit Impact of RM 46 2.9 Fairness Within RM 47 2.9.1 Key Elements of Fairness 48 2.9.2 Fairness Within the Service Industry 48 2.9.3 Fairness Within the Process Industry 49 2.9.4 Price Increase Strategies 49 Chapter 3: State of the Art and Perspectives of Revenue Management in the Process Industry 50 3.1 Background of the First Empirical Study 50 3.2 Explorative Research and Hypothesis Derivation 50 3.3 Quantitative Study: Data Collection 52 3.4 Results: State of the Art of RM in the PI 54 3.4.1 Focus, Implementation and Introduction 54 3.4.2 Importance of RM 55 3.4.3 Type of RM System 56 3.4.4 RM as a Lever Contributing to Profit Growth 56 3.4.5 Future Use of RM 57 3.5 Trends and Perspectives 58 3.5.1 Barriers to the Introduction of RM 58 3.5.2 Benefits and Risks of RM 58 3.5.3 Alternatives to RM 59 3.5.4 Statements on RM 60 3.6 Conclusions 61 3.6.1 Results 61 3.6.2 Limitations and Outlook 61 Chapter 4: Implementation of Revenue Management in the Process Industry in North America and Europe 63 4.1 Background of the Second Empirical Study 63 4.2 Exploratory Research and Hypothesis Derivation 63 4.3 Quantitative Study: Data Collection 65 4.4 Results: RM in Practice 66 4.4.1 Importance of RM 66 4.4.2 Focus, Implementation and Period of Use of RM 67 4.4.3 Current Use of RM 69 4.4.4 Future Use of RM 71 4.5 Trends 72 4.5.1 Barriers to the Introduction of RM 72 4.5.2 Alternatives to RM 74 4.5.3 Statements on RM 75 4.6 Conclusions 76 4.6.1 Results 76 4.6.2 Limitations and Outlook 77 Chapter 5: Use and Profit Impact of Revenue Management in the Process Industry 78 5.1 Background of the Third Empirical Study 78 5.2 Exploratory Research 79 5.3 Quantitative Study: Data Collection 81 5.4 Results: RM in Practice 83 5.4.1 RM Profit Impact Evaluation and RM Years of Utilization 83 5.4.2 RM Introduction and Use 84 5.4.3 Impact of RM Utilisation on Profits 85 5.4.4 A Priori and a Posteriori Estimation of Profit Improvement Due to RM 87 5.4.5 Barriers that Hinder RM Implementation 88 5.4.6 Reasons for Not Implementing RM 90 5.5 Conclusions 91 5.5.1 Results 91 5.5.2 Limitations and Outlook 92 Chapter 6: Conclusions 93 6.1 Summary and Results 93 6.2 Final Remarks and Future Research Directions 94 Appendix A: Questionnaires 96 A.1 Questionnaire for the First Empirical Study 96 Section I: Company Background 96 Section II: Application of RM 97 Section III: Statements on RM 101 A.2 Questionnaire for the Second Empirical Study 101 Section I: Company Background 101 Section II: Application of RM 102 Section III: Statements on RM 106 A.3 Questionnaire for the Third Empirical Study 107 Section I: Company Background 107 Section II: Application and Success of RM (For Companies Using It) 108 Section III: Reasons for Not Employing RM (For Companies Not Using It) 112 Appendix B: Correlation Matrixes 116 B.1Impact of the Barriers ́ Evaluations on Real Decision to Introduce RM 116 B.2 Spearman Correlation Matrix of the Metric Variables 117 Appendix C: State of the Art and Implementation of Revenue Management in Germany 119 Zusammenfassung 119 C.1 Problemstellung 119 C.2Anwendungsvoraussetzungen und Instrumente für Revenue Management in der Prozessindustrie 120 C.2.1Anwendungsvoraussetzungen 120 C.2.2Instrumente: Preis- und Kapazitätsmanagement 121 C.3Stand der Forschung 122 C.4Qualitative Vorstudie und Arbeitshypothesen 123 C.5Empirische Untersuchung 125 C.5.1Datenerhebung 125 C.5.2Ergebnisse: Derzeitiger Stand des Revenue Managements in der Prozessindustrie 127 C.5.2.1Fokus, Umsetzung und Einführungszeitraum 127 C.5.2.2Bedeutung von Revenue Management 128 C.5.2.3Ausprägung des Revenue Management Systems 129 C.5.2.4Revenue Management als Massnahme zur Erkösverbesserung 130 C.5.2.5Zukünftiger Einsatz von Revenue Management 131 C.5.3Trends und Meinungen 131 C.5.3.1Hindernisse bei der Einführung von Revenue Management 131 C.5.3.2Chancen und Risiken von Revenue Management 132 C.5.3.3Alternativen zu Revenue Management 133 C.5.3.4Positionen zum Revenue Management 133 C.6Wesentliche Ergebnisse und Limitationen der Studies 134 C.6.1Wesentliche Ergebnisse 134 C.6.2Limitationen 135 About the Author 138 References 139 This book focuses on the application of revenue management in the manufacturing industry. Though previous books have extensively studied the application of revenue management in the service industry, little attention has been paid to its application in manufacturing, despite the fact that applying it in this context can be highly profitable and instrumental to corporate success. With this work, the author demonstrates that the manufacturing industry also fulfills the prerequisites for the application of revenue management. The book includes a summary of empirical studies that effectively illustrate how revenue management is currently being applied across Europe and North America, and what the profit potential is. "With a strong historical focus on Revenue Managementĺls Origins and by placing a robust emphasis on its importance in future uses in several industries, Danilo Zattaĺls book Revenue Management in Manufacturing will give you and your company the tools needed to improve profitability and performance.ĺl Kevin Mitchell President, The Professional Pricing Society, Inc Front Matter....Pages i-xxii Introduction....Pages 1-7 Concepts and Application....Pages 9-27 State of the Art and Perspectives of Revenue Management in the Process Industry....Pages 29-41 Implementation of Revenue Management in the Process Industry in North America and Europe....Pages 43-57 Use and Profit Impact of Revenue Management in the Process Industry....Pages 59-73 Conclusions....Pages 75-77 Back Matter....Pages 79-129