Rockwool Scandinavia was faced with a negative development in pricing, primarily driven by a very tough competitive situation in the builder-merchant channel. The competitive situation put the supply chain under increased pressure regarding several parameters: lead times, special orders and delivery time, all of which increased costs. Newly appointed CEO of RWS Thomas Kähler and his head of supply chain urgently wanted to change this.
Urgent turnaround of declining profitability
We helped Rockwool achieve a two-digit percentage improvement through:
- A simplified product portfolio and new pricing structure for increased profitability
- Redefined terms and conditions for efficient ordering and delivery for customers as well as major cost savings in operations and supply chain
- Realigned and more effective discount and bonus structure for key partners and customers
After several years of declining profitability, Rockwool Scandinavia (RWS) restructured their commercial terms and conditions, making sure that discounts and bonuses for channel partners as well as end customers were aligned to optimise volume, order and delivery patterns.
Because of this turnaround, Rockwool was able to reduce costs and discounts with more than €6 million per year and increased earnings on custom products and deliveries which once again made RWS a profitable business achieving a two-digit percentage improvement.
See the full case below
Rockwool Scandinavia is the leading supplier of stone-wool insulation material to the building industry in the region. The company operates factories in Denmark, Norway and Finland, and supplies insulation for inner and outer walls, roof insulation, panel systems etc. for these markets. As such, RWS looks after the home market for the Rockwool Group, which has more than 10,000 employees spread across 35 countries.
Through analysing all sales transactions across RWS, as well as mapping product sales and profitability, Commerzial identified the following key challenges that needed to be addressed to deliver the desired results:
- Cleaning up and simplifying the product portfolio in close collaboration with the local MDs and sales directors (fewer and more standardised products).
- Updating the commercial terms and conditions for a more efficient ordering and delivery process for the customers.
- Realignment of discounts and bonuses that would give RWS’ customers and partners an incentive to buy products with higher profit margins.
- A new pricing structure that would secure increased profitability on standard products, as well as on custom orders and special delivery requests.
Commerzial helped RWS analyse and design new terms and conditions, as well as a new material and price list for each country, defining clear principles and follow-up routines for the discount and bonus systems.
- The country MDs and sales managers created a new and much simpler product portfolio that led to the increased profitability of the orders they received from their customers.
- Terms and conditions were redefined in close corporation with the production and supply chain, which resulted in more efficient customer behaviour while also securing major cost savings in operations and supply chain.
- The country MDs and sales managers were equipped with relevant insights for the yearly negotiations with key partners and customers, which resulted in a more effective discount and bonus structure.
- Fees and terms for express delivery, special orders and products were implemented in sales and customer service, further increasing profitability.
Could This Be You?
The challenges Rockwool Scandinavia faced are common for many production companies where increased market demands are handled by the sales organisation and often have consequences for the whole value chain, from production and supply chain to customer service.
As commercial excellence advisors, we can analyse the situation and help you define a simple and clear path to improvement. In this process, we also help manage the necessary change to your processes and build internal competence, habits and culture to sustain the improvements.
We supply the right competence and experience that help you embrace that challenge and achieve your goals. With Commerzial, you tap into a senior team of consultants and a proven method and toolbox addressing all corners of commercial excellence.
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