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DealTrack Blog — Andrew Butt
Many distributors are moving to the cloud to reduce IT costs. A cloud-based rebate management system can also give a significant boost to revenue and margin.
Topics: Rebate Management System
The rise of Amazon Business has distributors rattled. To compete, distributors should focus on the things Amazon can’t provide—using the Deal Economy as fuel.
Strategic collaboration with manufacturers could be a huge driver of revenue and profit for construction-industry distributors. So why have so many given up on trying to make it work?
Finance and accounting departments tend to rely on Excel spreadsheets to manage a growing business’s financial data because they know it, they understand it and old habits die hard. But human entry error is always a risk which we saw a few years ago when news about Excel miscalculations at JP Morgan rocked spreadsheet users’ worlds. A simple cut and paste excel error cost JP Morgan $6 billion and resulted in dramatic headlines like “Why Excel is the Most Dangerous Software in the World”, but it wasn’t the first time spreadsheets had caused massive business disruption, nor will it be the last.
Topics: Rebate Accounting
We learn about collaboration from an early age. As children we quickly learn that we need to collaborate with teachers, classmates and team players in order to be successful. "There's no 'i' in 'team' is a common mantra in sports and work teams. And "supply chain collaboration" has been a hot topic for decades.
Despite that, there are very few systems that enable wholesale distribution companies and their suppliers in the building materials industry to truly collaborate on their trade agreements.
The phrase win-win is probably over-used, but I am going to use it anyway to describe the situation where both parties come out of a negotiation feeling like they have won. Let’s be honest. If you think you won and the other party (your supplier or your customer) feels they lost, then it’s not really a good situation.
Price is important, but (particularly in industries like building materials distributors and grocery retailers where margins are tight) time to market, supply chain reliability, innovation, quality and flexibility are elements that contribute significantly towards a company’s competitive edge.
SIG is a leading European provider of specialist building materials, with close to £3bn of annual revenues and around 9,000 employees across the UK, Ireland and Mainland Europe. As a specialist distributor, SIG plays a critical role in the construction supply chain, bringing value to its customer base across major European markets.
Rebates, SPAs, claim-backs, contract support are all very similar and at the same time quite different to each other. In essence they are all terms for the money that wholesalers claim from suppliers and manufacturers for selling their products. Some of the key differences lie in how the agreements are formed, whether goods are actually ever handled by the wholesaler, and how the claims are made.
Collectively, they are sometimes referred to as “vendor monies”. It is estimated that, annually, these amount to $600bn in North America and perhaps as much as $500bn in Europe.
In a world where margins are tight, wholesale distributors across nearly 50 sectors rely so much on vendor monies that their absence would be a serious dent in their profit margin.
Topics: Rebate Management
Whilst many core business systems have some functionality to help monitor trading agreements that involve vendor rebates, most have neither the flexibility nor the extensive range of functionality that is needed to support the increasingly complex world of rebate management.
For many, that lack of functionality has resulted in missed rebates and poor accrual accounting.
But worse than that, if your business systems don’t support rebate management fully, then the whole purpose behind creating deals involving rebates – a means to influence business growth – is missed.