The task set for procurement leaders in buying groups is to save costs. Whilst that is done at the contract stage, the process of making those cost savings often depends on having the right systems in place.
With contract management systems boasting increased control, visibility and management of contracts that in turn increases profitability, it’s no surprise that finance and accounting teams in buying groups are being tasked with the job of finding the right contract management software for their group. In fact, a recent survey by Oxford Economics stated that by 2018 all 1000 procurement executives in their survey expected they would have automated contact management processes in place.
Contract management systems for buying groups support cost savings by:
automating contract renewal, so no opportunities are missed
automating invoicing, so that all revenue is claimed
automatic alerts for contract deadlines
maximising the efficiency of contract processes, and minimising contract administration costs
The problem with contract management software for buying groups
Buying groups looking to invest in contract management software tend to have a slightly different set of requirements to other types of buyer.
Often, whilst a contract is negotiated centrally, the buying group members place orders directly on the supplier under that contract. This means that there are several legal entities and software systems involved in procurement.
Consolidating purchasing information across a multi-site operation is one thing — collating information from across different systems in different businesses is quite another.
That’s not the only difference. Operationally, suppliers to buying groups tend to like to offer incentives in the form of rebates, and the cost savings made by buying groups therefore depend on 1) reaching the agreed purchasing levels in order to make claims and 2) accurate, timely processing of rebate claims.
If you can’t model all the complexities of your rebate contract in your contract management system then you’ll probably resort to tinkering with spreadsheets to fill the gaps. This is fraught with potential error.
And if you can’t capture data from members or suppliers of your buying group, you can’t monitor progress or process claims with any guarantee of accuracy.
The contract management software alternative: DealTrack Rebate Management Software for buying groups
DealTrack is used by buying groups such as Affiliated Distributors (AD), XLVets, Today’s Group, Landmark and DCS Group. All are realising cost savings and improved cash flow. DealTrack further supports cost savings in buying groups through:
The ability to model and monitor progress centrally against multi-level rebates and discounts to ensure that discounts and rebates are not missed
Full visibility of contracts for all buying group members so that they can purchase selectively against targets about to be reached / rebates due / imminent discount tiers
The ability to consolidate and project purchasing requirements across multiple systems, giving better negotiating power to the buyers
A range of automated alerts to buyers, procurement and finance to improve the timeliness and accuracy of invoice claims processes
Financial reports and audit trails against contracts and rebate claims to assist where disputes arise.
To find out more about the reduced costs that buying groups can realise with DealTrack Rebate Management Software, take a look at this recorded webinar and hear Andrew Curwen, CEO of XLVets, discuss the financial benefits his buying group realised after implementing a rebate management system.