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How to manage complex vendor rebates and drive margin

Posted by Andrew Butt on July 29, 2016 10:40:00

Multiple vendor rebates which are very often complex in nature can have a significant impact on the effectiveness of financial and procurement teams, profit margins and company performance.  

Dealtrack's rebate accounting experts held a webinar to discuss ways to 'Manage complex vendor rebates deals and drive margin'. In this webinar we hear from Richard Piekar - a seasoned global procurement professional who has spent many years working for enterprises in the Building Materials sector.

Rebates tend to be negotiated by commercial teams and managed by their colleagues in the finance department.  The aim has always been to ensure that the agreed rebates are claimed.

The data required includes:

  • trade agreement details
  • purchase order transactions
  • invoice information
  • goods receipt information

and, in many cases, an ability to transform units of measure so that goods received can be expressed in the same way as the deal. 

It's no coincidence that this information is exactly what is needed by procurement in order to negotiate future deals.

Far from being "just" a system to manage rebates, DealTrack provides the ability to use historical transactional information to create what-if scenarios for future negotiations.

Richard elaborated on his method of using data to create "fact-based negotiations". The characteristics of this are:

  • A discussion of profitability and not just providing a bonus on a category by category basis
  • Based on tangible facts
  • Based on a well prepared story line with options for negotiation

A key measure of supplier performance is its true contribution to profitability.

To create this Richard doesn't just look at sales and gross margin.  All relevant elements of a transaction must be looked at, for example

  • Adjusted gross margin per supplier
  • Share of products in assortment of CRH per supplier
  • Market shares of suppliers
  • Growth in sales of suppliers
  • Expenses on required and non-required products
  • Profitability per supplier after logistics costs and store costs

Richard went on to discuss the 3 steps he takes to prepare for fact-based negotiations and the benefits he has seen. 

Questions we addressed in the webinar:

  • Is Dealtrack focused on vendor rebates or can it also be used for customer payments?
  • How does DealTrack support business processes?
  • What are waterfalls and strings? How does DealTrack support this process?
  • Is it an on-premise or cloud solution?
  • How do you retrieve and send data back to the host ERP systems like SAP or Dynamics etc.? Is it webservice or file transfer?
  • How many clients do you have in North America, and what type of ROI have they seen?

What next?

To find out more listen to the full webinar recording:

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Topics: Rebate Management System, Supplier collaboration, Rebates, vendor rebates