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Maximising vendor rebates through supplier consolidation

Posted by Andrew Butt on June 15, 2016 13:00:00

The challenge for companies who manage rebates not only with hundreds of suppliers but also multiple divisions of single suppliers is being able to see the complete picture when negotiating vendor rebate deals.

So let’s describe a scenario:

A leading building materials distributor deals with a large group company, which has a flooring division, a concrete products division, an aggregates division, etc. With each division there could be several rebate deals, different terms and rebate earning levels. As the buyer you could have multiple companies within your group all dealing with various divisions of this supplier. The complexity of deals and complexity of relationships is significant, and is made worse by disparate systems on both sides.

How do you get a complete picture of your trading relationships to enable negotiations to take place for vendor rebates — not to mention supporting your commercial objectives with regards to stock holding levels etc?

How do you deal with fragmented suppliers? — which makes answering the question “how much business you do with a trading partner?” really difficult to answer!

Before coming onto the solution, let’s consider the role of a purchasing compliance manager.  In organisations we have worked with, one of their objectives is to make sure all vendor contract negotiations are compliant, commercial deals are aligned with business plans, and buyers are preventing from agreeing deals that ‘don’t pay’.   

Fragmented suppliers, disparate systems, multiple complex deals make this all very difficult to track.

For a purchasing compliance manager, rationalising these complex contracts down into something understandable is one thing.  Actually tracking purchases in a many-to-many-to-many relationship (many branches, buying many different products from many different divisions of one supplier) can prove to be not just difficult but time consuming and costly.

All the great work in negotiating an extra percentage on margin can be eaten away by the complexity of the tracking processes needed to make the appropriate rebate claims.

So DealTrack was born.

Of course, the software tracks deals, but it goes beyond that.  In a complex environment like the one just described, DealTrack enables the user to break down contracts into their individual elements (deals) and then consolidate all the purchasing activity back up to a single view of performance against each deal within a contract.

This is essential evidence to support appropriate rebate claims and to really optimise buyer performance.   And that in turn helps to maximise vendor rebates.

If you’re in a business where vendor rebates are commonplace, and tracking them is time consuming and costly, take a look at how DealTrack could simplify rebate management, help you to maximise rebate claims and strengthen your negotiating power at the same time!

To find out more about managing complex deals listen to our webinar recording.  

Hear from DealTrack user and global procurement expert, Richard Piekar, who shares his wealth of experience of contract management involving complex rebate deals in the Building Materials sector.

Vendor Rebates: how to manage complex deals

Topics: Rebate Management, Industry Sector: Building Materials