A key stakeholder in any successful business is the vendors it works with and it can take a lot of care and consideration to make sure that the company is maximizing the value it is getting out of the relationship with the vendor. Added value can take the form of general cost savings, efficiencies made possible by new technology or processes and delivery of certain products or services at an agreed rebate.
Enable Blog — Vendor Rebates
In the supply chain and the rebate world, you will often hear the terms supplier and vendor used interchangeably when supply chain roles and duties are discussed. Even here at Enable we sometimes call supplier rebates, vendor rebates. They both supply goods and services, but there are certain attributes that make each one a distinct term in the supply chain world, which we will discuss in more detail below.
Firstly, if you’re reading this blog you will most likely to be familiar with what an ERP system (enterprise resource planning) is, but as a reminder it is a type of software that manages and integrates a company’s financials, supply chain, operations, reporting, manufacturing, and human resource activities into one system. Examples of ERP systems include NetSuite, Oracle, SAP, SAGE plus many more.
Over the years we have seen many accounting scandals which means there are now more calls from organisations like the Financial Reporting Council (FRC) for “Boards of retailers, suppliers and other businesses to provide investors with sufficient information on their accounting policies, judgements and estimates arising from their complex supplier arrangements”.
In business, procurement and finance are two separate departments, working alongside one another within the organisation. The procurement function is about spending the money well and driving more for less from suppliers, and the finance team is all about keeping the balance sheet in check and driving profitability.
The challenge for many 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 rebates.