Is your rebate management process leaving money on the table?

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Is your rebate management process leaving money on the table?
Is your rebate management process leaving money on the table?

Saving money, keeping costs down, improving profitability — these topics are at the front of every businessperson’s thoughts, especially in tough times. Businesses are doubling down on outcome goals, process goals and performance goals.

Whether it’s retailers and their carrier networks, distribution companies and their suppliers, manufacturing companies and their part makers, or grocers and food companies, profit margins are the critical success factor.

One way to potentially manage costs and improve margins is to examine the process of rebate management, with the goal of improving benefits to both sides of the equation — vendors and suppliers. The rebate management process typically has high operating costs, heavy paperwork, and extensive data reconciliation that often leaves money on the table for businesses.

The rebate management process becomes significantly more complex with scale, so as companies grow, they must commit more complex teams, processes and financial accountabilities to manage their rebates.

Is your rebate management process leaving money on the table?
Is your rebate management process leaving money on the table?

The pain points for companies that are dealing with rebate management are common among the industry, and indeed among businesses in general whenever two companies must share information in order to do business.

Mountains of paperwork and system workarounds become the norm as companies try to evolve and adapt their systems to manage growth. Companies are built to work together, systems are not. Systems are built to work alone within each individual company.

This means that a vendor and a supplier typically would have completely different systems for performing the same function — such as managing purchasing, shipping, invoicing, sales — and rarely can the systems interact with one another.

In most existing systems, information is shared through spreadsheets and emails which limit efficiency and real-time access to information. There is only a limited amount of automation, so predictive and prescriptive analysis is performed manually or missed altogether. Gathering insights for next year’s budget projections is very time consuming.

Typical of any business process, rebates are calculated by comparing the terms of the agreement with the “facts” of what happened and when. Many products have multiple agreements, each with its own specific terms, so agreement entry must be detailed, accurate and time stamped.

Tracking sales figures for each SKU (stock keeping unit) across multiple locations produces growing volumes of information and the work is often attached to a particular person so change management and continuity must be considered.

With hundreds of product lines and thousands of customers, and manual entry with potential errors and omissions, rebate management is complex. Disputes, reconciliation and delays undermine trust between vendors and suppliers.

Imagine the value and savings if we could establish one source of accurate, up-to-date information that everyone could access, share and use at the same time? Imagine if parties could trust that this information was verifiable, tamper-proof, and impartial? If they could rely on data integrity to make business projections for the coming year? And if this all happened without having to learn any new programs or do anything differently?

Is your rebate management process leaving money on the table?
Is your rebate management process leaving money on the table?

Enter samepaging

Both vendors and suppliers want and need access to accurate, real-time information at the same time. This can be achieved by samepaging — a technology platform which establishes a single source of commercial truth for both parties — effectively getting them on the same page, at the same time.

Now all parties know the facts. There is only one set of facts, and it is accessed, shared and used by both parties. This saves time and reduces operating costs that arise from a lengthy, time-consuming, expensive and manual process which causes delays and missed opportunities to maximize cost savings.

These delays are expensive and stall business progress, so their removal adds significant value in terms of saving costs and resources.

Samepaging helps identify the opportunity to purchase more volume of a SKU at a lower price because you have visibility to your rebate thresholds. In turn you could offer a lower price to your customers (to incentivize sales and grow your revenue) or maintain the lower price and benefit from higher margins.

Missed opportunities result in lost revenue and lower margins. It is common practice for vendors to offer promotions, in weekly grocery flyers for example, when there is a time bound discount on specific products. One’s ability to access the offers in real-time — and prepare to have the right products on the shelves at the right time — is critical to maximize the promotional offer.

The DLT Platform ‘samepages’ organizations and ensures agreements are being followed all day, every day. We enable greater commercial trust because each participant in the process knows the data has integrity and is inherently accurate and up to date. This is made possible with three key factors:

  1. The DLT Platform greatly simplifies workflows and makes compliance easy by enabling data to be tamper-proof and traceable.
  2. The DLT Platform reduces lengthy disputes and costly reworks by providing the ability to share information in real-time between all parties simultaneously.
  3. The DLT Platform accelerates the execution of processes and effectively makes them error-proof and automated through the utilization of smart contracts.

Smart Contracts are an advanced form of business rules and business logic that are inherent in the blockchain infrastructure. They enable full and/or semi-automation of complex business processes that ensure that an agreement was followed. This is where a significant reduction in the length and cost of a process cycle can be realized, and a significant uptick in accuracy can be observed.

There are four important deliverables in a successful rebate management program: define, assign, claim and analyse. If the terms are accurately defined, the sales are auto-recorded, forms are auto-populated, and rebates are auto-approved, any extra steps related to verification, disputes and reconciliation are removed, thereby saving money and time.

Beyond process improvement, the ability to forecast and predict directly impacts revenue and margin for the entire company. After samepaging, both parties benefit from better, faster, less expensive, real-time results, and improved trust between vendors and suppliers.

Samepaging is the best solution when the following conditions exist:

  • Two companies must work together (vendor and supplier)
  • Companies must share information to do business (promotions, sales figures, inventory, shelf space, etc.)
  • There is difficulty and expense related to exchanging the information (high operating costs)
  • Agreements have specific terms unique to each implementation (rebate program)
  • Calculations must be accurate and complete, without errors or omissions to advance business process (vendor rebate accruals and payment)
  • Impartiality is important

When you’re analyzing processes from a corporate governance perspective, you need to know how to ensure your agreements are being followed all day and every day. If success in a process is defined by the agreements that are in place, then ensuring they happen as negotiated is important. For example, how do your customers ensure that their supply chain is agile enough to compete during a major recession? During these difficult times we are faced with, your businesses are certainly looking internally at ways to automate and optimize their existing processes and investments.

What you don’t know in Rebate Management

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Comparing the considerations vendors and suppliers have to make

With samepaging access to both real-time and historical information, now you know.

Walmart Canada and its national carrier network represent a comparable model for vendors and suppliers — calculating invoices for deliveries was a pain point with similar conditions to vendor rebate management — complex and unique agreements, antiquated and disparate systems, manual labour, and heavy paperwork.

Walmart receives some 500,000 deliveries per year. With 70 carriers, and 200 variable charges per truck, we’re talking about some 7-billion invoice permutations per year for Walmart and its third-party carriers. This process was previously done manually, so it was labor intensive to collect, input and verify each of the data points required to create each invoice.

Adding to the complexity, each carrier has an individual and complex agreement with Walmart (with different terms) as well as its own fleet management system so the network was disparate and fragmented.

The entire process was time consuming and riddled with delays and expenses, with upwards of 20% of operating costs of shipments originating in invoice reconciliation. The majority of payments were late, but the more important consequence was the loss of trust among the network of shippers and carriers. Samepaging is currently managing $23 billion of Walmart shipments annually and the auto-approval of invoices for carriers means that payments are seamless and trust is improving.

Read more about it in our post here:

We have solved key technical challenges that have been plaguing most distributed ledger initiatives, practices, and organizations by creating a scalable, configurable, and durable blockchain-based platform that works well in the real world and allows for customers to realize immediate value.

Our Platform is comprised of four enterprise-ready modules that are designed to be highly configurable and industry / vertical agnostic with out-of-the-box compatibility for 80% of relevant use cases where a distributed ledger architecture can be beneficial.

This leaves less than 20% that needs to be configured for the customer based on their unique business needs and environment. While most blockchain initiatives are a 12–18 month “from scratch” development that never progresses out of the POC stage, the DLT Platform is proven and fully production ready to ‘samepage’ multiple parties in any industry.

The DLT Labs Configurable Platform is an out-of-the-box solution to meet a variety of complex business requirements and has already been deployed into real-world enterprise environments.

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The benefits Vendors and Suppliers can enjoy with DLT Labs’ solution

So, when you’re staring at that pile of paperwork that needs to get done and sent to another company for approvals and payments, or starting to think about forecasting and budget projections, think of samepaging and how much time and expense would be freed up if those business processes, paperwork, forecasting and accruals took care of themselves.

Author — Shannon Hamilton, DLT Labs

About the Author: Shannon has spent 20 years in the financial services and tech industries in Toronto where she has built, lead and supported sales teams. She is passionate about technology and enjoys finding business problems that can be solved using blockchain.

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DLT Labs is a global leader in Distributed Ledger Technology and Enterprise Products. To know more, head over to: https://www.dltlabs.com/

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