The Old World
There’s a classic tale so many of the organizations we work with can relate to (and quite possibly you can as well). It goes something like:
Sarah oversees calculating, invoicing, and reconciling a high volume of special pricing agreement claims on a monthly basis. She has been with her company for 20 years and is the only one who knows how to run the process, which is manual and takes two weeks at a minimum. One day, a bit unexpectedly, Sarah retires taking two decades of experience running a highly custom process with her and the organization is left to sort things out in her wake.
Sound familiar? We’ve seen similar situations time and again across all types of rebate management, not just special pricing agreements (SPAs). When a key employee who holds valuable knowledge of legacy processes leaves the organization, it typically results in a loss of important information and disruptions to the established workflow.
Mark Gilham, currently an Evangelist at Enable but formerly a Finance Director at Grafton Plc, experienced the exact scenario above. After a long-term employee left, Mark and his financial team were asked to take over the process of calculating and submitting 70 different supplier claims each month across hundreds of special pricing agreements.
At first, Mark attempted to make the old procedure work, but quickly realized they were facing challenges that greatly exceeded a lack of familiarity with the process including:
- The legacy system used to calculate claims was limited to one type of calculation and could not be updated if claim rates changed, forcing additional work in spreadsheets
- There was a transition to Microsoft Dynamics AX but it also couldn’t handle all the calculations, so multiple unfit systems had to be utilized in conjunction with one another
- Constant back and forth was required across finance, pricing, and administration teams to resolve discrepancies (mainly due to usage of outdated data)
What’s somewhat ironic is the calculations themselves weren’t difficult; however, the volume of the data and the nuances across agreements simply could not be efficiently or accurately managed in spreadsheets and inflexible ERP software.
An Improved World
At the time, although Grafton used Enable for their volume rebates, special pricing agreement management wasn’t yet available. So, Mark determined the best path moving forward was to employ existing team resources to build a custom solution. They devised a system that not only automatically calculated SPA claims and submitted invoices (historically the two most time-consuming tasks), but also issued reminders when agreements were up for renewal and provided a report highlighting earning opportunities. Although it took time to build the solution, the results spoke for themselves.
First, the time savings were significant. At the end of the month, six days of manual administration were reduced to a few hours in which the system automatically calculated all the claims owed and issued invoices to individual suppliers. With the additional time to spare, focus could then be put towards finding areas of opportunity and educating internal teams on the process.
Secondly, there was a 10% increase in the amount of claims captured, mainly due to all eligible claims being accurately submitted, but also a more effective renewal process and insights into opportunities to improve agreements.
And finally, their suppliers were impressed with the formatting and accuracy of the claims submitted, allowing them to easily validate and make payments.
In general, building a custom system often isn’t the best option for a company, from the development costs to ongoing maintenance requirements. But in this case, Mark was able to couple a purpose-built solution with good internal processes that paid dividends for his company on an ongoing basis – an impressive feat by any standards!
The New World
Here at Enable, we are huge proponents of automating rebate management processes – and we are ensuring our solutions cover the full spectrum of challenges faced.
When it comes to special pricing agreements, organizations deserve a platform where the entire creation and management process is streamlined, where data exchange and collaboration with partners is seamless, and where insight in performance is readily available.
If you are interested in learning more about how to simplify and optimize SPA management at your organization, please reach out to schedule a demo!
