The Deal Economy

5 ways a rebate management system can reduce supply issues in the construction industry

Since lockdown began construction industry projects have surged meaning building materials are running short in the UK, leaving DIY projects in doubt and building companies under pressure. The Construction Leadership Council has warned that cement, some electrical components, timber, steel and paints are all in short supply. Weather has also played a factor, for example the winter storm in Texas affected the production of chemicals, plastics and polymer.

Not only has there been a sharp rise in shipping costs but a rise in the cost of the materials themselves with the Office for National Statistics projecting a rise of 7-8% in material prices, with increases for certain materials, such as timber, expected to more than double during the course of the year.

But what can be done to overcome these supply issues and many more? The answer is digital transformation. 70% of companies in the construction industry supply chain believe that those who do not adopt digital tools will go out of business. We discuss below all the ways rebate management software can help with your supply issues going forward.

1. Effective collaboration with suppliers

The case for collaboration in the construction industry is clear. It offers the opportunity to create stronger long-term relationships, shared research for creating better ideas, time and cost-savings due to greater understanding, and reduced overheads.  All of these aspects have a direct impact on operational efficiency. That said, significant improvements can still be made to reduce supply issues, especially with a collaborative platform in place.

Closer contact with key suppliers will enable you to agree achievable deals, track performance against them, and course-correct swiftly if the deal doesn’t seem to be delivering as planned. A mechanism for jointly monitoring progress on an ongoing basis, and agreeing appropriate actions, will go a long way toward both parties achieving the results they want.

Companies in the construction industry supply chain need to take a step back and view trading agreements not just as a bargaining tool or a necessary evil, but as a mechanism for mutual co-operation and growth between trading partners. Identify the suppliers that present the most strategic opportunity, and focus on negotiating deals that drive business growth for both parties.

Our rebate management system not only has collaborative features but has a built-in messages app, so you can seamlessly communicate with your trading partners, plus share any documents and links. This avoids emails being lost in inboxes and files being stored locally and allows information to be shared easily between those that need to have access to it.

2. Quick access to vendor information

When it comes to placing an order, companies in the construction industry supply chain will see a list of approved vendors in a rebate management system and will be able to quickly find out the best deal they have in place for the materials that they need for a job. If that supplier cannot fulfil their order, they will move on to the next best deal, and so on and so forth. It’s also easier for your organization to properly evaluate the performance of your vendors and see what is working out and what could lead to supply issues.

Enable has an organizations app which allows for improved access to what matters most: your trading partners, and the deals you make with them. Gone are the days of scrounging for information on your customers or suppliers. Now, organizational data will be front and center, and you’ll be able to view your trading relationships, trading programs, and other relevant information more promptly than ever.

3. Trading agreement sign-off

With Enable you can systemize all of your agreements so that they are stored in one accessible secure place. This means they are always on hand, and nothing is missed allowing you to accurately calculate rebate earnings and ensure your pricing reflects all agreements in place.

Both parties can sign off the same agreement that is then stored in their deal repository. This will reduce the risk of supply issues and disagreements about what was agreed at the start of the year and will help improve relations with your trading partner. The rebate management system also reduces chances of unauthorized access to information which anyone can normally access when you have all your important data and documents filed away in a drawer. 

4. Financial evaluations

A great deal of construction data remains unstructured and unused due to outdated processes or using tools that are not integrated. With all of your data built into a rebate management system, making smart financial decisions, especially if supply issues occur, becomes that much easier. You have visibility into deals that may be impacted due to unforeseen disruptions and how it will impact your bottom line. You’ll be able to determine rather quickly if you’re able to meet demand and make informed decisions about whether or not it’s necessary to partner with another supplier to make up the difference.

5. Real-time reporting and tracking performance of your deals

Reporting manually leads to poor decisions because they are made on out of date and/or inaccurate information. By providing your supplier access to your deals you can allow your suppliers to review your performance regularly and see whether your expectations and their expectations are in line throughout the year. This avoids any shocks at year end and allows you to have a strong relationship facilitating renegotiations of agreements and ad-hoc special deals. They can also notify you of price changes via this portal allowing you to adjust your expectations in line with this. Decision-makers can also keep better track of the movement of products/inventory and have the ability to use this streamlined data to improve operational efficiencies. Therefore, reducing the chance of any supply issues.

Next step: review your current rebate management processes

If your current tools and processes don’t allow you to manage your deals effectively and overcome supply issues, explore alternative options. A good rebate management system will integrate seamlessly with your ERP systems and enable you to structure, track, claim, report on, and account for even the most complex supplier rebates. Companies in the construction industry supply chain that have adopted a strategic approach to deal management have been able to maximize the value of trading agreements to their business and boost financial performance as well as increase their operational efficiency, allowing them to overcome supply issues more effectively.

Some of Enable’s customers in the construction industry supply chain include:

  • Affiliated Distributors (AD), the largest contractor and industrial products wholesale buying group in North America
  • Wolseley, the world’s leading distributor of heating and plumbing supplies.
  • Travis Perkins, the UK’s largest builders’ merchants.
  • MKM Building Supplies Ltd, an independent builder’s merchant who distributes construction materials through branches across the United Kingdom.