Buying groups, as the name suggests, are formed to give buying power to smaller independent companies through purchase consolidation. Whilst buying groups don’t typically have control over the systems implemented by members, they do need information from members in order to negotiate the best possible deals on their behalf.
It has long been recognised that buying groups can have difficulties in committing to purchase volumes with any degree of certainty. That impacts both the buying group’s ability to negotiate and the supplier’s willingness to concede larger discount.
Rebates are an agreeable mechanism for both parties — the ability to strike a deal where incentives depend on actual purchasing activity is a safe bet all round.
However, rebate deals themselves provide a headache for the buying group. That headache stems from three main areas:
- Having accurate information on which to base negotiations
- Being able to record all the detail of every deal in a system (including marketing funds, for example)
- Being able to upload information from members against each deal in order to calculate rebates owed
What systems are buying groups currently using?
We have seen buying group using purchasing systems that are built on a foundation of spreadsheets, which as we all know, are open to error — version control, mistakes and other issues. Admittedly, spreadsheets are a step up from others who build their rebate claims system purely on trust — relying on the supplier telling them what rebates are owed!
The alternative route that some have taken is to implement an ERP system, but that again poses problems in obtaining real-time information from members. ERP systems are designed for the enterprise, not for a combination of different companies. Trying to feed data from disparate member systems into an ERP system is fraught with problems.
So, a new breed of system has appeared on the market, targeted at buying groups and others who:
- Create profit by negotiating good margins
- Gain significant margin through accurate rebate claims
- Need to gather information from disparate systems
A system for a buying group needs to provide the following functionality:
- Improve the buyer’s job by providing the ability to negotiate from a base of accurate, real-time information
- Improve the rebate accountant’s job by providing automated rebate claims information based on live data feeds from members
- Improve member satisfaction by providing competitive pricing and timely rebate claims settlements
- Handle ANY type of deal that you may negotiate now or in the future
- Seamlessly integrate with ANY source data system
- Reduce overheads in the buying group through automation
- Improve relations with suppliers by providing access to information and a basis for mutually profitable negotiations
We advise you not to settle for a system that forces members to use your technology and one that demands cumbersome admin processes.
Instead choose an ERP agnostic system that gives complete flexibility over how data is extracted from your members’ systems — be that integrations, EDI or simple spreadsheet uploads. The easier it is for members to provide information to you, the more accurate and up to date it will be.
A rebate management system provides an end-to-end solution for buying groups — for their purchasing team, their rebate accountants and their members. Functionality includes contract management, member data uploads, supplier uploads, rebate calculation and automated rebate claims management.
It was designed to handle rebates in a way that no other system can — with complete accuracy, flexibility and transparency.