Are We Controlling SPAs or Are SPAs Controlling Us?
Special pricing agreements (SPAs) are a source of great strategic potential for businesses across the supply chain – but with this power, they bring unique challenges and a higher level of administrative complexity, requiring more capable systems and processes to manage than typical rebate programs.
Despite these difficulties, many businesses think they’re in control of their SPAs, believing that their processes and legacy systems – while perhaps imperfect – are “good enough.” When we asked businesses about the efficiency of their SPAs processes for our recent report, just over half (59.4%) rated their processes as “fair” or “good.” Meanwhile, only 2.9% of respondents rated them “excellent,” suggesting a general lack of confidence in these essential processes. While “good enough” may seem sufficient, this sense of complacency leads businesses to turn a blind eye to the true cost of managing SPAs with unsuited systems and inefficient processes.
Companies across the supply chain are struggling to get a handle on these powerful, yet complex and unwieldy deals. In this blog, we’ll explore the ways that businesses are lacking or losing control of their SPAs, as well as a solution for gaining and maintaining control of them.
How Are SPAs Controlling Us?
Most SPAs are negotiated, administrated and maintained by teams of fewer than 10 people. This can lead to dangerous levels of key-person dependency. With only a few people (or, in some unfortunate cases, only one person) that understand how these critical deals work, you open your business up to costly delays in communication, operations, productivity and decision-making. Long-lasting key-person dependency can be especially dangerous for businesses with high turnover or a SPAs team nearing retirement.
SPAs should be a tool to help grow your trading relationships – but allowing these issues to fester can quickly diminish the trust you’ve worked so hard to build. Make sure that your team has the education, backup and support they need to keep your SPAs alive and thriving.
It’s true that smaller teams can be more effective – but SPA teams are often overburdened and under-supported. Most businesses (64.3%) have between 100 and 5,000 SPA contracts. For 55.7% of businesses, these deals alone take more than 30 hours per week to manage. With a lack of standardization among claims submissions and contracts, this challenge is especially prevalent among manufacturers, 40.9% of whom spend more than 50 hours per week on SPAs alone.
To keep up with these responsibilities, smaller teams must work at capacity, spending most of their time bending ill-fitting software out of shape to manage these deals manually. This isn’t exactly the most productive use of your team’s time or skills. Instead, SPA teams need more support – starting with better tools and more efficient processes – to stay on top of these deals.
Most manufacturers and distributors are using ERPs (36.8%) or spreadsheets (39.7%) to manage their SPAs. But despite their popularity, these systems lack essential functions for managing and tracking the performance of SPAs, leaving many businesses to fall behind and miss out on the full potential of these deals.
In addition, most of these systems weren’t built to handle the complexity of SPAs and still require quite a bit of manual input and oversight to function, meaning that you cannot fully automate or streamline your SPAs processes to ensure maximum efficiency.
Choosing a spreadsheet or an ERP to manage deals of such a complex nature is a bit like foregoing a car in favor of a pogo stick. It may be cheaper and it technically “works,” but it’s far from the most efficient way to commute. If you’re struggling with SPAs, consider switching to a new solution – using the right systems to manage these deals can make all the difference.
Gaining Control of Your SPAs
Gaining true control of your SPAs is essential to their continued success. With greater insight into your SPAs, you can adapt and improve your strategy, creating better SPAs for the future. With greater administrative capability, your team can save valuable time and effort to return to value-add tasks. Once you have control of your SPAs, you can more effectively leverage them to accomplish your strategic goals, such as:
- Protect and/or control margins
- Collect information about the consumer
- Gain market share
- Retain market share
- Build and strengthen trading relationships
The best way to gain control of your SPAs is with a dedicated software solution, such as the Enable platform, designed to handle the intricacies of SPAs and other complex incentives. Put yourself in the driver’s seat with a comprehensive suite of features and let the automated platform streamline the rest.
Interested in learning more about the struggles businesses are facing with SPAs? Download our report on The State of Special Pricing Agreements.