Rebate Management Software was Paramount for Rubix to Gain Increased Visibility & Clarity
With revenue of more than €3 billion in 2022 and approx. 12 million different products, Rubix are Europe’s largest supplier of industrial maintenance, repair and overhaul (MRO) products and services. The company merged from IPH and Brammer. Their brands span across Europe including Biesheuvel Techniek, Brammer, Buck & Hickman, Giner, Julsa, Minetti, Montalpina, Novotech, Orexad, Robod, Syresa and Zitec, to identify, install and provide a leading range of industrial products and services to more than 220,000 customers.
Peter Haselden, Group Business Performance Director at Rubix has been in the role for over 4 years overseeing and managing the overall performance and strategic direction of Rubix including identifying opportunities for operational efficiency and performance improvement especially involving their rebate programs.
The Importance of Working Together as a Team
At Rubix, two historical companies were amalgamated, each with distinct operational approaches. While one operated in a highly decentralized manner and the other followed a centralized approach, the objective was to synergize and harness the strengths of both.
Haselden says, “I think it just comes back to working together as a team but not losing that local decision-making flexibility, is critical. If you are a group of islands, you don't do so well as a group financially. You've got to enable all of it. The whole is greater than the sum of the parts, and that is how groups are made to be successful. That all comes through trust, communication, visibility on all the data. You don't hide stuff. You don't treat data and knowledge as power internally. You share it as much as you can. The goal is for our category managers to take control of their own data and deals, and not rely on finance as much. “
Rubix previously relied on Excel spreadsheets to manage their two types of rebates. Central rebates where the group does the deals, a company wide deal with certain suppliers, and local rebates. With rebates representing 12% to 15% of their gross margin this was no longer a viable option.
Haselden says, “It was very hard to use Excel, particularly with a local and central element. It was very hard to figure out what was going on and what's the overall rebate from this supplier? That was one of the main drivers for going for a rebate management tool, to help us bring all the information together.”
He continues, "We were losing approximately $500,000 annually due to our inability to efficiently collect rebates. Enable will generate a return on investment of at least fivefold each year, compelling us to adopt a more professional approach to rebate management and enhance our yield rates."
Having Increased Visibility of Rebates Is Critical
Haselden explains, “One of the things that I've learned is that the more you centralize your rebates, generally the higher the yield you get on your rebates. It's roughly 2:1, so you might get 1.5% on a local rebate, but if you group them together, you work with the supplier and they give you a European-wide rebate and you remove the local ones, often you can get your yield up to 3%, so doubling your rebate profitability is fantastic. Of course, from a bottom-line point of view, that's brilliant, but it's also the visibility, which is critical.
He continues, “If you're in January, February, March. You have a spectacular February, you might think this may continue and then you accrue as though you were going to hit the top threshold. March could not go as well and suddenly you've got to unwind everything you've over-accrued in February and it can lead to a very, very lumpy P&L, which helps no one.”
Getting The Best Rebate Deal Is Important
Haselden tells us, “Of course when you are in a business like this, you've got a limited amount of spend and you want to orientate that spend to the most profitable suppliers, because you've got suppliers all providing almost identical products. You might get 3% on one and 2% on another, but the absolute price of that is 20% higher than that one, so it's a very complex game to work out where you are going to use your limited spend and get the biggest bang for your buck for Rubix, and the best deal for your clients. Of course, that's the most important thing. They want the products that they want, but you can move them amongst the various brands to get the best deal for them and the best deal for us.”
For Rubix, the local and central deals were one of the main financial cases for a rebate management tool. Visibility was the other, having the ability to know what everyone's doing.
Haselden says, “We chose Enable specifically because I've been in this space for a while, and I had never really come across a SaaS rebate management tool that was affordable, quick to implement and didn't rely on being attached to a massive piece of underlying software like SAP. It was purely an off-chance call from Enable to the CFO of Rubix and he passed the details. When I looked, I realized I’ve never seen a tool that does this. To me, it was almost the only product in the shop that we could have gone for. I haven't seen any other tool that does what Enable does, with that full interactivity between all the various systems.”
Taking Control of Rebates to Meet Auditing Standards
Haselden says, “We knew that having a good handle on rebates was critical in the pandemic and beyond. We all know that misstatements can happen because from an accounting point of view, they are very easy to manipulate so you need to keep track of them. I've experienced this in other B2B businesses and it's a critical part of managing profitability, having accurate visibility, particularly in the early part of the year. When your rebate thresholds are further on in the year, you need to know where you are in January, February, March, as to what that will look like in Q4. Enable provides us with this valuable information.”
Greater Clarity with Our Suppliers
Haselden states, "From our experience with Enable, we understood the importance of having accurate spend data. We needed to ensure that what we were purchasing from suppliers aligned with what they were providing us. We discovered that there were discrepancies between what suppliers believed we bought and what we believed we bought. So, improving communication channels was essential to progress the project successfully."
Realizing Our Own Data Is Good Enough
Haselden explains, “Utilizing data, not just reporting on historical data, extrapolating data into the future, doing a scenario analysis, what will happen if prices going up, which suppliers will struggle, which ones won't. Can you pass those increased costs onto client? Which clients will accept and which ones won't. Of course, that depends by customer segment and all that knowledge comes from data. The main goal of Enable is to trust our own data instead of relying only on what suppliers give us."
He continues, "At Rubix, it's crucial to see how we're budgeting, making predictions, and how accurate our data is. We aim to understand our daily sales for different product categories. Only with this information can we make informed decisions about the direction of our business.
What we learnt during our Enable project was getting the accuracy of our spend data right. So, what are we actually buying from these suppliers and does it match with what the suppliers are sending us