When your branches are owner-occupied and every penny matters, how do you know which product lines are profitable or not? That’s why MKM turned to Enable: to gain better visibility, faster, and improve trust with their branch owners. Trying to give the branches all the information they could possibly need is MKM’s goal.
Founded in 1995, MKM Building Supplies Ltd distributes construction materials through branches across the United Kingdom. The leading independent builder’s merchant in the UK was started by an entrepreneur who took a leap of faith after having been made redundant at the age of 50. Since then, the organisation has grown by hand-picking branch directors with strong customer relationships and local knowledge. Branches are run by owner-managers with a 25% equity share in their branches and the organization operates with a very entrepreneurial mindset.
MKM needed a method of keeping on top of the supplier rebates they receive. “It was all being managed on an Excel spreadsheet, and we didn’t have a way of checking if the payments of our suppliers were right,” says Jon Samuel, Commercial Manager.
In short, they wanted more granular access to their data on a more regular basis: weekly or even daily. “We are looking at rebates and contract management support — we call them claim backs — on a monthly basis to see the screen margin (before rebate) and through margin (after rebate)”, says Samuel. However, he knew there had to be a better, faster way of doing it. “Because we’re only doing them on a monthly basis, we were waiting to see the through margin. We’d wait until the 10th of the next month. By then there’s not much you can do about the previous month because it’s done.”
Why did MKM choose Enable?
MKM chose Enable because of a combination of “the people, the experience, the system and the sector-related experience”, as Jon puts it, as well as Enable’s entrepreneurial spirit which struck a chord with MKM.
“We chose Enable because of confidence in the guys — we were speaking to the person who built it — the founders. We liked the team; we had confidence in the consultant and Peter Hindle and the system looked great as well.”
MKM were also confident that Enable had relevant experience in their sector, since Enable was already working with other, larger merchants.
Importance of Accurate Reporting
In order to improve decision-making and work towards “trying to ensure the branches have all the info they could ever need, when they need it”, as Samuel puts it, they needed more accurate, more timely reporting.
Samuel says, “If you’re selling a product that could go into negative screen margin, you want to have the confidence that you are making money when everything else comes back in. If it’s low margin, you want the confidence that it’s worth doing.”
While the journey towards 100% accurate reporting with Enable is not yet complete, Samuel says, “Once we get that, we’ll pass it to the branches on a daily basis — it will give them confidence that their business for the month is profitable.”
Getting The Data Right
Building a bigger picture with the information in their systems is part of their data strategy. Samuel says, “Enable fits in with that perfectly. We have all sorts of different systems from finance to the telematics in our trucks –that we’re trying to piece together. That’s why the data is important to us.”
Having compared data from different systems, they are comfortable that both are giving them the same information about their rebates, so they are now using Enable as an engine to feed into their central data repository.
Enhancing Rebate Accuracy
Unlike many companies who choose to use rebate management software, MKM was actually glad to know their rebates and rebate accruals were accurate — and Enable helped them confirm this.
“We were confident we were accruing rebates but the up-to-date reporting was most important for us. If we found rebate we were missing along the way, that was a bonus for us, really. We weren’t owed a lot of money from the past three years, which is great news”, says Samuel.
From 95% to 100% Visibility
For 95% of their suppliers the through margin will be accurate with just the rebate. But that wasn’t good enough for MKM or for Enable who wanted to know how they could get MKM to gain 100% visibility.
Samuel says, “Having this ability to view all sales from the beginning to the end of the supply chain process is absolutely critical for us. Enable has certainly made that process much more accessible. They’ve made it significantly simpler.”
He continues, “Enable listened to us, are working with us, and have said, ‘If you’re not getting it 100% right, how could you? How could we help with that? Good collaboration, really.”
Reducing Debtor Days
Samuel explains, “We’ve had confirmation that our accruals are accurate. Enable produces a debtor list. Because we’re confident in the numbers we’re more confident to go to the suppliers. In the past, we’ve waited for the suppliers to say how much they owed us. If it was accurate, great, if it was less, we’d argue the point. Now we’re confident in the numbers so we’ll go out and ask for them. It’s helped us reduce the debtor days. We’re ringing them and saying, “you owe us this, let’s have it”. Clearly from a cash point of view it’s better.”
He continues, “The accuracy of the data, of the accrual, the fact that we can be confident and therefore collect our debt quicker, and it’s enabling us to see the through margin. Those are the three big things for us and together they help us make commercially-informed decisions from a product perspective, to the suppliers, to the customers, rather than going in a little blind as we have in the past.”
Special Pricing Agreements
SPA Contract Support
At MKM, a significant portion of their SPA contracts existed in either PDF or paper formats. It was just Sally Jasper, Group Rebates Co-ordinator at MKM handling the contract support which created challenges in ensuring that all contractual agreements made directly with suppliers by various branches were consistently conveyed.
Jasper explains, “There were instances where critical details were overlooked, necessitating retroactive actions involving a labor-intensive manual process. This involved generating reports for the missed periods and reconciling everything. However, now that we're consolidating everything into Enable, the process will become significantly more efficient, simplifying our ability to monitor and track these crucial contract details."
She continues, "Now, thanks to Enable we have a much clearer view of when a SPA contract is approaching its expiration date. Previously, there were instances where, if we didn't have an updated contract, we mistakenly assumed it had ended, when in reality, it had been extended. Fortunately, with the Enable system in place, we can easily generate a list for our branches, allowing us to identify all the contracts that are nearing their end dates. We can now reach out to them and inquire if they require a new contract or if they can provide us with the necessary copies. This streamlined process ensures we stay on top of SPA contract renewals and avoid any unnecessary disruptions due to expiring agreements."
Cutting SPA Management Time by 50%
Jasper used to spend a significant amount of time, roughly two days, to calculate and report on their SPAs. This involved sorting through countless emails, cross-referencing the contract support materials she had received, ensuring they were incorporated into reports, running the necessary calculations, and then formatting everything to fit the requirements of their finance department.
Jasper says, “The introduction of Enable has the potential to cut the time required by 50%, possibly saving an entire day's worth of work. With Enable, the calculations are readily available, making the process as simple as running a report, thereby greatly improving SPA efficiency.”
Automated SPA Claims Reporting
For the actual SPA claim submission to their manufacturers, the current process involves a manual extraction from the spreadsheet, transferring the relevant information to a new document, ensuring it contains only the necessary supply data, and then sending it via email for submission. Additionally, some manufacturers required a specific format, insisting that certain columns with particular numbers must be included.
Jasper says, “The introduction of automated claims reporting will significantly expedite this process. It will allow us to send out these submissions much more quickly, while also ensuring that they are all in a standardized format that complies with manufacturers' requirements.”
Why Would MKM Recommend Enable?
In conclusion, Samuel says, “From a software and a people point of view, they’re a great business to deal with. It’s a combination of the people who understand the industry, which helps because, from the outside, it can be quite complicated and convoluted; and that you’re dealing with the people who are the founders of the business. From our point of view that makes a massive difference.”
The accuracy of the data, of the accrual, the fact that we can be confident and therefore collect our debt quicker, and it’s enabling us to see the through margin.
Jon Samuel | Commercial Manager
MKM gained confidence in the accuracy of their rebate accruals and data reporting, leading to increased trust in their financial information.
Enable's features empower MKM to make commercially-informed decisions related to products, suppliers, and customers, based on accurate and timely data.
Enable significantly reduced the time spent on SPA management, providing efficiency gains and freeing up time for other strategic tasks.