The Company

S.P. Richards is a wholesaler of office products. They purchase from vendors and manufacturers, then resell to distributors who, in turn, sell to end users. This creates a complex supply chain with many choices for customers, who can purchase from S.P. Richards, other wholesalers, or directly from vendors.

Oleg Gvozdenko, the Senior Director of Pricing at S.P. Richards, oversees the invoice pricing—the price customers pay at the time of sale. Rebates play a crucial role in this process. Oleg needs clear data on which customers receive specific types of rebates to ensure that invoice pricing aligns with these rebates.

In the wholesale industry, rebates are extremely important, including both vendor and customer rebates. Given the razor-thin margins typical in this sector, a rebate can be the difference between a profitable and a non-profitable sale. Monitoring potential earnings from vendor rebates and potential payouts to customers is crucial to success. This vigilance allows for more accurate planning and ensures financial viability for S.P. Richards.

Pricing and Rebate Strategy

For S.P. Richards, it is crucial to have a holistic pricing strategy, with the rebate strategy as one of its pillars.  

Oleg explains, “I oversee invoice pricing for the company, and rebates are a significant consideration in this process. Without understanding the money coming in from vendors and going out to customers via rebates, determining the optimal pricing becomes extremely challenging.”

He continues, “Smart customers can navigate different parts of the company to maximize their benefits: they might secure the best rebate program, request a lower invoice price, and negotiate favorable terms. It's essential to monitor the net impact of all rebates, discounts, and other mechanisms to ensure we control any potential revenue leakage.”

The Challenges

Manual Nature of Special Pricing Agreements

Oleg tells us, “One significant challenge with SPAs is their predominantly manual nature. Currently, our approach resembles more of a "gatherer" mentality: we primarily process special pricing agrements that are already available to us. However, with Enable's assistance in simplifying this process, our aim is to transition to a more proactive "hunter" approach.”

Vendor-specific Rules

One of the major challenges with special pricing agreements (SPAs) is the variability in rules set by each vendor. Each vendor creates their own rulebook, which can span 20 to 50 pages, requiring a deep understanding of the specific rules governing each transaction. While SPAs are a general concept, S.P. Richards’ approach differs significantly for each vendor due to these distinct restrictions and rules.

To manage this complexity effectively, Oleg has a dedicated team who specialize in SPAs for specific vendors. This expertise is crucial because vendors may require different data formats, have varying criteria for user and product information, pricing, quantities, and more. Currently, the majority of this process is handled manually using separate templates and Excel spreadsheets.

Oleg says, “Moving forward, we are looking to Enable to streamline this process by automating data handling and standardizing workflows. This would allow us to manage SPAs more efficiently and effectively navigate the diverse requirements imposed by different vendors.”

Revenue Leakage  

For many companies, SPAs introduce significant complexities that can put a strain on relationships with trading partners. Unlike standard rebates, SPAs involve numerous intricate details that increase the risk of non-payment, which is a persistent challenge for S.P. Richards.  

Oleg says, “Initially, when we anticipate receiving 100% of the funds from an SPA, various factors can reduce this amount, leading to financial losses and revenue leakage for both us and our vendors. The language and requirements of SPAs can be highly intricate. For instance, one vendor may have up to 60 different potential errors or issues that could invalidate the entire SPA agreement. If any of these conditions are not met precisely, we may forfeit the entire rebate amount. This complexity is a significant area of concern for us as it directly impacts revenue and our ability to recover funds effectively.”

He continues, “Moving forward, our focus is on ensuring that the SPAs we engage in are structured in a way that minimizes risk and enhances collectability. This includes improving our processes and systems, leveraging Enable to streamline SPA management and mitigate the risks associated with revenue leakage.”

The Software

Transitioning from Sales Cycle to Implementation  

According to Oleg, the sales team at Enable has been exceptional, providing valuable support and guidance throughout the procurement process for selecting a rebate software partner. One notable aspect he observed was the seamless transition from the sales cycle to implementation.  

Oleg comments, “This smooth transition is particularly reassuring, as past experiences with other software vendors have sometimes involved overpromising during sales and underdelivering during implementation. However, Enable has demonstrated strong internal cohesion and cross-functional collaboration, ensuring that promises made during sales are effectively carried through during implementation. This integrated approach has instilled confidence in their ability to deliver on their commitments and meet our expectations effectively.”

Excellent Support and Onboarding

Oleg tells us, “Enable’s sales organization has been incredibly strong and supportive throughout all interactions during the selling cycle. The sales team has been extremely well organized, providing detailed notes and regular follow-ups that have been invaluable in managing this project. This support was especially helpful as we conducted an extensive review of other market options, a process that took several months. Enable consistently stayed with us on this journey, reinforcing the value they offer and connecting us with their technical resources for deeper insights into the technology.”

Integrating Pricing and Rebate Software

Oleg says, “One of the main motivations for engaging with Enable for Rebates is the seamless integration it offers with our pricing software. We use this software to set invoice prices, and knowing the net cost after accounting for all customer charges and rebates is crucial. This integration provided by Enable allows us to accurately factor in these elements, ensuring more precise and effective pricing strategies.”  

Breaking down Silos

At S.P. Richards, customer rebates, vendor rebates, and invoice prices are managed by separate teams. Oleg explains, “We are using Enable to help break down these silos by consolidating all this information into a unified platform. This will allow different departments to access and analyze the net impact of money flowing into and out of the organization more effectively. By centralizing this data, Enable can facilitate better collaboration and decision making across teams, ensuring a more cohesive approach to managing rebates and pricing strategies.”

Identify New Opportunities and Reassessing Rebate Programs

S.P. Richards plans to leverage their database of rebates and financial transactions more effectively.  

Oleg says, “This database will serve as a foundation for benchmarking and identifying opportunities. Specifically, I aim to evaluate existing vendor rebate programs to explore growth possibilities with certain vendors. Additionally, I plan to review customer rebate programs to ensure they are optimally structured. By utilizing this data effectively post-implementation, we can enhance our rebate strategies and foster mutually beneficial relationships with both vendors and customers.”  

Special Pricing Agreements

The Critical Role of SPAs

In the janitorial supplies and printing supplies sectors, SPAs play a crucial role in offering discounted prices to specific distributors or end users. These industries are characterized by sticky sales, where customers frequently reorder due to the consistent need for these products in settings like office buildings. Setting competitive prices is essential to maintaining customer loyalty, potentially leading them to purchase additional products from S.P. Richards.

Oleg explains, “As a wholesaler, we primarily manage SPAs that vendors extend to our customers. Our role involves administering these agreements, calculating their net impact, and determining the appropriate discount to pass on to our customers. The impact of SPAs on margins and profitability can be significant, particularly with vendors offering substantial discounts that can range from 20% to 40% off the original list price. Without these agreements, capturing such business would be challenging.”

Benefits of SPAs

Oleg says, “SPAs often lead to sticky sales, meaning it's challenging to change suppliers once customers are accustomed to the lower prices offered through these agreements. We prioritize leveraging every SPA opportunity to not only provide competitive pricing to end users but also to enhance customer retention and loyalty.”

He continues, “By managing SPAs effectively involves staying informed about vendor offerings, optimizing discounts to maintain competitiveness, and using these agreements strategically to foster long-term customer relationships in these stable yet competitive markets.”

Being Proactive with SPAs

Oleg says, “We are looking to leverage Enable's platform to delve into our database of SPAs, identifying opportunities, and actively engaging with vendors. We want to negotiate for additional SPAs, extend discounts to more customers, or expand the range of products covered. By adopting this proactive stance facilitated by Enable, we anticipate enhancing our SPA management capabilities and optimizing opportunities for both our company and our customers.”  

Dedicated SPAs Platform

With Enable's SPA solution, S.P. Richards' goal is to automate much of the manual work involved in managing SPAs and to systematize the handling of exceptions and vendor-specific rules. As mentioned, each vendor has unique requirements, and managing these manually requires significant human expertise to ensure compliance with each vendor's specific needs.

Oleg explains, “By leveraging Enable's SPA platform, we aim to codify these rules and exceptions into a centralized system. This would allow us to manage and enforce these requirements consistently, reducing the reliance on individual knowledge and minimizing errors. Thus, streamlining the process of handling SPAs, making it more efficient and less prone to mistakes or oversights.”

He continues, “Ultimately, our engagement with Enable in managing SPAs is focused on enhancing accuracy, efficiency, and compliance by transitioning manual processes into a structured, automated system that can effectively handle the complexities associated with vendor-specific rules and exceptions.”