Why Enterprise Resource Planning Systems Fail With Rebate Management

Enterprise Resource Planning (ERP) systems allow companies to integrate many disparate elements of their business into a single centralized platform, from human resources to supply chain logistics to data financial. While this level of centralization can create operational efficiencies, the breadth of functionality offered by ERP systems also makes them less effective when it comes to managing more specialized aspects of your business.

For example, when companies need to design, track and execute rebate agreements, ERP systems fall short. Indeed, discounts can be very complex and dynamic. To manage them productively, businesses need purpose-built software that will help them maintain transparency internally and with trading partners, identify areas where rebate programs can be improved, and respond to market changes. and distribution. dynamic. ERP systems allow businesses to record discounts due to them, but not much else.

Although many businesses make do with the rudimentary rebate management tools offered by ERP systems, backed up by spreadsheets and other off-system tracking, the usefulness of these tools breaks down with rebate programs. incentive-based complexes and an ever-increasing demand for discounts. to stimulate the growth of the business for which they were implemented in the first place. Dedicated rebate management systems, on the other hand, are designed around the needs of complex and dynamic rebate programs, helping companies build longer-lasting relationships with each other by giving them a wider range of options. and the resources they need to communicate and collaborate in real time. -time.

How to manage complexity

Global supply chains have never been more complex than they are today – they are more interconnected, they serve larger and increasingly diverse markets, and they often require extensive logistics infrastructure to operate. . A 2020 survey found that 91% of companies say they “can’t stay ahead of the complexity of their supply chain.” As if that task wasn’t difficult enough, COVID-19 threw the global economy into chaos overnight, severing crucial links in supply chains, straining relationships between manufacturers and distributors and forcing consumers to deal with delays and unpredictable cost fluctuations.

One of the reasons discounts exist is to account for uncertainty – from economic shocks to changing consumer demand. They retroactively align volume, prices and payments to projections, incentivizing trading partners to continue investing in each other. The more contingencies discounts can accommodate, the easier it will be for businesses to predict future conditions and adapt when they change. That’s why there are hundreds of different types of discount deals – they can be based on seasonality, sales targets, marketing engagements, performance of specific product lines, and a range of other variables.

Many rebate agreements also change annually (or more frequently) to drive growth and respond to market changes as they arise. These are all reasons why these agreements can be surprisingly complex, making ERP systems blunt instruments for managing them.

Increase efficiency and agility

ERP systems are synonymous with efficiency – by bringing together a wide range of business processes (from workflow solutions to communication tools) on a single platform, these systems are designed to consolidate information, facilitate cooperation and streamline business processes at all levels. This sounds particularly appealing to business leaders in the supply chain industry, who are hyper-aware of any opportunity to increase efficiency. A EY survey found that 55% of companies expect digitalization to improve supply chain operational efficiency (the second most cited option) over the next three years.

But can ERP systems really increase the efficiency and effectiveness of B2B rebate programs? By failing to account for a wide enough range of variables and offering little real-time flexibility, these systems are not the growth engines businesses need. According to Gartner, 89 percent supply chain professionals want to invest in agility. This is what specialized rebate management solutions deliver by giving businesses the ability to be creative in negotiating and implementing agreements, adjusting those agreements as circumstances change. and follow each step of the process on a platform specially designed to manage rebates.

When companies rely on ERP systems that cannot meet their reimbursement needs, they are forced to use other forms of documentation and manual logistics management, such as spreadsheets. This can lead to costly mistakes and wasted time – which isn’t exactly the efficiency that businesses are looking for.

Build stronger relationships between supply chain partners

Rebates help companies forge stronger relationships by allowing them to negotiate agreements that satisfy both parties and giving them the freedom to change the terms of those agreements as circumstances dictate. Dedicated rebate management platforms provide mechanisms to ensure transparency and accountability, more robust contract management, and the ability to manage hundreds of different types of rebates.

According to a recent Enable survey, more than a third of companies say they still use spreadsheets to document, share and sign transactions. This doesn’t just lead to errors, backtracking, delays and a host of other logistical problems – it can also damage relationships, as it forces partners to dig through scattered documents and search for records that don’t have not been properly systematized whenever a dispute or any other issue arises. ERP systems are typically transaction-centric, while reimbursement management systems make the process of creating, approving, and tracking transactions an ongoing collaborative process with dedicated workflow and communication tools.

ERP systems have a clear role to play in helping businesses become more productive, which is why rebate management solutions can be directly integrated with them. But rebate management is a highly specialized field – it requires purpose-built digital tools to manage complexity, improve supply chain flexibility, and build healthy, long-lasting relationships between partners.

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AUTHORS BIOGRAPHY :

Andy James is director of product strategy at Activate, a cloud-based SaaS solution for B2B rebate management. The software is used by supply and finance professionals in distribution, wholesale and manufacturing in over 50 industries so they can have a simple and seamless solution to execute and track their range full of commercial programs.