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Posted March 21, 2022

How digital integration will drive B2B rebate management

By Mo Barsema, Industry Principal for the Electrical Industry, North America at Enable

Mo BarsemaAt a time when supply chains are becoming more integrated than ever before and adaptability is increasingly vital for suppliers and distributors, effective rebate management is essential. Rebates allow trading partners to bring projections and contracts (on everything from sales volume to delivery schedules) in line with reality, which helps them prevent waste, meet shifting market demands, and create incentives to continue doing business with one another.

As the rebate economy grows, trading agreements are becoming more complex to handle a wider range of variables and allow partners to reach more markets. This means old methods of formulating and tracking these agreements, such as spreadsheets and other error-prone manual processes, are rapidly becoming obsolete. Supply chain partners need robust analytics, automation, and collaborative tools that will help them streamline their operations and create visibility at every level if they’re going to remain competitive.

Now that partners have access to digital platforms which allow them to access shared data and analyze actionable insights around forecasting, cashflow, accruals, and a wide range of other joint functions, we’re going to see greater supply chain integration with an increased demand of rebate agreements that facilitate this process. The most successful supply chains in the distribution industry will fully leverage these agreements to build healthy relationships between partners.

How integration and automation are reshaping supply chains
It has never been more important for companies in the supply chain sector to be capable of collecting and interpreting large quantities of data, using those data to make decisions in real time, and automating their processes. As supply chain operations and rebate agreements become more complex, it simply isn’t possible to manage all this information with manual resources like Excel. Yet that’s exactly what many companies are doing – a recent Enable survey found that over a third of companies still use spreadsheets to manage rebate deals.

Automation is a core priority for today’s supply chains. Instead of wasting time and money on slow-moving, unreliable manual processes, companies are using shared data to automate their operations. This won’t just increase efficiency and eliminate waste – it will also help supply chain partners seamlessly integrate rebate management, forecasting, and other critical functions. According to a PwC survey, 80 percent of leaders in supply chain digital transformation are focused on external integration, while 72 percent have implemented end-to-end planning. This trend will only accelerate in the coming years.

Regardless of what ERP system companies use, the integration and automation of their data is crucial to improve visibility, implement effective rebate management solutions, and adapt to supply chain disruptions, shifts in the market, and other changing circumstances.

Why supply chains need a single source of truth
The most productive and efficient supply chains are transparent, flexible, and integrated. This is why siloing is one of the biggest challenges suppliers and distributors face – when segments of the supply chain aren’t aligned with one another, bottlenecks form, disputes become more likely, and companies aren’t capable of adapting quickly enough. By using a single digital platform for data collection and analysis, partners can eliminate silos, ensure that all stakeholders have access to relevant information, and dramatically improve visibility.

However, many companies in the supply chain sector are still falling short on digitization. Gartner reports that half of organizations haven’t actively started preparing for their digital transformation, while a survey conducted by Bain found that one-third of companies say their “supply chain technology falls short in providing real-time insights.” This means supply chain partners are missing opportunities to optimize rebate earnings, develop collaborative growth strategies, and increase market share. It’s also difficult for partners to mitigate disputes and improve their relationships when they don’t have access to the same information.

Robust data management is indispensable for accurate forecasting, visibility, and collaboration across the supply chain. When there’s a single source of truth for the whole supply chain, companies will have the actionable insights they need to improve strategic planning, forge stronger relationships, and serve customers more effectively.

Improving performance with powerful digital tools
Suppliers and distributors face a wide range of challenges, from changing consumer demands around product availability, visibility, etc. to ongoing supply chain disruptions caused by the economic fallout from COVID-19. Instead of addressing these challenges with real-time insights and a data-driven rebate management strategy, too many companies are still using antiquated manual resources and failing to make the most of their supply chain partnerships.

According to a report by Grant Thornton, less than a quarter of companies in the supply chain sector say they’re “very capable” of identifying risks. Meanwhile, a Deloitte survey found that the top reason for failed collaboration in the industry is misalignment between the expectations of partners. When supply chains are more integrated and data-driven, they’ll address these problems by increasing deal visibility, establishing and securing shared performance goals, and developing rigorous rebate management platforms that will improve relationships between suppliers and distributors. It’s vital for supply chain partners to forge mutually beneficial trading agreements, make adjustments when conditions change, and audit claims when necessary, and they now have powerful digital tools to facilitate these processes.

Supply chains produce massive amounts of data, and the ability to collect, synthesize, and interpret that data will be essential for the future of integration and automation in the sector. The companies that recognize this fact will penetrate new markets, increase customer satisfaction, and outpace their competitors.