Rebate Management: the “Secret” Ingredient for Driving Growth

By: | Category: ERP

Rebate programs are powerful tools for B2B companies in a broad swath of industries, particularly those where margins are tight and pricing strategies can make all the difference. When properly structured and implemented, they can establish market differentiators, create purchasing incentives and build brand loyalty. Companies in the medical device and supply business and chemical manufacturing and distribution business are prime examples of price-sensitive, intensely competitive industries where effective rebate management programs can deliver significant business benefits.

Medical Supply Companies: A Snapshot

After labor costs, medical and surgical supplies represent the second largest expense for hospitals. Medical suppliers often offer rebates as an inventive for purchasing select items. However, rebates can complicate efforts to calculate and track the actual prices they pay for these supplies over a period of time. Plus, the hospital will be overpaying up front, with the expectation of collecting the rebate at some point in the future. Hospitals that operate on thin margins might not be able to defer receipt of the rebates, particularly as many suppliers are unable to process them for months, making efficient rebate management an essential sales tool.

Chemical Manufacturing and Distribution Companies: A Snapshot

Several years ago, Deloitte Consulting published a paper titled “Pricing in the Chemical Industry: Boost your pricing power” : “In times of volatile raw material costs, chemical companies need to better understand their customers’ buying behaviour and how their business units price products. Escaping the commodity trap or introducing value-based pricing requires a closer connection with your customer and more insights into the end markets in which your customer is operating, allowing you to capture the maximum value through price setting and execution.“

Price fluctuations in raw material costs are difficult to manage, making it hard to keep chemical products profitable. Automating and efficiently managing rebates – a system that calculates, tracks, manages, and analyzes rebates – can go a long way in driving revenue growth and rewarding customer behavior for companies in the chemical industry supply chain.

Most rebate programs are structured in such a way that it can take months for rebates to be processed and checks sent. Even to this day, some are maintained and managed in spreadsheets which lack security and are prone to error. An efficient rebate platform can shrink the window between the time a rebate is submitted and processed. It can also properly track, trace and manage a variety of programs, enabling distributors and manufacturers to sell more products and (because there’s no longer the large gap in processing) increase brand loyalty. Such a platform can also improve visibility and control by providing channel managers, sales, and marketing with a complete view of rebates and channel incentives. All of which is vital to the success of businesses in the chemical and medical device industries, giving them the ability to finally gain control of all their rebate, pricing, and channel programs so they can make sure it all adds up to smoother operations and more growth.

For more information about rebate management and tracking and specifically about Net at Work’s Rebate Management & Tracking software for Sage X3 ERP, please contact us.