Deals Management & Frequent Problems Encountered
WHY IBS DEALS - FREQUENT PROBLEMS ENCOUNTERED
A lot of companies face some Business challenges in managing vendors' trade funds. There is a lack of transparency
and no system of record for all the vendor trade funds negotiated. Too much time is lost in correcting errors, doing
manual follow-up and search for reliable information. The source of errors and litigation from lack of proper records
of negotiations and contracts became huge, pushing to a lack of automation and reporting capabilities to support the
trade funds management process.
From a human Perspective, a heavy manual process is carried out with each buyer and category manager managing its vendors in its own way with its own excel based on individual calculations methods. It creates difficulties to capitalize on buyer's knowledge, vendor negotiations and agreements if and when a buyer changes jobs or vendors.
Concerning financial challenges, millions are lost each year due to improper record keeping, follow-up and non-optimized negotiations, and other millions in collection agency fees are spent per year to collect funds due to improper invoicing and collection follow-up.The commercial finance lacks proper forecasting and budgeting of annual vendor trade funds, while operational finance require an automated invoicing/deduction process and payment follow-up.
From a legal side, major losses are due to audit and litigation fees to defend contracts. And no arrangement exists between departments of the company involved in the full negotiation process (legal, buying and finance for example).
“a process without a system: lack of support, lack of reliable information”
Most frequent issue is that too numerous data are available, but no needed information allowing an efficient preparation
and follow-up of the negotiation is current. So, it creates some difficulties to consolidate supplier information from
different sources and systems, to analyze conditions and to obtain accurate information. It is often lead by complexity
to obtain a clear view between the negotiation and the reality.
Business also faces a lack of support of information systems. The follow-up is realized manually, no harmony in work methods exist so the buyer negotiation knowledge is difficult to transfer.
The Buyer is restricted by a poor visibility and control, and the lack of efficient decisional tool.
“each buyer has his own approach to prepare and conduct supplier negotiations”
- A simulation and negotiation tool to manage negotiation conditions at each level (supplier, groups of product groups, products groups, product), to compare negotiated conditions versus targets, and to standardize and automate work methods.
- A contract and amendment management to automate contracts and amendments based on templates and conditions captured, to calculate funding projections, and to manage cycle approval for statuses and negotiation process.
- An invoicing and payment follow-up to automate supplier billing or deductions, to calculate and reconcile projections against invoices and payments, and to generate automatic follow-up alerts on payments and delays.
“supplier funding negotiation and tracking”
OBJECTIVES OF IBS DEALSStrategy impacts
- Ability to maximize opportunities between suppliers, products groups and distributors
- Real time negotiations tracking to ensure the receipts of all negotiated discounts and rebates
- Centralized negotiation controls and best-in-class merchandising
- Performance tracking compared with the planning
- Integration with financials, operations and marketing
- Consolidated results at all levels of the hierarchy
- Improve purchasing terms; reduced COGS(Cost Of Goods Sold) – simulate and evaluate the supplier's terms prior to agreement
- Complete bill back tracking & invoicing
- Integrate Category Management plans into negotiations
- Improve cash flow by appropriate receipts of negotiated conditions through automatic invoicing
- Generate detailed documentation and audit trail for validation
- A complete toolkit for the buyer and Category Manager
- Work methods are standardized for a better communication in the organization
- Captures historical data and spreads buyers know-how
- Improves communication between the purchasing process players and web technology
- Cost reduction through an efficient human resource utilization
- Analysis and reporting thanks to a complete library of reports and KPIs
“real time follow-up and performances of the supplier negotiation”
- A better information analysis
- A better supplier recognition
- A better preparation for negotiation