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Managing vendor trading terms and identifying multiple financial considerations, such as rebates, is a challenge for any organisations. For department store, David Jones, which has thousands of vendors and hundreds of sales and deals being offered on a weekly basis, managing everything at once can be overwhelming without the right tools.
“You also have to factor in staff turnover, or people growing within the business and moving departments,” David Jones merchandise planning / buying training and development specialist, Juanique Vorster said.
“People move and they take their knowledge with them, so unless agreements and terms are properly recorded in one place it can be really tough to get your hands on the latest information.”
A lack of visibility over deals can lead to financial erosion. If rebates are not claimed or suppliers overcharge, even small errors or unclaimed monies can result in an amount that impacts the bottom line.
“Without a central system in place, you can imagine how easy it is to lose track of an agreement because there are so many,” Vorster said.
If the terms of an agreement weren’t met or rebate claimed, tracking down a correction can often impossible. The biggest risk in leaving rebates unclaimed is to the bottom line. While one rebate won’t materially impact a business, multiple small rebates unclaimed can accumulate and have a measurable impact on profitability.
“We all love what we do; we love fashion, and we love bringing our customers together, but ultimately the bottom-line matters. There’s nothing sexy about chasing profit, let’s call a spade a spade. Any business needs good cash flow and a good balance sheet to enable it to continue to grow,” Vorster said.
The business has worked with leading technology-driven services provider of compliance and recovery solutions, Profectus Group since 2014.
Prior to then, buying teams were responsible for manually calculating scan deals and markdown claims and passing relevant paper forms across multiple touch points, with the hope of having the deal entered correctly in the Enterprise Resource Planning (ERP) system. Apart from the inefficiencies of the process associated with people responsible for passing paper across desks, there was also lack of full visibility as not all standardised and relevant information was accessible throughout the organisation.
David Jones turned to Profectus and implemented its Rebate Deal Management (RDM) solution to ensure all deals, agreements and terms could be easily imported, categorised and, easy to find and trace.
The initial implementation of RDM involved a slow but persistent digitalisation of processes, identifying where and how to reduce wasted effort and minimise lost income. The solution was first implemented in 2014, mainly focusing on the collection of promotional support monies, evolving over time to include collection of volume rebates, new store opening contributions, marketing subsidies, vendor data charges and more.
In 2017, the business moved its headquarters from Sydney to Melbourne, but not all staff relocated with the business, which would normally present a knowledge loss risk.
“Not all paperwork and knowledge travelled down to Melbourne with us. But when it came to food agreements and promotional rebates, it didn’t need to. All food trading terms, historical promotional monies and food volume rebate collections remained visible and accessible for new team members and audit purposes,” Vorster said.
David Jones also leveraged Profectus’ Audit capability to further enhance its bottom line.
“We’ve just opened up our emails to protect us as part of that extensive identification of financial leakage. Already we are seeing very low hanging fruit in that space where we may have had terms agreed and commercial agreements with vendors that we may have just not collected as a result of somebody leaving the business,” Vorster said.
“By using artificial intelligence and identifying emails featuring agreements and terms and referring back to our accounts payable data to see whether we’ve actually collected the money, we can identify leaks. From there we can claim the money from vendors who had previously agreed to pay it.”
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