Vendor Rebate Forecasting System
IBM Cognos TM1
One of the world’s largest distributors of technology products services IT resellers around the world purchases vast quantities of hardware and software from multiple suppliers worldwide. Generally, financial forecasting can be challenging enough, but this company also needed to perform quarterly vendor rebate forecasting. They wanted to be able to predict the amount of rebate earned, or projected to be earned, by each vendor and to correlate its related income and expenses with that vendor. The process was managed in a home-grown Microsoft Access-based system, with actual analysis being performed across multiple Excel spreadsheets. This process resulted in the distributor’s purchasing staff not being able to easily access the information they needed, a lack of trust in the accuracy of the final data, and an overall approach that was error-prone and difficult to manage.
The technology distributor teamed up with Revelwood, who built a IBM Cognos TM1-based vendor rebate forecasting application to improve the overall management, visibility and tracking of vendor rebates across multiple factors. The model incorporated a number of aspects of vendor rebates that were specific to the company’s business processes. The Revelwood team also built a number of custom features that allow administrators to control changes by locking the database for changes after due dates. Lastly, as a result of the project, the company now has a common data repository where all the related data is stored and can be accessed by the rebate team, by product managers and by senior executives.
In addition to the significant time savings gained by moving from an Access and Excel-based approach to relying on TM1 for managing and forecasting vendor rebates, the distributor has seen a number of meaningful benefits from converting to a performance management solution. For example, the company can now more easily and accurately report on expected rebates, and then perform comparison tracking of those forecasts to determine accuracy over time. This also enables the company to create adjustments at a top level.
With the new TM1-based solution, the distributor can ask questions such as:
- Who are my top suppliers? Which suppliers are underperformers?
- Who are my top product managers? Which product managers are underperforming and need attention?
- Who are my Top 10 Vendors on a weekly, monthly, quarterly and annual basis?
While time savings and efficiencies are often the drivers for switching over from Excel and/or manual-based forecasting “solutions,” many companies like this distributor, realize the higher level benefits—such as greater visibility and the ability to perform much more meaningful analysis—far outweigh the time savings.