Securing Rebates

February 6, 2012 by Frank Zscheile

Headquartered in Soltau, Germany, hagebau Handelsgesellschaft für Baustoffe mbH & Co. KG comprises some 260 small businesses and midsize companies. The group maintains around 1,000 locations in Germany, including approximately 300 hagebaumarkt DIY stores and more than 700 businesses that sell lumber, tile, and other construction materials.

Not surprisingly, the hagebau business model is built on four pillars: the specialist trade in lumber, tile and natural stone, and other construction materials; and retail. The former three distribution chains are handled by hagebau, while ZEUS Zentrale für Einkauf und Service GmbH & Co. KG is responsible for the retail sector. The hagebau group has held a majority stake in this cooperation since 2003. For some time, all four of hagebau’s primary lines of business have been using an SAP-integrated contract management solution from nextevolution AG.

With its vendors, hagebau negotiates outline agreements that specify types and amounts of rebates. These can take a wide variety of forms, from traditional conditions such as rebates on annual volume – which take effect at the end of each year – to terms that hagebau applies immediately after invoicing. First, an employee in purchasing creates a contract within the corresponding contract record. These agreements are fully integrated into the group’s SAP system through a unique business object for contract data; through SAP NetWeaver Folders Management, which handles the administration of all the documents involved; and through SAP Business Workflows, which manages the necessary contractual processes.

In an SAP vendor file, the purchasing employee maintains a conditions sheet, which constitutes part of the contract in question. It also serves as the basis for passing data on to hagebau’s rebate department, where the rebates to which the group is entitled are immediately determined – automatically and error-free. Misunderstandings stemming from the rebate department’s failure to enter conditions arranged between the purchasing department and certain vendors are now a thing of the past, as are manual maintenance errors and information lost between purchasing and the rebate department.

More efficient settlement

Though this automation sounds simple, it wasn’t possible until electronic contract records were introduced. It used to be that contracts were available only in paper form in the purchasing department. Copies had to be sent to the rebate department by internal mail or courier. “It took a significant amount of organizational effort to ensure that we factored our vendors’ rebates into their invoices on schedule,” recalls Tim Fäsecke, who heads the service and development department at hagebau Datendienst IT-Service GmbH.

The rebate department used to have to confer with purchasing to prevent misinterpretations of how each vendor contract was worded, which was an onerous back-and-forth process. The resulting need for a complex control mechanism led to the implementation of electronic contract management, which now facilitates the automation hagebau requires to optimize its settlement of rebates.

Since then, nextevolution has updated its standard contract record application to handle the corresponding management of information on rebate conditions. Users can now enter master data into master records all at once, for example. A workflow that requires item-by-item approval of conditions before their transfer into the respective master data has also been implemented, along with an option for generating draft contracts based on conditions entered.

The implementation of electronic contract records was an iterative process involving small, careful steps in real-world scenarios. Today, hagebau uses nextPCM Contract Management to oversee not only purchasing and master agreements (and the conditions they contain), but also the license and maintenance agreements that hagebau Datendienst IT-Service GmbH deals with.

Next step: invoice processing

After establishing its use of contract records, hagebau also implemented a nextevolution application for electronic invoice receipt verification. The group now uses nextPCM Invoice Management to process around 50,000 FI- and MM-related invoice documents every year. In the past, when a vendor sent an invoice to hagebau, the group’s accounting department first created an account assignment document. Along with a copy of the invoice, this document was then passed on to the cost center manager in question, who checked the numbers and other content before signing off on it.

Around 250 of these documents piled up every day, the vast majority of which eventually came back to the accounting department; the rest required some manner of follow-up. “The hagebau group generates over €4 billion in centrally invoiced revenue every year. It would be absurd for us to risk having to deal with payment reminders over a forgotten €5,000 invoice,” explains Arne Schönrock, in-house SAP consultant at hagebau Datendienst IT-Service GmbH.

Luckily, nextevolution’s electronic invoice processing solution now ensures the necessary transparency and timely payment in the area of cost accounting. Invoice documents are scanned, identified by an OCR component, and automatically entered into the system’s invoice receipt ledger.

Workflow involves 70 inspectors

The subsequent approval process is an SAP Business Workflow that involves 70 inspectors and reviewers at hagebau and ZEUS. In the invoice receipt ledger, the accountants can view their current processing status in the group’s SAP system based on their level of authorization. This status – as well as the “location” of each workflow – is constantly accessible, and cost center owners receive e-mail reminders in the event of delays.

This enables hagebau to adhere strictly to discount periods. “It all runs within our SAP system, so we don’t need anything extra,” reports Tim Fäsecke. “And scanning everything means we don’t need to do any manual archiving anymore.”

To design its approval processes, hagebau uses another nextevolution product: nextPCM Process Builder. With it, the group can have its own IT team configure its SAP Business Workflow without having to enlist the help of a consultant from the solution’s provider.

Finally, the group has purchased nextPCM Form Builder to design SAP portal forms and make them available to its employees. Forms are also procedural in nature, after all: They typically need to be filled out by one person and passed on to another. Thanks to the combination of nextPCM Form Builder and nextPCM Process Builder, hagebau can now provide optimal support to its employees in creating forms and handling their further processing through workflows.

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