Sales commissions and back-end rebates for hitting performance targets are critical components of any distribution channel sales program.
We’ve had some recent success automating this highly manual activity at Avnet, so I’ve asked Ger Purcell, senior vice president of IT for Avnet’s Technology Solutions business and a member of my Impact Team, to contribute a guest post on the subject.
Performance-based incentives (commissions and rebates) are quite common in the technology channel, based on their ability to align the efforts of the Avnet sales teams with the manufacturer’s own sales goals.
NAVIGATING THE INCENTIVES MAZE
However, managing the incentives process—actually identifying, promoting, documenting and ultimately collecting and distributing the incentives—required a massive, highly manual effort on the manufacturer’s side as well as Avnet’s.
In our Technology Solutions Americas business alone, this included:
- A commissions program in involved 800 employees on 26 different payment plans that changed at least monthly.
- 200 rebates programs that change frequently according to complex rules delivered through a number of manufacturer-specific tools.
IDENTIFYING THE RIGHT PLATFORM
To help us automate this process, we partnered with Vistex to provide the incentives platform that would support the administration, financial, and settlement processing aspects of the process.
Vistex also had the ability to connect directly to Avnet’s ERP system where much of our incentives data was held.
72,000 BUSINESS RULES
Integrating the platform was a critical aspect of the project, but establishing the rules engine was a much larger piece of the puzzle.
The IT team sat down with the Americas business representatives to identify, document and code all the various incentive conditions the tool needed to track…more than 72,000 rules in all.
FOUR KEY BENEFITS
After more than 6,000 hours of coding and 1,000 hours of testing to ensure every dime was tracked and accounted for, the system was rolled out to all Americas employees. Since then:
- The sales teams have moved from quarterly to monthly goals, due to the enhanced speed and visibility.
- The number of commission plans has been reduced from 26 to five, based on the increased accuracy of the system.
- The business is able to track hundreds of millions of available rebate dollars in real time. This in turn gives us the ability to alert our reseller customers about potential rebates they might otherwise overlook.
- Avnet is able to provide more accurate demand forecasting to manufacturers and suppliers, increasing the unique value we can offer them from our position at the center of the technology supply chain.
While the commitment to a project of this size was great, the return has been far greater.
Not only is Avnet able to deliver value to customers and suppliers that wasn’t possible under the previous system, but countless hours of bureaucracy have been eliminated in the process.