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whitepapers Quick Wins - Management of Suppliers' Discount Rates

Intro
In our Quick-Win - Tips series we have worked out more than 100 tips. This time we are dealing with the management of suppliers’ discount rates. This quick win tip is particularly interesting for companies with sufficient liquidity, as you can directly identify the effects of discount optimization through successful supplier negotiations.
In the coming weeks we will repeatedly accompany the fictitious company Production Company SE in realizing quick wins. The Production Company SE is a global company and has several production beach locations with decentralized purchasing. We also have the following information, which was given to us by the procurement department.

Baseline
For starting an optimization of the discount rates, it is necessary for a company to create a database in the first step. Hereby, four pieces of information should be worked out to ensure ideal data transparency.

• Supplier number and -name
• Discount rate of the supplier in the supplier base
• Stored discount rates for all invoices paid by the supplier
• Procurement spend for the supplier

When searching for deviations between the discount rate in the supplier base and the discount rate of the invoices paid, both the suppliers and the process should be examined. In this step, we recommend a prioritization of suppliers based on the height of the purchasing volume and then processing them top-down.