With a turnover of more than €2.3 billion in 2018 and approx. 12 million different products, Rubix are Europe’s largest supplier of industrial maintenance, repair and overhaul (MRO) products and services. The company merged from IPH and Brammer. Their brands span across Europe including Biesheuvel Techniek, Brammer, Buck & Hickman, Giner, Julsa, Minetti, Montalpina, Novotech, Orexad, Robod, Syresa and Zitec, to identify, install and provide a leading range of industrial products and services to more than 220,000 customers.
We sat down with Peter Haselden, Group Business Performance Director at Rubix to discuss, how Rubix has navigated the past year, why they chose Enable to manage their rebates and key learnings for the future.
How did the pandemic affect Rubix?
Peter explains, “Initially, like most businesses we were concerned. We did an initial forecast, I think reducing sales by 50%. That didn't turn out to be the case. Overall, we are pretty much flat year on year. One of the main reasons for that is the drop off in automotive businesses who stopped producing cars like BMW, Mercedes. We replaced all those sales with masks, all PPE equipment and got heavily involved in providing kits for factories to convert their production lines to create ventilators. So, it was a game of two halves if you like. Initially it went down, but then we filled that gap.”
Peter continues, “We knew that having a good handle on rebates, was just critical in the pandemic and beyond. We all know what happened to certain companies, big supermarket in the UK that messed up on rebates, because they are, from an accounting point of view, very easy to manipulate so you need to keep track of them. I'd experienced this in other B2B businesses and it's a critical part of managing profitability, having accurate visibility, particularly in the early part of the year. When your thresholds are further on in the year, you need to know where you are in January, February, March, as to what that will look like in Q4.”
Closer supplier relationships were key during the pandemic
Peter says, “One of the most important things was communication, not only amongst us, but with our suppliers and our clients, to them let us know what's going. Rebates are important to Rubix because they represent 12% to 15% of our gross margin and we were aware those targets were going to be missed. If we had waited until the end of the year this would have impacted our profitability and then we’d have to cut back elsewhere. Therefore, having that communication with suppliers earlier on enabled us to rejig those targets creating a better relationship. We could then continue to support our clients who were right at the front line during the pandemic.”
Peter continues, “It was also important to have visibility on budgeting, forecasting and the accuracy of our data. We had to know day by day what sales were doing and by which category of products, and only when you know that you know which way you can orient the business.”
How were rebates managed previously at Rubix?
Peter says, “Rebate management really here was basically Excel. We have two types of rebates. Central rebates where the group does the deals, a company wide deal with certain suppliers, and you've got local rebates. Everyone pretty much used Excel. It was very hard to do, particularly with a local and central element. It's very hard to figure out what was going on. What's the overall rebate from this supplier? In Excel, it was impossible. That was one of the main drivers for going for a rebate management tool, to help us bring that together. Now these things are difficult to implement because you've got contracts all over the company in different languages and different deals and often the suppliers themselves aren't joined up enough to want to move towards a more standard rebate management process”.
Having increased visibility of rebates is critical
Peter explains, “One of the things that I've learned from the past, and I've proven it since I've been here, is that the more you centralize your rebates, generally the higher the yield you get on your rebates. It's roughly 2:1, so you might get 1.5% on a local rebate, but if you group them together, you work with the supplier and they give you a European-wide rebate and you remove the local ones, often you can get your yield up to 3%, so doubling your rebate profitability is fantastic. Of course, from a bottom-line point of view, that's brilliant, but it's also the visibility, which is critical. As I mentioned earlier on, you're in January, February, March. You have a spectacular February, you might think this may continue and then you accrue as though you were going to hit the top threshold. March could not go as well and suddenly you've got to unwind everything you've over-accrued in February and it can lead to a very, very lumpy P&L, which helps no one.”
Getting the best rebate deal is important
Peter explains, “Of course when you are in a business like this, you've got a limited amount of spend and you want to orientate that spend to the most profitable suppliers, because you've got suppliers all providing almost identical products. You might get 3% on one and 2% on another, but the absolute price of that is 20% higher than that one, so it's a very complex game to work out where you are going to use your limited spend and get the biggest bang for your buck for Rubix, and the best deal for your clients. Of course, that's the most important thing. They want the products that they want, but you can move them amongst the various brands to get the best deal for them and the best deal for us.”
Why did Rubix choose Enable?
Peter says, “Well, the local and central deals was one of the main financial cases for a rebate management tool. Visibility was the other, just the ability to know what everyone's doing. We chose Enable specifically because I've been in this space for a while, and I had never really come across a SaaS rebate management tool that was affordable, quick to implement and didn't rely on being attached to a massive piece of underlying software like SAP or something like that. It was purely an off-chance call from Enable to the CFO of Rubix and he passed the details. When I looked, I realized I’ve never seen a tool that does this. To me, it was almost the only product in the shop that we could have gone for, really. I haven't seen any other tool that does what Enable does, with that full interactivity between all the various systems.”
Key learnings from the past year
Peter says, “I think it just comes back to working together as a team. The pandemic has shown that working together, but not losing that local decision-making flexibility, is critical. If you are a group of islands, you don't do so well as a group financially. You've got to enable all of it. The whole is greater than the sum of the parts, and that is how groups are made. That's how they're made to be successful, anyway, and that all comes through trust, communication, visibility on all the data. You don't hide stuff. You don't treat data and knowledge as power internally. You share it as much as you can. I think we've got a lot better at that within Rubix, because we were effectively two historical companies that were pushed together, and they have very different ways of working. One was very decentralized. One was very centralized and it's trying to get the best of both.”
Enable helped us gain greater clarity with our suppliers
Peter states, “What we learnt during our Enable project was getting the accuracy of our spend data right. So, what are we actually buying from these suppliers and does it match with what the suppliers are sending us. We realized that what the suppliers thought we bought from them didn't actually match with what we thought we were buying from them, so really clearing those channels of communication was critical in making the project move forward.”
What do you foresee happening within the next year at Rubix and more generally in the supply chain?
Peter says, “Within our business certainly there's going to be lots more consolidation. We are the largest in Europe and we've got a market share of something like 3%, so within our area, it's got to be consolidation. In terms of the supply chain, there's lots of different challenges at the moment. You've got the pandemic, you've got Brexit in the UK, you've got rising costs everywhere, you've got lack of HGV drivers, so I think costs are going to go up and I think that will feed through to the end customer as well. From our point of view, we don't do the transporting ourselves, but we know there will be a big potential inflationary impact on numbers next year. So how best do you manage that? You can only do that really by working with your clients and your suppliers.”
Peter continues, “You are not alone in this business world. You've got to do everything together with everyone else and help your clients. If you know you’ve got to ship a lot of stuff from China and the lead time is too long, explore other options. A lot more of our suppliers now are European. They manufacture in Europe, and we deliver from Europe, so rather than having stock sitting everywhere in our 750 warehouses, we're trying to concentrate to reduce our stock needs and increase the availability to our clients. They may take a day or two longer than it did in the past, but we hope that way around to be more efficient.”
To help stay ahead of the competition, what actions would you recommend companies take in this changing world?
Peter explains, “Scaling is absolutely important. Utilizing data, not just reporting historical past data, extrapolating data into the future, doing a scenario analysis, what will happen if prices going up, which suppliers will struggle, which ones won't. Can you pass those increased costs onto client? Which clients will accept and which ones won't. Of course, that depends by customer segment and all that knowledge comes from data. Also, trying to get ERPs to talk to ERPs and have all the ordering done automatically, everything like that. You've got to be at the forefront of technology, as well as of your own business space, so robotics, AI, etc.