‘Furniture of Your Dreams, Delivered’ - that’s the promise of Australia's leading online-only retailer who offers the largest range of products, with more than 180,000 products available for order 24/7 along with fast shipping around Australia and world-class customer service.
Launched in 2011, it now has a subscriber base of more than a million Australians, and regularly holds limited-time sale events and consistent deals for customers across the nation.
To make the machine hum, the online retailer relies on a large supply chain; from furniture suppliers to logistics companies and fulfilment centres – literally hundreds of stakeholders across its value chain. As the company delivers to thousands of customers every day, there’s plenty of invoices to account for – and plenty of opportunities for minor overcharges or undercharges to snowball and have an impact on the bottom line.
Exponential growth comes with increased risk of supplier overcharges
“The sheer scale of our network requires a huge amount of coordination,” said Tim Charlton, Group Head of Supplier Operations, Logistics and Customer Care. “It’s very fragmented and it’s a network that spans the country, so it’s quite complex. There are more than a thousand deliveries a day.”
The supply chain was “supercharged” through the pandemic, making fulfilments and delivery demands skyrocket for the retailer.
“Consumers were spending more time at home, and because they weren’t travelling, had more discretionary spending, and wanted to buy more stuff for their homes,” he said. “We were expecting growth anyway, but the pandemic just fast-tracked a lot of that growth.” With exponential growth comes in-kind increases in supplier invoices. If there was an error in a consignment or an overcharge from a courier company, the volume of those minor errors had the opportunity to increase from a small to a significant amount.
For example, a 10-cent overcharge from a courier company on one consignment is one thing, but if the overcharge was consistent over thousands of invoices from that same supplier over a sustained period, suddenly the EBIT of a business can take a hit. Thus, contract compliance for an online retailer becomes a critical role – a role usually too much for a single person to handle in a retailer of any size, let alone one experiencing a period of supercharged growth. “Some of the nuances of being able to solve those reconciliation issues at scale is very difficult to do unless you just have more people looking at it,” said Charlton.
“As the volume increases, issues can increase proportionally and it's overwhelming for just one person to look at each and every invoice and check each line item to see if we’ve been overcharged.”
Profectus' safe pair of hands pays for itself
The online furniture retailer began working with Profectus, the leading technology-driven services provider of compliance and recovery solutions, a little more than a year ago.
“It was really easy to onboard Profectus, and once we worked out the nuances around certain vendors and unique arrangements, we started seeing recoveries almost immediately,” said Charlton.
Recoveries came through Profectus acting as the retailer’s compliance insider, leveraging its leading Rebate Deal Management (RDM) solution to automatically identify instances of overcharges from suppliers or undercharges to vendors, and being able to claim monies owed.
“I have absolute confidence that the team at Profectus have my back and can find any errors and manage the recovery for us,” said Charlton. “It means we have a safe pair of hands that pays for itself.”
That’s not a throwaway line either; whatever money has been spent on Profectus has already been repaid in the form of recoveries claimed through compliance solutions.
“For us to be able to do the level of compliance and recovery required, we’d have to build the capability in-house which would cost more than what we pay for Profectus in the form of wages and resources,” said Charlton. “What people don't realise is that Profectus pays for itself. I have confidence that Profectus will take care of the compliance aspect, that they’ll check to make sure they can recover all credits, and that all invoices are being cross-checked by them.”
Compliance checks leads to more robust supplier system
An additional and often unsung benefit of outsourcing compliance and recovery to Profectus is that the knowledge of their involvement in the process helps vendors make their own systems more robust, according to Charlton.
“Errors are understandable from vendors and suppliers because often their systems rely on manual processes,” he said. “But when they know that deals and agreements are being managed accurately on our end, it means they’re more likely to look to get their invoices more accurately submitted as it will save them issues in the long run.”
“But that goes both ways too; if we identify that we’ve overcharged a vendor, we’ll alert them too. From a relationship perspective, it’s in the best interest of everyone to ensure charges are made correctly. It’s best for both parties.”
Furthermore, Charlton says Profectus does its job regardless of the company’s underlying enterprise software platforms.
“Enterprise Resource Planning (ERP) platforms are notoriously complex and for them to be able to deliver the level of contract compliance to a retailer of our size would require engineering, customisation, which is bandwidth which we just don’t have,” he said. “Procurement systems, on the other hand, just can’t deal with the complex agreements we have to deal with daily.
“For companies that have complexity in what they do, like us, these systems just can’t do what Profectus does. The value they provide is not just in auditing or compliance, but as an operations partner.
“I have confidence that Profectus will pick up an error, no matter how small. As a duty of care – both for me as an employee, and to our shareholders – I know that I've got a governance structure set up to allow me to have faith that we’re maintaining compliance.”
“I know that I’ve got the right partner in the room, one that feels like an extension of our team.”
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