Three incentive streams, one margin
A building-products distributor is unusual: you are simultaneously the receiver of incentives (from manufacturers, directly and through a buying group) and the payer of them (to contractors, builders and national accounts). Both streams settle late, and both are calculated on data that lives somewhere other than where the decision was made.
The result is a business where the gross margin on the invoice is not the margin on the job, and the gap is not knowable at the time of quoting. That is not a discipline problem. It is a data problem with a financial signature.
The job-quote trap
A branch manager wins a project by pricing off a supplier special. The special is real — it was agreed by email, or in a portal, or over the phone with the rep. The order ships. Now somebody has to turn that shipment into a bill-back claim against the supplier, using the reference the supplier expects, inside the window the supplier allows.
Where that link is manual, a third or more of job quotes cannot be traced to an authorising special after the fact. The claims that do get raised are the large, memorable ones. The rest are absorbed, and they land as unexplained margin erosion at the branch level.
The tier you missed by a fraction
Supplier growth rebates are retroactive. Cross the threshold and the higher rate applies to the whole year’s volume; fall short by a percent and it does not. That is an enormous swing decided by purchase decisions made months earlier — decisions that would have been made differently if anyone had known where the run rate stood.
Most distributors discover their landing tier after the year closes. The benchmark here is simple and achievable: a weekly projected landing tier per supplier agreement, so a purchasing team can act while acting is still possible.
The buying-group gap
Your group negotiates well. But the rebate they distribute is calculated from what you report, mapped into their product hierarchy. Every mapping drift, every new SKU that has not been categorised, every branch that files late is volume that does not count.
Under-reporting of five to ten percent is common and almost never detected, because the group reports back on what it received, not on what it should have. Reconciling your own purchase ledger against your submissions is the only way to find it — and it is a reconciliation, not a report.
What good looks like
The targets in the benchmark table are the ones worth arguing about internally. Three in particular:
- Above 99.5% of purchase volume reported to the group. This is usually the single largest recoverable number for a mid-size distributor, and it is pure margin.
- Above 98% of job quotes traceable to their authorising special. Traceability is what makes the bill-back claim automatic rather than heroic.
- A weekly landing-tier projection per supplier. Not a year-end reconciliation. A forecast you can still influence.
How RevUpra runs this
Supplier agreements become executable rules with a live run rate and a projected landing tier. Project specials are objects, not emails: the quote references the authorisation, the shipment references the quote, and the bill-back claim is raised automatically inside the supplier’s window. Buying-group submissions are generated from your own purchase ledger and reconciled back against what the group settled, so the gap is visible rather than assumed. And customer-side contractor rebates accrue on the same ledger, so gross-to-net is one number per branch, per month, that ties to the GL.