Chemist Warehouse is working with compliance and audit specialists, Profectus, to help solve processing errors when managing rebates and deals.

Utilising Profectus’ Rebate and Deal Management technology, RDM, Chemist Warehouse has been able to streamline automated deal management to ensure accuracy with rebate claims and accruals, receive more granular visibility on deals, and track hundreds of supplier invoices and deals automatically.

RDM is an online portal for storing, creating and approving agreements and claims with a comprehensive rule engine covering all deal types. It can automate all supplier and customer rebates with accurate claims and accruals interfaced into any business’ ERP platform.  

Having grown from humble beginnings to more than 500 stores and over 16,000 staff, Chemist Warehouse’s mission remains the same – to bring affordable healthcare to every Australian by bringing significantly lower prices to customers – according to managing partner and director, Mark Finocchiaro.  

“We want to make sure that we provide the best possible value to our customers, so pricing is something we’ve dedicated a lot of time and attention to. It’s not simply about offering the lowest price; if we get too deep, you lose a lot of money quickly, as a discounter. If you’re too expensive, then you’re losing your proposition to the market,” he said.

Pricing was a challenge due to lack of visibility into product margins as Chemist Warehouse relied on wholesalers to gain access to products with no understanding of the margins available in each transaction.

“The structures of deals and discounting increasingly became more complicated. When you’re having a model that’s so dependent on your margin, you need to have a clear understanding of what your costs are,” Finocchiaro said.

Chemist Warehouse needed to take control of its deals by dealing directly with pharmaceutical companies. However, the company was not set up to negotiate and capture a deal or maintain visibility.

“We needed to spend more time to be confident that what we were doing was able to be captured correctly, that we could make the right claims with suppliers and that we were getting the right rebates.”  

The company began the direct supplier process using internal resources, but quickly identified that doing so was prone to error.  

“It was just such a vast exercise to undertake. We realised that we needed structure to the process, as it isn’t as simple as people might think, particularly for a high-volume business. 

“There is a certain level of rigor required in setting up a deal, maintaining it, reviewing it and subsequently claiming on it. There are a lot of moving parts, and there is a risk element in missing some of those parts, or if certain parts aren’t undertaken correctly. We started looking outside the company for a deal management system to record and reconcile the various aspects of supplier arrangements.”

Profectus’ RDM enables online collaboration on deal creation and claim data and has allowed Chemist Warehouse to create deals directly with suppliers and provided clear and granular visibility into the information of each deal. 

Chemist Warehouse is now able to keep track of hundreds supplier invoices and deals at once and automatically.

“What was quite a manual and interpretive process became more standardised and crystallised. This helped us streamline our direct supplier relationships and enabled all parties to agree on the deals and then us to track each deal. Once we were able to understand and agree on the deal mechanisms, then it’s simply mathematics after that point,” Finocchiaro said.

Chemist Warehouse then expanded its work with Profectus, leveraging its auditing expertise to track historical overcharges and rebates. “Profectus brings a degree of understanding and visibility across everything we’re doing.”