February 20 by Monis Raza
MedTech companies expect to face the challenge of understanding the dynamics of specific geographic markets and competing with a global landscape of med tech manufacturers. Manufacturers, distributors and wholesalers of Medical products and supplies strive to come up with innovative pricing, optimize contract compliance and maximize the revenue flow. There is a dire need for an agile and scalable platform to improve sales effectiveness as well as the customer experience.
Contract-to-Cash Drivers for Medtech
Manufacturers and distributors of medical devices and supplies require an effective system to manage pricing, promotions and packaging for contract and quote-based sales. The major drivers are –
• Manage distributor and wholesaler pricing and incentives based on revenue instead of cost to comply with revenue commitment.
• Optimize profitability with proper deal management using artificial intelligence and machine learning.
• Quickly build, price and quote even the most complex product combinations including kits, bundled services and performance-based incentives.
• Effectively incorporate proposal terms, pricing and rebate strategies, including tiered and usage based options, into contracts.
• Eliminate revenue leakage and legal risk to ensure correct pricing on orders & invoices for contract compliance.
• Execute to planned revenue while ensuring that accruals and payments for incentives, fees, rebates and other deductions are properly managed.
Manufacturers face obstacles to profitable markets due to competition and cost measures that challenge revenue planning, sales execution and customer retention. The common challenges faced by customers in MedTech industry from Pricing to Revenue compliance are:
1. Contract Pricing: Healthcare companies negotiate pricing with their customers and create pricing contracts to drive pricing for future sales. This is a key functionality, missing in most Quote-to-Cash (QTC) applications.
2. Rebates: Rebates are post-sale incentives that companies give their customers to encourage them to buy more products and services. Rebate functionality requires complex data processing which most SaaS applications are not able to offer.
3. Promotions: Promotions are sales incentives and/or discounts that healthcare companies give their customers based on products and services purchased. Advanced promotion handling is missing in most QTC applications
4. Complex Pricing: Healthcare pricing can be complex with a hierarchy of products. Pricing depends on the quantity, number of products and type of products.
5. Usage: Healthcare companies are moving from traditional sales to usage-based pricing. Tracking usage for medical devices and procedures can be challenging.
The Apttus Solution
Apttus Intelligent Cloud, offering a complete Quote-to-Cash solution including Configure Price Quote, Contract Management, E-Commerce and Revenue Management across all channels, makes it the go-to choice for MedTech customers. The Apttus Quote-to-Cash for MedTech solution maximizes revenue through contract compliance management, pricing and rebate management tools as well as gross to net analytics. Based on our experience, Medtech companies can adopt these best-practices to maximize their ROI on a Quote-to-Cash / Contract-to-Cash implementation.
7 Best Practices for Successful Contract-to-Cash Implementation
1. Make it Intuitive: Define pre-configured or flexible deal kits or bundles, capital equipment, options & tests and/or procedures to intuitively guide the user selection of an accurate set of products or services.
2. Keep it Simple: Reduce bundles within bundles and keep product hierarchy simple to curb complexity and performance issues. Multi-layer bundles can be avoided using constraint rules and optimized business process.
3. Avoid SKU Proliferation: Simplify constraints by using validation rules wherever possible instead of callbacks and avoid SKU proliferation by leveraging attributes.
4. Minimize Dimensions: Keep Price Matrices and rules simple by minimizing dimensions and avoiding consolidation of many items into one rule. Make use of Agreement & Contract Pricing to reduce Price List growth.
5. Reduce Reliance on Customized Call Backs: Use Product Hierarchies with catalogs and pricing to reduce reliance on customized pricing call backs. In order to improve performance use product structure (such as bundles), not rules (constraint, validation, etc.) where possible.
6. Automate Approval Processes: Simplify the approval process for faster deal closure and automate revenue based approval processes to the cart to assess the impact of each proposal on Revenue Recognition.
7. Manage Rebates and Promotions: Utilize Incentive Manager to handle promotions and rebates effectively.
In a business that is constantly changing, the Apttus solution for Healthcare & Life Sciences provides a centralized platform for bundle creation and complex pricing, offer development, contract management in commercial operations, and procurement along with accurately computing and paying incentives, rebates, fees and commissions. To stay ahead in the competitive MedTech market with challenges of expanding regulations and cost pressure, Apttus Intelligent Cloud – Contract-to-Cash automation can be a key differentiator.
Standav’s enterprise value delivery mechanism provides for a proven approach to successfully implement and adopt Quote-to-Cash solutions in an accelerated fashion. With a stellar track record of successful implementations, the team at Standav stands tall in terms of expertise in the Medtech domain. Contact Standav today for more information.