In the previous post, my esteemed colleague Chris Haydon highlighted the emergence of the e-catalogue as a player in today’s global marketplace. I would like to go into a little more detail and explain why the e-catalogue revolution can and will impact your company’s bottom line.
One of the realisations of the GFC has been how little control companies have over what they spend. Even though procurement may have done the work and set the agreement, one of our greatest criticisms, is that the deals we do don’t hit the bottom line. Our savings or improvement claims shows up in finance at only a fraction.
Not Buying What Is Negotiated
Why is this? Well to oversimplify, it’s because buyers are not purchasing what has been negotiated.
There are usually multiple reasons for this, but one of the greatest comes down to access to information and ease of making that purchase. E-catalogues have been around for some time, but the modern equivalent as Chris mentioned, they are more flexible, easier to use and implement, content rich and cheaper than ever before.
E-catalogues can solve many of the problems that occur between the time the deal is signed and time the buyer needs a good or service. They can:
- Make it easy to find and purchase an approved product or service
- Dramatically reduce cycle time and hopefully any down time
- Ensure negotiated T’s and C’s are used every time
- Cuts invoice mismatch, lowers Accounts Payable Error rate and lowers processing costs
- Will work with almost any purchasing system, so long as they can speak cXML or OCI
Electronic catalogues have undergone a substantial revolution over the past decade and are no longer relegated to simple approved product lists, sitting in Excel or a dusty corner of the ERP. Then, all the information had to be manually collected and maintained and the number of attributes was limited to little more than a vendor part, company part number, a price and a brief item description.
The information frequently went out of date and the search capacity was limited with the end user having trouble finding what they wanted to purchase. They have always been a good idea, but in the past were considered just a bit too hard.
Nothing Like Their Predecessors
Even though it has been just a few short years, 2010 catalogue solutions are nothing like their predecessors. Today’s catalogues solutions come in two basic forms, Hosted and Punch Out.
Hosted Catalogues are stored by a third-party catalogue service provider.
- They are completely secure and dedicated to a single buyer or buyer group.
- They allow the buyer to control the User Interface (UI) and all the information that is presented, so that it looks the same for all items, regardless of the supplier.
- They negate the need for buyers to maintain their own master data.
- They can be updated by the buyer, the supplier or the catalogue solution provider.
- Where a buyer chooses, suppliers can update information within the catalogue and the buyer will receive a message to approve the changes.
In this way, the supplier keeps the information current and the buyer need only approve the changes. Should the buyer wish, even the approvals can be automated with rules maintained within the buyer’s ERP, or within the hosted catalogues themselves. It may not be necessary to approve an item description, but may be desirable to approve a new product add or price increase.
The complexity of the business rules can also now reflect the creativity of modern procurement. Price increase changes of less than 2%…auto approve. Price changes of 3%, route for validation. Change in product specification, route to John in engineering for notification. Discontinuation notice, route to Tammy in Legal…etc.
In the next installment, I will discuss Punch Out Catalogues also known as Round Trips.
Tags: catalogue solution, e-catalogues, e-procurement, hosted e-catalogues, Procurement, Punch Out e-catalogues