Many purchasing organizations take advantage of punchout catalogs as a method to access their supplier’s product catalog that offers users a more web-based option for purchasing certain items. A punchout catalog is a mechanism where the buyer “punches out” of the ERP, MRP or other purchasing application to the vendor’s website. While there are benefits to using punchout catalogs, leading procurement organizations see the risks and limitations of this model and have taken advantage of alternative options to create a seamless user experience without the need to punch out.
Positives of Punchout Catalogs
Punchout catalogs offer businesses certain benefits. For companies with a cumbersome process to import supplier catalogs, a punchout catalog offers a simpler way to access the vendor catalog data (pricing, product details, etc.) without the need to navigate an import process.
Often the punchout catalog includes some level of integration back to the e-procurement system. Once the item is selected in the punchout vendor site, the details return to the corporate purchasing system, eliminating the need for double-keying.
In addition, many vendors will create a “custom” punchout catalog site that is branded to look closely like the company’s website. This gives the buyer a feeling of still operating in their corporate environment.
While there are some time and technical benefits from punchout catalogs, the challenges may outweigh the benefits.
Limitations and Risks of Punchout Catalogs
Punchouts Reduce Control
Once the buyer leaves the corporate purchasing system, the procurement organization's control reduces significantly. The expectation is that their buyer will see contracted items and the purchasing process will continue as expected. Unfortunately, we have heard that sometimes this is not the case.
Consider a B2C online experience. Visitors to a retailer's site searching for a product often see a "recommendation" for a different product or products that others have purchased during a similar search. That capability is at the core of most modern B2C sites, provides a useful feature for consumers, and often can be a revenue generator for the retailer. In the B2B environment, that type of intelligence can create a challenge for procurement.
Users May Buy What They Recognize, Not What is Under Contract
Procurement has worked closely with suppliers to negotiate certain rates for certain categories. Users preparing to make a purchase in a certain category punch out to the vendor's site. That buyer sees the negotiated product, but the vendor site also presents another product with which the buyer is more familiar. As a result, they buy the product they know instead. That product may not be part of the negotiated rates and results in a higher cost for the business. While the price difference may be nominal, with thousands of employees making purchases every day, those small differences quickly become a measurable increase in costs.
Some procurement organizations have enough leverage with their suppliers to mitigate this risk, but others may not realize this happens until they start to receive invoices.
Scalability is an Issue
Leveraging a few punchout catalogs linked to the e-procurement system likely offers a few benefits. But what happens when purchasing is working with a large number of vendors, all of whom are offering punchout catalogs? This creates a disjointed, complex user experience with different user interfaces and purchasing flows unique to each punchout catalog. This is not a B2C experience.
Eliminate the Need for Punchout Catalogs
Punchout Catalogs take control away from the procurement organization. Procure-to-pay technologies like BuyerQuest Marketplace improve the user experience and create a mechanism for supplier engagement, eliminating the need for punchouts. This puts control of the corporate purchasing process in the hands of the procurement organization and gives them the ability to deliver the desired products at negotiated rates that best suit their business.
With BuyerQuest Marketplace, users do not punch out. Users search and compare products across suppliers within the BuyerQuest Marketplace, seeing only those items that have been approved for purchasing. As a result, the procurement organization can bring more spend under control, and enforce compliance with contracts.
For suppliers, BuyerQuest Marketplace offers user-friendly access to their site. Suppliers have access to the site so they can see what their customers can see, including the category tree, how their items appear in search results, and any gaps in catalog content. Suppliers have the flexibility to provide rich catalog content via entry online, upload via sFTP, and simple CSV catalog templates based on industry standards.
To learn more about BuyerQuest Marketplace, visit the Marketplace page of BuyerQuest.com.