E-procurement has been consistently evolving for close to 40 years, and the early systems are vastly different than the current ones. In the late 1980s, the first dedicated e-procurement systems were created to instantly send transaction information such as addresses and product numbers. While not necessarily revolutionary in terms of computing, these systems were substantially more efficient than telephone orders and large paper catalogs.
With innovation comes improved workflow and streamlined productivity. Today, you can have your indirect inventory, procurement, and MRO in one system, without searching through catalogs to match existing inventory items and shuffling paper requisitions through an approval process.
E-Procurement solutions systems are designed to manage all supplier catalogs, whether hosted or punchout.
What Is Punchout?
Punchout Catalogs are a way for resource-heavy businesses to have direct access to preferred suppliers’ inventory catalog through an e-procurement system.
Before punchout, selecting and ordering material required accessing large, printed catalogs given to each supplier’s customers. Since these books would include every product a supplier offered, they could be hard to navigate. Physical catalogs also could not indicate whether items were in stock.
It was not until 1999 when the commerce eXtensible Markup Language, or cXML protocol, was developed. This language established the communication protocol between procurement applications, e-commerce hubs, and suppliers.
While cXML is still used today, other punchout standards include the Open Catalog Interface (OCI), invented by SAP and now used by other ERP/Purchasing Systems when connecting to external punchout catalogs.
These protocols utilize the same core functionality – the facilitation of interactive sessions from one application to another in real-time, allowing for suppliers and customers to coordinate and simplify buying over the internet.
Today suppliers and their clients have adopted cloud-based punchout catalogs capable of being configured remotely by both ends of the partnership, offering immense data for reporting, enhanced customer service, and a very user-friendly experience. Punchout provides users of e-procurement systems a familiar online shopping experience while allowing their companies to control the shopping sites and approve purchases.
How It Works for The User
First, your business needs an e-procurement system to streamline all your purchasing processes. Ideally, the e-procurement system should be a cloud solution to eliminate the need for on-premise equipment and installation time.
Once you have an e-procurement system in place, your users can utilize the system to gain easy access to requisitions, control spending and product preferences, automate orders, and ensure that all purchasing approval rules are followed.
It all starts with a requisition. Your employees need a part or a combination of items to complete maintenance or repair. Using the built-in punchout capability of the e-procurement software, the user can directly access suppliers’ e-commerce websites and add all required items to their shopping cart.
When the user is ready to check out, all cart items and prices are added automatically to the requisition within the e-procurement system. Multiple suppliers can be added to a single requisition. GL accounts, delivery information, required delivery dates, and other detailed notes can be added so that everyone gets the full picture.
Based on preset approval rules defined within the e-procurement system, requisitions are then sent to an authorized manager who will either approve or deny the purchase.
By leveraging the e-procurement systems’ definable approval rules, you can ensure each punchout requisition is approved by the proper channels and that overall spend is managed. Flexible approval rules will route approvals based on the requisition amounts and handle situations when more than one approval is required.
Once a requisition is approved, the e-procurement system automatically generates and sends a Purchase Order (PO) to each supplier on the requisition. The authors of each requisition are kept in the loop throughout the process as the supplier’s system emails each user as the requisition progress through the approval and ordering stages.
Once an ordered item is received, users of the e-procurement system can utilize the system’s inventory capabilities to scan in new items, add items to inventory, acknowledge receipt in the related PO, and ultimately issue the received item out to the shop floor. All these processes improve both efficiency and accuracy in your procurement initiatives.
Benefits to Users
When implementing punchout services into your procurement process you extend the capabilities of your software to include the bigger picture, integrating a view of inventory carrying costs, purchases for regular inventory and spot-buys, and control of your overall budget. Integration of systems and processes reduces steps and increases accuracy, saving time and money. Some of the benefits of integrating punchout into your e-procurement process include:
- E-commerce like shopping experience
- Visibility to supplier stock levels
- Increased productivity
- Complete purchasing data in a single repository
- Better spend data for informed decision making
- Instantly communicate order confirmations and shipping information
Suppliers Can Benefit Too
While having access to punchout catalogs has been a game-changer for B2B consumers, suppliers are benefitting from it as well. Supplier-customer relationships are based on the quality and consistency of deliveries, with Punchout integration providing benefits that include:
- Easy maintenance of customer-specific pricing and products
- More likely to win the business of medium and large customers who have existing e-procurement systems
- Punchout catalogs are more visually appealing and easier to navigate for your buyers
- Electronic PO from e-procurement systems require less manual intervention by the supplier
- Higher fulfillment rates as customers can locate alternate items for any out-of-stock products
Integrate Your Purchasing & Inventory Requirements Today
Have you considered adopting an MRO management system that also has e-procurement with punchout? Or maybe you’re dissatisfied that your current software is limited to hosted catalogs?
Tofino has you covered with our easy-to-use Smart Procurement and MRO management. Helping manufacturers, facility managers, educational institutions connect easily with their suppliers. Tofino’s Smart Procurement with Punchout Catalog integration means you will be saving time, money, and relationships.
Get control over your spending today by giving us a call or requesting a demo to see if Tofino is right for you. Our experts will help guide you through all the benefits of making the switch today.