eProcurement and the dreaded catalogue management

Catalogue management is one of the trials and tribulations of implementing an eProcurement system. There are many reasons why managed catalogues make absolute sense and yet so many businesses fight it off during process design and system implementation workshops - "it's too hard - we won't be able to maintain it - our suppliers can't give us their catalogs electronically" etc etc.

The following is an excellent article on this topic by Debbie Wilson in Cool Tools for Purchasing.

http://www.purchasingautomation.com/articles/articles173.shtml

I particularly liked the section "Maximizing Catalog-Based System Performance" - as always it's all about people and their behaviour rather than systems and their operation. I smiled broadly when I read this bit.

The final line is a cracker - "if someone tells you that in order to successfully implement eProcurement you must normalize your data, offer requisitioners millions of items to choose from, and insist on certain formats from your catalog suppliers, don’t believe a word of it."

It doesn't have to be hard and it doesn't have to be every item on day one (or ever). It's all about mindset - look for the benefits to your business, pick the targets appropriately, keep it simple and remember the 80/20 rule - probably 80% of your spend is with 20% of your suppliers - focus accordingly and turn the heat up in your negotiations.

However let's not forget about online/web catalogues that a supplier maintains themselves. This can be an excellent way to outsource the responsibility of catalogue management to the supplier - "but how does that help me?" you may ask. With a sophisticated eProcurement solution (like iPOS for SunSystems) you can optionally punch-out to online catalogues and allow users to select items for their shopping basket as normal. The "check out" function on the website actually returns the item list back to your internal/buy side system for processing through the normal budget control and delegated approval rules.

In my experience this is most applicable for the classic low value - high volume suppliers such as office supplies etc where once a contract is in place you want the end-user to be able to select and purchase items with the least amount of fuss and effort. There may be "millions of items" for people to choose from but someone else is doing the hard work of managing them.

Punch-out is also the best way to interact perhaps with government or commercial buying hubs where multiple supplier catalogues may be aggregated. The challenge in leveraging these online marketplaces is the lack of real-time integration to the backend financial management system and the ability to overrun budget and approval controls through poor data integrity.

Punch-out comes with some downsides however:
- You rely on the supplier to maintain the currency of the catalogue and also to accurately apply the service levels of your contract.
- It may not be possible for the supplier to build restricted views of their catalogue for different user profiles in your business - it may be a one-size-fits-all approach.
- They may have more detailed views of your buying habits and trends than you do when it comes to contract negotiation.
- There could even be the ability for "push selling" in their catalogue management that leads people to buy upgrades or additional items or volumes based on the choices they make for their shopping basket.

In reality many organisations may decide to live with a combination approach to their purchasing procedures, internal catalogues for critical business purchases and strategic suppliers, online catalogues for "consumables" and free-form item description for those exceptions that invariably exist (controlled by increased levels of supplier selection, review and approval).

The sensible and reasonable wish of the business is for all options to be managed within a common, process-driven purchasing channel that delivers aggregated spend control and reporting with single source of truth in the financial data.