1. Ariba Knowledge Nuggets eCatalogs: Your Punchout to Compliance At the heart of every procurement system is a catalog. Even in an SUPPLIER TIP environment lacking automation, requisitioners consult a hard copy or customer service reps use a catalog at the other end of a phone line. So Suppliers should be guided on the best it stands to reason that getting everyone to use the correct catalog from way to use the a preferred vendor at the contracted price will ensure that negotiated standard fields savings from sourcing and contracting activities are actually realized. of the catalog This Knowledge Nugget will explore benefits and best practices around template as well as these core elements: any additional required attributes • Price Compliance depending on the commodity area. • Supplier Compliance • Process ComplianceTurn Identified Savings Into Realized Savings — Prevent Spend Leakage1. Does your company have an eProcurement system? If not, thoroughly investigate the significant savings that such a system can deliver. Most vendors are happy to provide you with an ROI analysis of your spend free of charge. This should be of particular interest if you have already invested heavily in strategic sourcing so you can capture all of the negotiated savings and avoid leakage.2. Does your company have an eProcurement system? • Decide whether it continues to make sense to dedicate resources to a function that may be better executed by outsourcing. • Seriously explore the options around eCatalog management solutions. With a small investment (especially compared to your ERP investment) and in only weeks you can unlock the value of your ERP eProcurement.3. You have an eProcurement system and you are happy with its capabilities and performance. • Enable more catalogs work towards at least 80 percent of your spend. (Don’t forget services.) • Work with suppliers to execute on the suggestions outlined in this paper to improve the quality of the content. • For large catalogs, encourage suppliers to support Level 2 PunchOut.
2. Who Should Manage the Catalogs?There are several criteria to consider when determining whether eCatalogs should be managedinternally or by a 3rd party service provider: 1. Are there enough resources in house to support an aggressive rollout and support all of the eventually required catalogs? 2. Is it worth the cost of developing the skills required? 3. Does the organization have or is it willing to invest in tools for catalog cleansing and content enrichment? 4. Will an investment be made to develop quality processes and best practices?The initial rollout of an eCatalog program is resource-intensive due to the amount of coordinationrequired between the technical lead doing the eCatalog enablement, the suppliers, and the suppliermanagers at the buying organization. The technical lead will also need to take the time to educatesuppliers who may be new to providing eCatalogs, while the supplier managers will need to workwith suppliers to get agreement on what content should be included and ensuring that the correctpricing is being applied. A successful catalog technical lead will need to have the skills required tounderstand content requirements, educate suppliers on these requirements, cleanse and manipulatelarge amounts of catalog data, and troubleshoot technical errors that may occur during theenablement. Also, if supplier-hosted content (punchout catalog) is being used; this person will alsoneed to be strong with HTML, cXML, OCI, or any other communication protocol that is being used by the system. Tools for catalog cleansing and content enrichment are beneficial to provide a better end user experience, finding and fixing potential errors, A successful catalog adding and/or extracting supplemental attributes, assigning commodity technical lead will need codes, and ensuring correct content. Developing and maintaining these to have the skills required tools can be costly and are not practical for smaller organizations. Off-the- to understand content shelf software designed specifically for this purpose is not available and will requirements, educate suppliers on these require IT resources to develop in house. Quality processes and defined requirements, cleanse procedures for collecting, processing, and refreshing eCatalogs are critical and manipulate large for ensuring a high-quality end user experience and updated accurate data amounts of catalog data, and troubleshoot in the system. The method by which a supplier submits their eCatalog data technical errors that may needs to be not only user-friendly, but also secure and reliable. Many times occur during the email is seen as the best way of submitting catalog data, however large file enablement. sizes, no visibility to the supplier if transmission was successful, and the lack of a systematic way to track the most-current version makes this method undesirable. An FTP site is a somewhat better solution and will allow for thetransfer of large files and also give eachfile its own time and date stamp. Ideally Tools for catalog cleansing and content enrichment are beneficial to provide a better end user experience, finding and fixing potential errors, addingsuppliers should submit their eCatalog and/or extracting supplemental attributes, assigning commodity codes, anddata through a supplier portal where the ensuring correct content.supplier can see if the transfer has beensuccessful. A more sophisticated tool should also offer the option of doing some initial datavalidation on the eCatalog to let the supplier know of potential errors prior to or at the point ofsubmission. This supplier self-service tool can dramatically reduce the hassle and time to updatecatalogs. It is critical that refreshed data is processed quickly and correctly so that the pricing anditems are up to date.
3. How to Keep Pricing CurrentKeeping internally hosted eCatalog data and pricing current is essential to maximizing useradoption and driving compliance, and minimizing the number of exceptions that Accounts Payablemanages. Contracted items should have a set time period where the price is valid. Manyprocurement applications can attach an expiration date to each item so that when this date isreached and the price is no longer valid, the item is hidden from view. Once agreement is reachedfor a new contracted price, the updated eCatalog can be loaded to refresh the items.Non-contract items may have a specific or completely random refresh schedule. Expect thatsuppliers will provide an updated eCatalog on a quarterly basis. For certain commodities, it may benecessary to update on a monthly basis. For anything more frequent than monthly, we recommendthat the catalog not be internally hosted, but rather supplier-hosted in a PunchOut catalog. Thisminimizes the amount of file handling, validation, and cleansing that needs to be done, as well asensures the price is always current without the delay that occurs when content is transferred fromthe supplier and then loaded at the customer. Even a best-in-class organization can take up tothree days to collect and process catalog changes.1 Through the use of PunchOut technologies, itis possible for end users to be directed to the supplier-hosted catalog and select items to add tothe requisition. The benefit is that supplier updates to pricing and items are visible immediately.Some organizations are hesitant to use supplier hosted content because they feel that they losecontrol over price changes. Ideally control can be maintained through a level 2 PunchOut that willtake the user directly to preferred approved items. A well-set-up requisition approval flow, as wellas catalog manager random audits of frequently purchased items, can help minimize this issue andin almost all cases the benefits of the supplier-hosted content for items that have volatile pricingoutweigh the risks.Don’t expect suppliers to be diligent about providing updated content on a quarterly basis. It isimportant that the supplier manager establishes a specific refresh schedule and follows up withsuppliers as the date nears. The catalog manager may also assist in this effort by developing asystem to track time to the next expected refresh. Criteria for Catalog Management Vendors Catalog management vendors should be evaluated on four main criteria: 1. Consumer-like shopping experience through advanced technologies 2. Quality of supplier self-help tools that are available for catalog creation and maintenance 3. Security, service levels, and quality processes used by the vendor 4. Cleansing and content enrichment capabilities
4. Criteria for Catalog Management VendorConsumer-Like Shopping ExperienceMany procurement platforms support advanced content technologies that greatly improve the end userexperience if they are configured correctly. These technologies make the difference between a current state-of-the-art, consumer-like shopping experience (think Amazon.com) and “old-school”, client-server shoppingagony. A minimal list of shopping cart technologies that should be enabled include:1. Intelligent Fuzzy Search - returns word variations including misspellings2. Parametric Search Filtering - search filter based on price, supplier, color, etc.3. Side-by-Side compare - allows easy comparisons of similar items4. Kit Creation and maintenance - combining multiple items into one SKUFuzzy search, parametric filtering and kitting correctly can dramatically decrease searchand requisition time—increasing user adoption.
5. Compliance ControlCompliance/ControlIn addition to easy-to-maintain control over spend, the eCatalog solutionshould provide: • Relevance Ranking - sorting search based on pre-configured requirements, e.g. preferred suppliers or products • Icons - green, recycled, Woman or Minority-Owned Business, etc. • Configurable catalog view – depending on roles or business units, views into catalogs may be limited based on requirements • Contract compliance – ensuring that during the requisition process pricing is verified against the contract, including volume discounts and tiered pricingA catalog management vendor needs to have an understanding of these features and how they canbest be used. Relevance ranking and icons direct buyers to preferred suppliers or products to helporganizations achieve purchasing goals. Similarly the configurable catalog view will direct buyers tothe proper supplier or product based on your business rules. Proactive contract compliance asdiscussed earlier, is essential to realizing your previously negotiated savings.Cleansing and Content EnrichmentThe final criterion to consider is the ability of the vendor to performcatalog cleansing and enrichment. At a minimum, the catalog shouldbe cleansed for proper formatting of the description verifying thatimages are present and confirming that url addresses do not containdead links. Data rationalization of words in the short and longdescription can aid in keyword searches. For example, the adjective“black” could be written by suppliers as “blk” or “blck”. Rationalizingthe adjectives to the full word in the description will ensure that allresults are returned when the end user searches usingthe full adjective “black”.Content enrichment such as commodity code assignment and attribute extraction is also valuable.Commodity code assignment is important if critical business processes, accounting, and approvalrules are driven off of the commodity code assigned to the item as well as for the purpose of spendvisibility. If left up to the supplier to provide the commodity code, the accuracy rate will be 60 percentor lower. A leading catalog vendor will be able to enrich the content with commodity codes andachieve at least a 99 percent accuracy rate.Attribute extraction can greatly reduce the time the end user needs to find a particular item. This isespecially helpful in direct material purchases. A good example would be searching for a “bolt”.Simply doing a keyword. Using attribute extraction, the end user can be presented with itemparametric filtering where the size, head type, and materialof the bolt can instantly be selected thereby reducing the time required to find the exact item.Attribute extraction can be labor-intensive, however when the time savings to find items in thecatalog is considered across a large user base, the return on investment can be realized shortly afterthe initial set-up.