This document is primarily aimed at Procure to Pay leaders and recommends a structured approach towards identifying electronic trading (e-commerce) opportunities, including key milestones to help determine which suppliers will meet your business objectives and improve process efficiency.

1. How to Identify and Integrate Suppliers for Electronic Trading
By David Kelly and Annie Naveed, May 2012
In an age where economic instability and challenging market conditions have been, and are perhaps still at
the forefront of many people’s minds, and where organisations are enforcing tighter spending controls and
looking at opportunities to reduce process complexity, it comes as little surprise that operational and capital
expenditure has come under the microscope more than usual in recent times. For many people involved in
the Procure to Pay (PTP) cycle, adhering to strict procedures when ordering goods and services has become
the norm with many organisations now heavily enforcing company policy and ensuring basic practices, such
as first ensuring a purchase order has been created and approved before an order is placed, are correctly
implemented. However, in addition to monitoring expenditure more closely, your organisation may also
consider introducing, or expanding, a Business-to-Business (B2B) solution to reduce costs and time across
the entire cycle.
A B2B solution that facilitates the exchange of transaction data benefits both the buying organisation and the
trading (selling) partner. A buying organisation can reduce overheads associated with setting up and
maintaining internal catalogues by introducing online catalogues with the latest pricing (including company
and region-specific), descriptions and product availability maintained and provided in real time by the
supplier. Such a solution can save time compared to manually entered orders and virtually eliminates input
errors and incorrect information being sent to the supplier, making purchase orders (POs) more accurate and
allowing suppliers to process orders and ship goods more quickly. Suppliers also benefit by reducing item
returns and time/costs associated with customer queries and disputed orders and allows them to generate
invoices more quickly from the PO data received. Furthermore, with supplier invoices generated from the
same source data as the purchase orders, the number of matching holds in the Accounts Payable (AP)
system can be significantly reduced.
Although implementing a B2B solution impacts many departments, this document is primarily aimed at
Procure to Pay leaders and recommends a structured approach towards identifying electronic trading (e-
commerce) opportunities, including key milestones to help determine which suppliers will meet your business
objectives and improve process efficiency.
While the recommendations in this document can be applied to any Enterprise Resource Planning (ERP)
system such as SAP and Ariba, we have provided examples based on Oracle E-Business Suite Release 12.
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How to Identify and Integrate Suppliers for Electronic Trading
David Kelly & Annie Naveed 2012

2. Punchout Catalogues and Document
Exchange
A punchout is a web-based catalogue hosted and
maintained by a supplier which can be securely Stage 10: Post- Stage 1: Identify
accessed via a buyer’s ERP system such as Oracle Implementation
Review
Stakeholders.
Agree Roles &
iProcurement, with the supplier able to offer company Responsibilities
specific items and pricing based on the login
credentials used at the time of connecting to the site. Stage 9:
Production Stage 2: Identify
When items are selected from the punchout catalogue, Cutover Opportunities
data such as product code, description and unit price is
then transferred back into the buyer’s procurement
system where it is first used to create a purchase
requisition document (after additional information is Stage 3:
e-Commerce Supplier
entered) and then subsequently a purchase order. Stage 8:
Testing Selection and
Internally
Assess
Integration Process Opportunities
Once an order has been approved, for example by
responding to an approval notification sent from Oracle
Workflow, order details which you would normally see
Stage 4: Trading
on a physical purchase document can be sent back to Stage 7: XML
Document Partner
Opportunity
the supplier ‘electronically’ for processing. Once a Exchange
(optional) Assessment
supplier has shipped the goods, they may then send Stage 6: Stage 5:
the corresponding invoice electronically back to the Punchout
Setup and
Validate /
Implement
buying organisation to import into their Payables Configuration
(internal)
Internal
PurchasingGuid
system, providing the supplier has the ability to elines
generate invoices this way and an agreement is in
place with the buying organisation to do so. The act of
sending and receiving data electronically is referred to
as document exchange.
For organisations wishing to take advantage of this Agree Roles & Responsibilities: Once you have
technology, it is important that the right trading identified the key stakeholders, the next step is for all
partners for a B2B relationship are identified before parties to agree on their roles and responsibilities
embarking on such a project to ensure existing throughout each stage of the selection and integration
business processes are not compromised. These are process. You can do this by first of all creating a RACI
our recommendations. (Responsible, Accountable, Consulted and Informed)
matrix to highlight the level of responsibility by
Identify Stakeholders: The first step towards position/role for each stage (e.g. accountable for
migrating onto punchout catalogues is to identify the successful completion of tasks; responsible for
key stakeholders within your organisation who should performing tasks; supporting others to complete tasks,
be involved throughout the supplier selection and B2B and those who need to receive communication about a
implementation process. Consider involving people in task). At a detailed level you can then define the exact
the following roles (or similar if they exist): national roles and responsibilities such as coordinating meetings
procurement and strategic sourcing managers who internally and with suppliers; gathering and assessing
should manage the process from selection through to data for supplier evaluation; working with suppliers to
implementation; e-commerce manager to provide create punchouts and testing connectivity; ensuring
strategic input and manage technical deliverables; purchasing policy is adhered to, and providing input
financial services managers to drive the top-down towards the punchout look and feel / buying
support of new initiatives; ERP functional and technical experience. By identifying roles and responsibilities this
analysts to work with the e-commerce manager and way, it becomes clear that moving to a B2B solution is
suppliers to configure punchouts and document not a decision that can be made by one person or
exchange; supplier maintenance or AP team to apply department and that support needs to flow from top to
any changes to supplier details; cataloguing bottom with all stakeholders playing a key part towards
coordinators responsible from transitioning internally successful supplier integration.
managed catalogues over to supplier-hosted
(punchouts); Accounts Payable team to ensure e-
commerce initiatives support current AP processes, and
business stakeholders representing the buyers who are
the users mostly impacted.
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How to Identify and Integrate Suppliers for Electronic Trading
David Kelly & Annie Naveed 2012

3. Identify Opportunities: This is when the idea of moving Trading Partner Opportunity Assessment: Once you
away from manually entered documents or an internally have decided at a high level which suppliers are suitable
maintained catalogue is proposed and is usually driven by to trade electronically with, you can then arrange an
annual spend and volume of transactions for a particular initial meeting with suppliers to share results of the
supplier. At this stage supplier names are merely internal assessment, gain a more detailed understanding
suggested and no discussions have been held with them of their technical capability and to determine whether
to discuss their ability to host a punchout (unless a they comply with your business guidelines and PTP
supplier initiated contact). The decision to proceed to the processes.
next stage usually rests with a senior purchasing
manager (such as a national purchasing or strategic
sourcing manager) but is not yet a commitment to To ensure seamless operation of PTP processes, you may
implementing a punchout solution. want to discuss requirements such as:
Internally Assess Opportunities: To assess • Does the trading partner’s punchout allow buyers
opportunities internally, a meeting is held between all key to pick up from store as well as delivering goods
stakeholders whose role requires them to contribute to your specified location?
towards the selection process. It is a good idea to create • Does the trading partner list freight in a way that
a trading partner evaluation form with a set of will allow the seamless electronic processing of
considerations and weighted scores to rate the value of invoices (i.e. as a separate item on invoices)?
the supplier to your organisation and the degree of • Can the trading partner re-send invoices
change required to internal rules and processes before electronically if they are rejected during the
electronic trading can commence. The evaluation form, import process?
which requires information to be gathered prior to the • Does the trading partner currently take
meeting to ensure decisions can be made quickly, can ask responsibility for completeness of information on
questions such as: their invoices?
• Is this a high value trading partner ($ value, The meeting is also an opportunity for the supplier to
transaction volume and strategic importance)? raise any concerns and indicate whether they are
• Does the trading partner have technical interested and willing to proceed with the electronic
competence required to trade electronically? trading opportunity.
• Does the trading partner have a suitable
electronic catalogue solution? At this stage you may find that the supplier doesn’t fully
• Is the trading partner proactive and willing to meet your ideal criteria for an electronic trading partner.
support its customer in developing their e- For example, a supplier may have a punchout catalogue
commerce relationship? but they are unable to receive POs electronically in
Extensible Markup Language (XML) format or do not
If you are also looking to receive invoices electronically have the capability to issue electronic invoices, meaning
then additional questions can be asked, such as: your Accounts Payable department will still need to enter
invoices manually.
• Does the trading partner currently submit
invoices where invoice lines are the same as If both parties agree to move forward, discussions can
purchase order lines? commence on a project timeline and regular meetings
• Does the trading partner have existing price hold with the trading partner’s technical teams can be
and tolerance issues which are currently causing organised to discuss business and technical
process delays or deficiencies? requirements and any other issues in relation to the
• Does the trading partner refuse to issue invoices technical setup process. Representatives from the
prior to submitting a purchase order? business and your Accounts Payable department can
• Is the trading partner used by multiple divisions? also be involved to provide their input in relation to
various business rules and punchout functionality /
Each trading partner is rated against the criteria in the presentation.
evaluation form, based on your current knowledge of a
supplier, and a score is decided (with results Validate/Implement Internal Purchasing
documented) for each partner evaluated. Guidelines: If a decision has been made to continue
with the electronic trading opportunity, it’s important
The score determines if your organisation should proceed that new setups are validated against existing
with the e-commerce opportunity with a supplier. As per purchasing guidelines and that newly implemented
previous stages, an agreement to proceed to the next processes align with Accounts Payable practices.
stage is not a commitment to commence electronic Business representatives also need to ensure all possible
trading. business scenarios are taken into consideration and
included in the technical design.
If the trading partner made the initial approach to discuss
the e-commerce opportunity, they are advised of the
meeting outcome.
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How to Identify and Integrate Suppliers for Electronic Trading
David Kelly & Annie Naveed 2012

4. Punchout Setup and Configuration (Internal): Once
a supplier has provided details of a punchout catalogue
that can be used for testing purposes (such as URL, login
ID and password), your internal ERP support team can
define punchouts in your test environments, for example
by creating content zones and assigning to a newly
created store in Oracle iProcurement. For some trading
partners you may only need to create a store with a
Scenario 1: Different Regional Pricing; Orders
single content zone; for other partners you may need to Processed at Supplier’s Regional Offices
create separate content zones for different buying
locations to accommodate regional pricing agreements. ABC Supplies (supplier)
Once you have defined your punchouts, you may then
Supplier Hosted Catalogue
need to assign them to different application
responsibilities in order to control which users have (punchout)
access to punchouts (if you have multiple punchouts for
the same supplier).
Note: some suppliers may process orders centrally and
use your ‘deliver-to’ location to determine which
Oracle
warehouse goods will be shipped from. In this situation iProcurement
ABC ABC ABC ABC
you only need to map your punchout(s) to a single (content zones) Sydney Melbourne Adelaide Perth
supplier record, rather than multiple supplier sites /
addresses.
Furthermore, to allow items to be returned into your Oracle Payables ABC ABC ABC ABC
procurement application, you may need to map supplier (supplier sites)
Sydney Melbourne Adelaide Perth
products to some internal setups, such as PO Categories
using Oracle eCommerce Gateway.
Buying Organisation
XML Document Exchange: For trading partners who
have the capability to receive purchase orders
electronically, they should provide all the required
technical details that will feed into an interface design Scenario 2: Different Regional Pricing; Orders
document. For buying organisations using Oracle E- Processed Centrally by Supplier
Business Suite, this would mean additional setups in
Oracle XML Gateway for outbound documents and details ABC Supplies (supplier)
entered in Oracle Supplier Network (OSN) where
Supplier Hosted Catalogue
documents are exchanged with suppliers. For trading
partners also sending invoices electronically, XML (punchout)
Gateway will also require details to enable processing of
inbound transactions.
Testing: As with any kind of project that introduces
process and configuration change to your production
Oracle ABC ABC ABC ABC
environment, a certain level of testing will be required to iProcurement
ensure correct behaviour is observed before releasing the (content zones) Sydney Melbourne Adelaide Perth
change to the general user community. Everything from
item selection in the punchout catalogue to returning
items to your procurement application; completing and
approving a requisition through to generating a purchase Oracle Payables ABC
order; electronic transmission of an order through to (supplier sites)
Punchout
Site
order acknowledgment, and electronic invoice
transmission, import and matching (if implementing) all
need to be tested. At this stage your business Buying Organisation
representatives are likely to take on a leading role and
ensure all business scenarios previously identified are
fully tested.
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How to Identify and Integrate Suppliers for Electronic Trading
David Kelly & Annie Naveed 2012

5. Production Cutover: In addition to performing the same One way to conduct the review is to create a survey with
setups in your Production environment, don’t forget to a set of questions for key participants that will allow you
disable any internal catalogues used previously for your to understand what worked well and the areas requiring
suppliers who are now transitioned to punchouts. Where improvement. You can ask questions such as:
requisitions and purchase orders were previous entered
manually (for example using non-catalogue requests in • How well did the supplier understand the
Oracle), consider internal controls to prevent orders being requirements and how willing were they to
created manually in future. accommodate change to their standard
processes?
Post-Implementation Review: Some people may think • Was there adequate and effective
a post-implementation review is not necessary for a communication to you during the course of the
change that is fairly low in complexity and carries a low project?
risk should it fail to work as expected. However, for • Were your issues managed effectively on the
organisations that are new to punchouts and plan to project?
make the transition onto supplier hosted catalogues and • How would you rate the improvement to the
electronic document exchange a repetitive exercise, purchasing process achieved by this project?
learning from your early experiences and becoming good • What would you like to see done differently on
at implementing this functionality will allow you to future projects?
achieve future transitions more quickly and with fewer
issues. With early projects likely to be time consuming and
problematic, it’s important that the benefits of moving to
electronic trading are not negated by lengthy and/or
costly implementations which potentially deter buying
organisations from expanding their punchout footprint.
Example of End-to-End Purchasing Process (based on Oracle E-Business Suite with document exchange via OSN)
Selected process steps and application tables
Buying Organisation Exchange Supplier
Browser Oracle iProcurement Oracle XML Gateway
Supplier PunchoutTo
Application
iProc (punchout
User logs on to loginRequest XML
from application) Supplier’s punchout
iProcurement and document
generates login to application
selects required
request authenticates buyer
punchout link
and returns a login
Supplier response
iProcurement loginResponse XML
User browses
redirects browser to document accepting
catalogue, adds
supplier hosted the requester’s
items to cart and Supplier’s punchout
catalogue logon
completes order in to application
supplier punchout returns the
shopping cart items
to iProcurement
Purchase Oracle e-Commerce
Requisition Created Gateway
Items returned to
iProcurement via
user’s browser. Shopping cart
User completes Code Conversion information returned
checkout process mapping in url-encoded
and submits order Oracle Workflow shoppingCart XML
document
REQAPPRV
workflow generated
Oracle Purchasing for requisition
approval
PO created
(approval status = AutoCreate PO
In Process)
Launch Create PO
Workflow
PO approved
(approval status =
Approved) POAPPRV workflow Oracle Supplier Network
generated and
completed for PO
approval
Receive XML
document, perform
Send PO document Generate PO XML data
to supplier document and send Receive and
transformations, process PO
to OSN and send XML to
supplier
Ship Goods
Oracle Payables
Validate invoice Generate invoice
format and send data to
Run Payables Open OSN
Interface Import Oracle Payables Open
Interface
Validate Invoice Convert invoice to
ap_invoices_interface XML document and XML format and
Review output and ap_invoice_lines_interface insert to send to XML
correct Open applications tables Gateway
Interface errors
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How to Identify and Integrate Suppliers for Electronic Trading
David Kelly & Annie Naveed 2012

6. Other Considerations
For Oracle E-Business Suite customers wishing to further explore options around PTP spending controls and
process improvement, the following functionality may also be of interest:
iSupplier Portal
iSupplier Portal is a component of Oracle Advanced Procurement which enables secure, self-service business
transactions between buying organisations and their suppliers. The portal provides registered suppliers with
access to real-time information via a standard Web browser and allows them to search, monitor, revise and
review documents such as RFQs (Request for Quotation), purchase orders, receipts, invoices and payments.
By allowing suppliers to access their information directly, you reduce the volume of supplier queries handled
by your Purchasing and Payables teams; improve order, invoice and payment transparency; lower processing
costs (for example, when suppliers enter their own invoices), and generally improve supplier relationships.
Below are some of the core features of iSupplier Portal:
View and Acknowledge Purchase Orders
Oracle iSupplier Portal enables suppliers to view purchase order details, such as terms and conditions, lines,
shipments and attachments. Buying companies may request acknowledgement of a purchase order in order
to ensure the supplier has received, reviewed the details of, and accepted or rejected a purchase order. If a
buying organisation requests acknowledgement of a purchase order, suppliers receive a notification requiring
their response. Suppliers may then acknowledge purchase orders online, or accept or reject the order using
notifications. When suppliers respond to a purchase order acknowledgement, the system automatically
updates the purchase order and sends notification to the buyer.
Submit Purchase Order Change Requests and Split Shipments
Oracle iSupplier Portal enables suppliers to request changes to purchase orders when modifications are
needed to fulfill an order. Suppliers can request changes during or after purchase order acknowledgement.
Submit Advance Shipment and Advance Shipment Billing Notices
Oracle iSupplier Portal enables suppliers to create both advance shipment notices and advance shipment
billing notices that alert the buying organisation of upcoming shipments. Suppliers can create shipment
notices online or use a spreadsheet to upload shipment notices.
View Delivery Schedules and Overdue Receipts
On the Delivery Schedules Results page, suppliers can determine deliveries that require scheduling or are past
due. On the Overdue Receipts Results page, suppliers can view the details of past-due purchase order
shipments as well as receipts and returns. On the Receipts Transactions page, suppliers may also review a
historical view of all receipts that have been recorded for their shipped goods.
Invoice Information
If buying companies have implemented Oracle Payables, suppliers may submit invoices online based on
purchase order lines that they have fulfilled. Suppliers can create invoices against open, approved, standard
purchase orders, or blanket releases that are not fully billed. They can also enter a credit memo against a
fully billed purchase order as well as invoice against multiple purchase orders. On the Invoice Summary page,
suppliers can view the history and status of all invoices from their buying organisation.
Manage Payment Information
Payment inquiry in Oracle iSupplier Portal enables suppliers to view the history of all the payments for the
invoices that buying companies have completed.
Supplier Profile Management
Supplier Profile Management enables suppliers to manage key profile details that establish or maintain a
business relationship with their buying organisation. This profile information includes address details, names
of main contacts, business classifications, banking details, and category information about the goods and
services suppliers provide to their buyers.
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How to Identify and Integrate Suppliers for Electronic Trading
David Kelly & Annie Naveed 2012

7. Encumbrance Accounting
Within Oracle General Ledger you can record pre-expenditures commonly known as encumbrances. The
primary purpose of tracking encumbrances is to avoid overspending a budget.
When you enable the budgetary control flag for a ledger, the system automatically creates encumbrances
from requisitions, purchase orders and other transactions originating in feeder systems such as Purchasing
and Payables.
When you do not enable the budgetary control flag, you can still enter manual encumbrances via journal entry
but you cannot generate encumbrances from requisitions and purchase orders. You have two options for
using encumbrance data to monitor over-expenditure of a budget: after actuals and encumbrances have been
posted, you can generate reports to show over-expenditures. You can also use funds checking to prevent
over-expenditures before they occur.
Used alone, encumbrance accounting does not automatically verify that there is sufficient funding in these
accounts.
Budgetary Control and Online Funds Checking
Budgetary Control is the process of recording budget data and ensuring there are sufficient funds in a ledger’s
budget to allow a requisition, purchase document, invoice or manual journal to be processed. There are two
main functions within Budgetary Control:
• Online Funds Checking: Funds checking helps prevent overspending budgets by verifying available
funds online before processing a transaction. For example, if a user enters a requisition and wants to
check funds on a distribution line, the process checks funds on the transaction, updates the status of
the lines to Passed Funds Check or Failed Funds Check and immediately displays the result.
• Funds Reservation: After a requisition passes funds checking, you can reserve funds in the GL against
the distributions entered on your source document. Before you reserve funds, the distribution lines on
the requisition have a status of Pending. After you submit the lines for funds reservation, the status
changes either to Accepted or Rejected. The system updates available funds immediately when you
reserve funds, whether you reserve funds for an invoice, purchase order, requisition, or other
document. Information the system needs to calculate funds available is therefore always current
regardless of when you post.
When defining a budget organisation in Oracle General Ledger and assigning account ranges, you can assign a
Funds Check Level as part of your budgetary control options to control the severity of budgetary control
checks. With Budgetary Control Groups you can also set the funds check level by journal entry source and
category which can be used to specify how funds will be checked for different types of documents such as
purchase requisitions and purchase orders. The three levels of funds checking are:
• None: for no funds checking or funds reservation.
• Advisory: for online notification when transactions fail funds checking. The system still reserves funds
for transactions even when no funds are available.
• Absolute: to prohibit you from reserving funds for a transaction unless funds are available.
Using budgetary control groups, you can also give people at various position levels different budgetary control
tolerances and abilities to override insufficient funds transactions where documents fail absolute budgetary
control checks. This is another useful tool that gives managers greater visibility and control over
departmental, divisional and organisational spending.
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How to Identify and Integrate Suppliers for Electronic Trading
David Kelly & Annie Naveed 2012

8. About the Authors
David Kelly has over 15 years of experience with Oracle E-Business Suite implementations, upgrades and
operational support, combining in-depth functional and technical understanding with project management,
process reengineering and application design.
Consulting and operational roles include complex, large scale projects and support across Europe, Asia Pacific,
North and South America as well as smaller engagements at regional and national level, ranging from version
10.7 up to 12.1.3. Most of his experience comes from working in financial services, manufacturing and
construction industries.
David’s recent operational focus has been on implementing PTP initiatives aimed at making business and
system processes more efficient and targeting cost savings through improved utilisation of standard Oracle
functionality, supplier spend analysis, supplier rationalisation and redistribution of underutilised resources. As
well as having a strategic and leadership focus, David also likes to remain hands-on by working on the
analysis, configuration and support of new solutions.
LinkedIn Profile: http://au.linkedin.com/in/1davidkelly
Annie Naveed has over 5 years of experience in process analysis, process modeling, process re-engineering,
process design, process and procedural documentation, and change management and is also a trained Lean
and Six Sigma Yellow Belt professional.
Annie's focus has mainly been supporting businesses in various organisations by packaging diverse IT,
product and people changes in the form of a 'To Be' process, guiding them through the change and helping
them adjust to processes once implemented. Highlights of Annie's career include the design of the e-
Commerce Supplier integration process at Boral and design of the verification process for credit cards at
Commonwealth Bank of Australia (CBA).
LinkedIn Profile: http://au.linkedin.com/pub/annie-naveed/14/838/98b
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How to Identify and Integrate Suppliers for Electronic Trading
David Kelly & Annie Naveed 2012