Today, Ariba is launching the first in a series of blogs entitled Kurtz’s Korner. I first used this moniker when writing a sports column for my high-school newspaper. Now, I’m revitalizing it as a series of articles, discussions, and hopefully thought provoking topics that I encounter as General Manager of Ariba’s Network and Financial Solutions business. The blog title might be a bit hokey, but I talk to our customers on a regular basis and this approach seemed like the best way to broadly spread the word about best practices, key trends, and interesting challenges.
The first topic that I am going to tackle is the world of catalogs. Lately, we have seen a significant increase in the number of companies looking to drive more of their spend to catalogs and asking their suppliers to provide more catalog content. During a recent trip, a customer challenged me with a goal – they wanted 90% of their spend on catalog – and, oh by the way, today they are only at 9% on catalog.
Interesting objective - but why is it so important to them?
· Spend on catalog is typically “touchless” - meaning it doesn’t require a bunch of extra approvals. It is also error-free, so it limits change orders or PO-reissues. It also has a much higher likelihood the invoices will have no matching exceptions and thus is touchless for Accounts Payable
· Spend on catalog is easier for suppliers to process and has fewer errors. This benefit leads to lower overall supply chain costs and better customer service
· Spend on catalog has fewer invoicing errors decreasing Accounts Payable costs and enabling greater access to early pay discounts
· Catalog suppliers are typically “preferred suppliers” with more favorable pricing and thus buying organizations save money (and suppliers get the volumes they expect)
· The user experience is better and closer to an “Amazon-like” shopping process (HINT – more on this topic to come in a future Kurtz’s Korner)
· Spend on catalog gets categorized correctly for spend visibility and future sourcing activity
So, if your company is like the one I described above – what should you do to drive more spend onto catalogs?
First -- find suppliers who are already providing catalog content with other buyers. You’d be surprised at how often I learn that companies are amazed to find out how many of their suppliers are providing catalog content to other companies but not theirs. Just to stimulate some thought here – did you know that the Ariba Network has nearly 15,000 different suppliers who provide catalog content? These companies have produced over 113 million catalog line items.
Second - set a goal or target for your company like the customer that I mentioned above. As a benchmark to consider, consider the top 25 companies on the Ariba Network in terms of number of catalogs they have – the average for these 25 is 836 catalogs. How are you doing versus that metric?
Third - allow your suppliers to provide you rich catalog content and do the ongoing maintenance via a Punchout catalog strategy. Your users will get a better experience, your suppliers will be happier, and you’ll get the savings from not having to maintain a catalog team to manage all of your development and maintenance.
Fourth – if you’re going to revitalize your catalog program, make sure you “market” the change to your user base. Incent them / make it fun for them to check out the new and improved shopping experience and remind them of the benefits (i.e. - savings) of buying on contract. One of our customers offered a prize for the first user to provide feedback on the new experience and another prize for a suggestion on another supplier that they’d love to see have a catalog in their purchasing system.
Fifth – often overlooked but critically important is considering the suppliers value in increasing your own catalog usage. Make sure you communicate the importance of doing catalogs with them for your business but also why it’s important to them. Suppliers are anxious to get their products in front of your users to increase revenue and / or reduce maverick buying that subtracts from their wallet share. Use this incentive to not only get catalogs collected and enabled but also to leverage for electronic Pos, Order Confirmations, and Invoice management thereafter – the happiest and most satisfied suppliers are the ones that can centralize many activities in a single process with their customers.
Because driving more spend to catalogs has become so prevalent amongst our customers, we’re holding several sessions at Ariba LIVE to help our customers share their experiences, best practices, and lessons learned.
· 5 Rules for Catalog and Supplier Enablement Success: Thursday, 3:15pm
o Featuring: SunTrust and Under Armour
· 7 Habits of Highly Successful P2P Programs: Thursday, 3:15pm
o Featuring: Dollar Tree, Corinthian Colleges, and Synovus
· 5 Steps to Better Trading Partner Collaboration: Wednesday, 1:15pm
o Featuring: Reed Elsevier, Sallie Mae, The Hackett Group
· “Smarter Supplier Management” – Moving Beyond the Stick to Become a Customer of Choice: Wednesday, 1:15pm
o Featuring: Kimberly Clark and Staples
So, how do you take advantage of this trend and the power of the Ariba Network? If you’re a buying customer of Ariba and are thinking about how to make the purchasing process easier for your internal stakeholders, talk to your Account Executive or Customer Management representative and ask how we can help you drive more spend to catalogs. If you’re a seller on the Ariba Network and you want to connect more of your Ariba customers via catalogs, send an email to AribaConnection@ariba.com. Alternatively, if you don’t support punchout or cif catalogs today, contact us, and we’ll help you assess the opportunity these formats provide to better meet your customers’ needs and grow your business.
Please let me know your thoughts on this topic.
I look forward to seeing you in Las Vegas and Barcelona at Ariba LIVE.
Vice President and General Manager, Ariba Network and Financial Solutions