At the heart of every procurement system is a catalog. Even in an environment lacking automation, requisitioners consult a hard copy or customer service reps use a catalog at the other end of a phone line. So it stands to reason that getting everyone to use the correct catalog from a preferred vendor at the contracted price will ensure that negotiated savings from sourcing and contracting activities are actually realized.
How to Keep Pricing Current
Keeping internally hosted eCatalog data and pricing current is essential to maximizing user adoption and driving compliance, and minimizing the number of exceptions that Accounts Payable manages. Contracted items should have a set time period where the price is valid. Many procurement applications can attach an expiration date to each item so that when this date is reached and the price is no longer valid, the item is hidden from view. Once agreement is reached for 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 that suppliers will provide an updated eCatalog on a quarterly basis. For certain commodities, it may be necessary to update on a monthly basis. For anything more frequent than monthly, it is recommended that you reconsider managing the catalog internally, but rather supplier-hosted in a PunchOut catalog. This minimizes the amount of file handling, validation, and cleansing that needs to be done, as well as ensures the price is always current without the delay that occurs when content is transferred from the supplier and then loaded at the customer. Even a best-in-class organization can take up to three days to collect and process catalog changes. Through the use of PunchOut technologies, it is possible for end users to be directed to the supplier-hosted catalog and select items to add to the 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 lose control over price changes. Ideally, control can be maintained through a level 2 PunchOut that will take the user directly to preferred approved items. A well-set-up requisition approval flow, as well as catalog manager random audits of frequently purchased items, can help minimize this issue and in almost all cases the benefits of the supplier-hosted content for items that have volatile pricing outweigh the risks. Don’t expect suppliers to always be diligent about providing updated content on a quarterly basis. It is important that the supplier manager establishes a specific refresh schedule and follows up with suppliers as the date nears. The catalog manager may also assist in this effort by developing a system to track time to the next expected refresh.
Criteria for Catalog Management Vendors
Catalog management vendors should be evaluated on four main criteria:
- Consumer-like shopping experience through advanced technologies
- Quality of supplier self-help tools that are available for catalog creation and maintenance
- Security, service levels, and quality processes used by the vendor
- Cleansing and content enrichment capabilities
Consumer-Like Shopping Experience
Many procurement platforms support advanced content technologies that greatly improve the end user experience 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 shopping agony.
A minimal list of shopping cart technologies that should be enabled includes:
- Intelligent Fuzzy Search - returns word variations including misspellings
- Parametric Search Filtering - search filter based on price, supplier, color, etc.
- Side-by-Side compare - allows easy comparisons of similar items
- Kit Creation and maintenance - combining multiple items into one SKU
- Fuzzy search, parametric filtering and kitting correctly can dramatically decrease search and requisition time—increasing user adoption.
In addition to easy-to-maintain control over spend, the eCatalog solution should 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 pricing
A catalog management vendor needs to have an understanding of these features and how they can best be used. Relevance ranking and icons direct buyers to preferred suppliers or products to help organizations achieve purchasing goals. Similarly the configurable catalog view will direct buyers to the proper supplier or product based on your business rules. Proactive contract compliance as discussed earlier, is essential to realizing your previously negotiated savings.
Cleansing and Content Enrichment
The final criterion to consider is the ability of the vendor to perform catalog cleansing and enrichment. At a minimum, the catalog should be cleansed for proper formatting of the description verifying that images are present and confirming that url addresses do not contain dead links. Data rationalization of words in the short and long description can aid in keyword searches. For example, the adjective “black” could be written by suppliers as “blk” or “blck”. Rationalizing the adjectives to the full word in the description will ensure that all results are returned when the end user searches using the 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 approval rules are driven off of the commodity code assigned to the item as well as for the purpose of spend visibility. If left up to the supplier to provide the commodity code, the accuracy rate will be 60 percent or lower. A leading catalog vendor will be able to enrich the content with commodity codes and achieve at least a 99 percent accuracy rate. Attribute extraction can greatly reduce the time the end user needs to find a particular item. This is especially 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 item parametric filtering where the size, head type, and material of 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 the catalog is considered across a large user base, the return on investment can be realized shortly after the initial set-up.
Check out the other Tip of the Week for eCatalogs Part 1 and 2: