Providing users with the ability to self-select goods electronically, and in a compliant manner, removes a series of headaches for the procurement department, says Ian Nethercot, supply chain director of Probrand.
Catalogue management, online portals where suppliers can display products, pre-approved by procurement teams, to authorised purchasers has fast become a popular feature offered by suppliers to support organisations’ procurement processes.
When used correctly, not only does it help procurement departments, for end users it also removes a great deal of frustration that can be felt when going through traditional approval processes. This can feel like an uphill struggle if authorisation protocols are creating bottlenecks, which in turn can create resentment and friction with procurement.
Procurement does need to police purchasing, however, but in a way that doesn’t create barriers for buyers. Catalogue management is helping to create a slicker approval process, which benefits both sides.
The ability to integrate these portals with e-procurement, accounting and other management systems, such as software asset management (SAM), is also speeding up wider business processes – including invoicing, reporting, auditing and compliance. For example, when a SAM system is integrated it is much easier to spot the under, or over, licensing of software products within an organisation.
Despite the obvious benefits, procurement professionals need to be careful about how they utilise catalogue management, as blind acceptance of a supplier’s portal can create more problems than it solves in the long-run.
There are three boxes that suppliers should be able to tick when it comes to catalogue management; they have the ability to lockdown any rogue purchases, they are giving users access to search features and support services and, lastly, that the catalogues are constantly being updated.
One of the major benefits for procurement professionals is the ability to create a pre-approved list of catalogue items that have already been subject to a price negotiation. This is important because, given the choice, end buyers will always be tempted to buy the newest, shiniest piece of kit – which is usually the most expensive. We’re not just talking pens and writing pads, it could be expensive laptops and smartphones.
Filtering what people can see gives them a comfortable set of barriers in which to make purchases. The biggest benefit is the ability to cut out rogue purchasing which, left unnoticed, can add up to thousands of pounds worth of overspend. This also gets rid of an unpredictable element which makes it easier to forecast spend more accurately.
Search and support
Of course, online catalogue management means less human interaction so thinking about usability for the purchaser is another consideration. In the same way that we shop online in our personal lives, there needs to be an intuitive search function that allows users to easily browse products and make suggestions if the first choice is out of stock.
The system can’t leave users completely on their own either. Complex, high-cost or first-time purchases are all examples that may require additional expertise and assistance from someone who can support the buyer through the purchasing decision – helping them get the right product for their business needs. For example, a user looking to buy a new computer may well need help and advice determining the right amount of memory required. Some people will always need more hand-holding than others, and suppliers need to be able to offer that service.
It’s vital that your preferred supplier is constantly updating their catalogues as goods come in and out of stock. This is especially important when it comes to IT. Procurement needs to be able to work closely with suppliers to identify better products when they become available. With hundreds of new technology products being released daily, this will also lower the trade price on the older models, which should be passed on and made visible.
Another big benefit of this automated element of catalogue management is that it fundamentally changes the relationship between procurement teams and their suppliers. Instead of squabbling over prices, they can spend more time focusing on introducing new solutions for end users.
When all the above has been addressed, catalogue management can be highly effective. It impacts every stage of the buying cycle, speeding up the entire process by reducing the administration involved. This is helping procurement professionals concentrate on what will really make a difference to their organisation.
The initial setting up a product catalogue does involve a lot of work. But if you have a dedicated team who can establish a catalogue that works for your organisation, the potential benefits are plentiful.
Ian Nethercot is supply chain director of Probrand