PunchOut

PunchOut is a term which defines the electronic communication between a vendors web storefront and a buyers procurement application. The buyer leaves ("punches out") their company's system and goes to the supplier's web-based catalog to locate and and add items to their shopping cart, while their application transparently maintains connection with the web site and gathers pertinent information. A vendor catalog that is enhanced for this process is known as a punchout catalog. PunchOut enables communication between the software and the web site so that relevant information about the transaction is delivered to the appropriate channels. Ariba based their product on commerce XML (cXML), which comprises a meta markup language and a protocol for data exchange between applications. RoundTrip, Commerce One, Oracle Exchange, and products based on open buying over the internet (OBI) are similar to PunchOut, and are sometimes referred to as punchout solutions.

History of Supplier Catalog Management for eProcurement

Phase I: Host All Supplier Catalogs

Early in the lifecycle of e-procurement systems, the concept was simple: bring all of the procurement processes into a central location and gain control of what was likely a run-away situation. So all of the bidding and soliciting processes were conducted on a central software system (i.e. Ariba), and the suppliers who were awarded contracts supplied the buyer with their catalog which was loaded into the centralized catalog database and managed in house. Buyers now had complete control over the buying process, but also gained the headache of managing it all.

Challenges:

eContent - Getting suppliers to provide electronic catalogs was a difficult endeavor. Many suppliers simply did not have their catalog in electronic format – only paper based catalogs from their printers. Most suppliers who did have it in an electronic format - didn’t have it in the format required by eProcurement systems.

Supplier Adoptions - Motivating suppliers to comply in a timely fashion. In order to realize the ROI for these e-procurement systems, buyers needed to get suppliers using the system.

Catalog Updates - Some suppliers catalogs changed frequently and needed to be update often to keep accurate information available to the buyers. This often meant that a temporary team who was brought in to setup suppliers became a permanent fixture as they managed and updated supplier catalogs.

Configurable Products - Many suppliers offer products and services that just don't fit in a simple catalog model. Products may need to be configured, or options selected, or services calculated. These types of offerings just didn't fit well in the internal catalog model.

Phase II: PunchOut for Large Catalogs

Buying organizations began implementing punchout catalogs with suppliers who had large or frequently changing catalogs, or products that needed to be configured. Early adopters were the large office products dealers, large industrial suppliers, chemical suppliers and computer supplies dealers. The first suppliers to use PunchOut were large suppliers because they were the only ones who could afford the integration costs.

Challenges:

Small Suppliers Lack Technology - Most suppliers did not even have a web storefront - let alone the technical capabilities to support PunchOut. This was a barrier to the smaller suppliers who subsequently could not provide PunchOut. This proved to be a challenge for buying organizations who have programs designed to allocate purchases for small, minority-owned, or women-owned businesses. Organizations they were trying to help grow.

Phase III: PunchOut as a Strategic Initiative

As buying organizations began to calculate the ROI that their eProcurement systems were supposed to provide, many realized that the amount they were spending on supporting the supplier catalogs was devouring the cost-savings they were counting on. PunchOut became a Strategic Initiative in organizations looking to take the costs of managing catalogs off their books. Every dollar saved by removing the cost of catalog management was added directly to the bottom-line. Managers reported that they were seeing the financial results they were looking for.

Challenges:

Contract-Catalog Compliance - The promise of getting random spend under control started to fall apart when suppliers provided access to PunchOut catalogs containing more items than were on the contract. Users were able to buy goods that were not approved for purchase (but were higher margin for the supplier). Regularly scheduled visual inspection of the supplier catalog became a costly method to gain supplier compliance.

Contract Price Valiadation - Buyers had to rely on costly audits to catch where final pricing on a purchase order did not match the contracted price. This was not an issue with the hosted catalogs where the eProcurement system could validate pricing, but proved challenging with PunchOut.

Phase IV: Enterprise PunchOut

Once PunchOut was identified as a strategic benefit, what remained was a method for organizing, consolidating, and streamlining the PunchOut process. In response to this need, Supplier Solutions created enterprise-Connect TM, a platform designed to provide the benefits of PunchOut without the disadvantages seen when every supplier creates their own PunchOut site.

By creating a standardized PunchOut site, Supplier Solutions changed the supplier enablement landscape and made possible services like eContract-Compliance, and eCatalog-Compliance. No longer did buyers have to worry about whether their users were buying goods off-contract through PunchOut sites – the eContract-Compliance module restricts buying behavior and enforces contract catalogs. And buyers can reduce the audits they conducted to verify contract compliance because the eContract-Compliance ensures that the prices included in the Purchase Order are the ones that were negotiated when the contract was awarded.

Benefits

PunchOut gives suppliers the ability to extend the duration of actual sell time and expand market reach. A company can expect to double or triple their hours of selling time daily, and with the capabilities to extend geographically, new business relationships can be made.

The ability to access remote catalogs using PunchOut benefits both the supplier and the buyer. It enables suppliers to maintain and host their own catalog information. New product information can be updated in real time to market instantly and cost effectively, while buyers can search for items from within their system. The burden of maintaining the hosted catalog is removed from the buying organization, reducing catalog maintenance and data storage costs. In addition to the local catalog, PunchOut provides a single point of entry to catalog content regardless of where the content resides.

Remote catalogs are particularly useful for products that are configurable or include highly variable or dynamic items and pricing. These products are difficult and costly to maintain in a buyer-hosted (local) catalog. Catalogs with these kinds of items are better maintained by the supplier, to ensure the latest content and pricing are available and to eliminate inefficiencies.

PunchOut Process

1. The requester clicks a punchout link to the external catalog site.
2. The punchout from application sends the login request to the catalog site.
3. The punchout to application authenticates the requester or buyer.
4. The punchout from application redirects the requester’s or buyer’s browser to the catalog site.
5. The requester or buyer browses or searches for items on the external catalog site and completes shopping on the site.
6. Via the requester’s or buyer’s browser, the punchout to application returns the shopping cart with the items to the punchout from application.
7. The requester or buyer completes the checkout process for the items in the shopping cart, and the punchout from application processes the order.