You're an engineering director who must oversee purchasing during the early stages of your robotics startup company. This is a tall order, so you've been looking into everything there is to know about procurement systems, PunchOut catalogs, and the connection between the two.
It seems as though shopping with a supplier that has PunchOut integration can make your life easier in more ways than one. And suddenly, purchase orders and procurement doesn't seem so intimidating.
But the technological aspects of the PunchOut process are, understandably, raising some questions. You need a clear, step-by-step guide as to how the PunchOut catalog works and background information on the importance of eProcurement.
Luckily, we're going to provide this information for you. After completing this article, you will learn the following:
- What is a PunchOut catalog?
- How does a procurement system work?
- How does a PunchOut catalog work?
- Key takeaways
What is a PunchOut Catalog?
A PunchOut catalog is a method of streamlining B2B e-commerce relationships. Corporate purchasing agents can buy from a vendor's website without leaving the buyer's procurement system. The term "punch out" stems from the idea of punching out of the buyer's own procurement software (while it runs in the background) to gain momentary access to a vendor's catalog and then punching back in to process the purchase order.
A PunchOut catalog is a combination of business systems. An eCommerce store and procurement system come together to streamline the purchase order process for the buyer.
After choosing a provider, the user has to go through the "punching out" process to be directed to the supplier's storefront. Then, the buyer completes the authentication and gains access to an e-commerce store, selects their items, "punches out," and their items transfer to their procurement system. The vendor then grants order approval and creates a fulfillment order.
That is the gist of how a PunchOut catalog works, but to fully understand, it's important to go in-depth and analyze each step and component.
How Does a Procurement System Work?
Using a PunchOut catalog is not possible without an eProcurement system. Think of a procurement system as the foundation or host for a PunchOut catalog.
Procurement refers to all activity related to sourcing materials and goods needed to support company operations. In the B2B eCommerce world, all buyers and sellers should have their own procurement software and applications. These are computerized systems designed to manage the procurement process.
But how does this system work? And why do companies use them? A procurement system has several responsibilities, namely identifying and understanding the goods or services a business needs. It also means sourcing the right suppliers a company needs for each desired item.
Procurement is not synonymous with purchasing, although it does include making purchase orders. Procurement is broader and encompasses other critical processes that are more than just transactional. But let's look at it from an engineering director's point of view and ask why companies need specialized software for hardware procurement.
Essentially, your company will be purchasing machinery that complements the mind-blowing work you do. As a result, you need a system that establishes and maintains supplier relationships, especially since you will need a lot of large items to build drones, submarines, supercomputers, rockets, and more. You don't want to waste time hunting for new suppliers and would prefer building a B2B eCommerce relationship with a select few.
A procurement system is also proactive and analyzes the company's needs before making purchase orders. It should also ensure that a company receives the most value for the goods they purchase, and in a hardware-centric field, this is of the utmost importance.
In order to achieve all of this, procurement software is the way to go. Without it, you won't be able to seamlessly purchase goods using a PunchOut catalog, and the program or suite frees up staff resources and automates the procurement processes. An electronic procurement system is responsible for:
- Creating purchase orders based on the company's needs
- Verifying purchase orders with the vendor
- Submitting purchase orders for approval
- Generating reminders to confirm orders and cancellations
- Maintaining inventory and preventing item shortages
- Streamlining administrative tasks
How Does a PunchOut Catalog Work?
The punch-out approach is not only highly innovative but a massive step up from the somewhat outdated hosted catalog approach. These were catalogs hosted directly on the buyer's infrastructure, but they were much less user-friendly and weren't reflective of an easy-to-use eCommerce store.
First, there are two ways a PunchOut catalog translates information from the supplier's side to the buyer's side. The first is customer interways, and the other is cloud gateways.
The cloud gateway option is typically preferable for both parties and serves as a mediator between purchasers and vendors. It is a simple and more cost-effective way of transferring data between eCommerce stores and eProcurement platforms.
Customer interways require both the buyer and seller to build a mutually compatible host software that connects the eProcurement and eCommerce systems. Without coding knowledge and plentiful free time, this is a time-consuming option that may defeat the entire purpose of the PunchOut integration.
PunchOut Catalog Purchase Order Process From Buyer's Perspective: Step by Step
- The buyer uses their eProcurement platform to search for the appropriate supplier for an item they need. Let's use a motherboard as an item example to keep the discussion within the engineering realm.
- The buyer selects the relevant supplier and is immediately redirected to their eCommerce platform.
- Authentication is automated, and the buyer instantly has access to their account with the store.
- The buyer now searches for the motherboard. Here they can learn what products have high inventory, how expensive they are, and can read accurate, up-to-date descriptions of all relevant products.
- During the shopping process, the buyer will also notice bonus information on behalf of the supplier. This will include customization options and personalized discounts.
- The buyer has found the appropriate motherboard and adds it to their cart.
- Rather than check out, the buyer now "punches out." This means transferring all the shopping data to the eProcurement platform for approval.
- Approval happens quickly, and the supplier creates an official purchase order.
- To streamline procurement activity and purchase orders, startup engineering firms should use PunchOut catalogs.
- PunchOut integration allows the buyer to shop without leaving the safety of their chosen eProcurement platform. It also provides up-to-date product information, personalized discount offerings, and real-time stock updates. This frees up staff resources and creates valuable time for the engineering director.
- Using a PunchOut catalog to shop for products is extremely easy and looks similar to personalized online shopping, with the only difference being "punching out" instead of checking out.