PunchOut is a type of electronic catalogue that forms an integral part of e-procurement solutions. It enables companies to have direct access to the offering they have negotiated with their suppliers. In this article, you’ll find all the answers to your questions about PunchOut: its definition, the value of using it, how it works, its advantages and how it differs from a hosted catalogue.
What is the definition of PunchOut in e-procurement?
The term “PunchOut” or “Punch-Out” was originally coined by Ariba, a US procurement solution platform. Widely popularised and standardised, this terminology is now used by most of the global players (Coupa, Ivalua, Determine etc.). Unlike EDI[1], which is simply about making digital files available, PunchOut offers the user a purchasing experience.
PunchOut refers to the connection between the e-procurement environment of companies and the web solution of their suppliers. This allows companies to directly access their partners’ websites, where the contractual terms and conditions they have negotiated are applied (prices, shipping costs, etc.), and to transfer purchase orders to their own e-procurement system.
As an electronic catalogue belonging to the large family of e-procurement solutions, PunchOut is, by definition, part of a process of digitalising commercial transactions between companies and their suppliers and, more specifically, the first phase of the Procure-to-Pay (P2P) process: product selection.
Ariba defines PunchOut as follows: “[It is] an electronic catalogue on a remote website accessible from an e-procurement system. [It’s] a simple and cost-effective way of providing buyers with customised content, tailored purchasing experiences and timely content updates. It is particularly useful if:
- The content of your catalogue changes frequently;
- You offer highly configurable items that require customisation or complex ordering;
- Your catalogue is large and contains more than a thousand items.”
What needs does PunchOut address?
PunchOut is particularly suited to the long tail spend management, as this purchasing category comprises a wide range of products (several tens of thousands of items) and a low repeat purchase rate. This dynamic catalogue system, which is updated in real time, enables procurement departments to improve efficiency and save precious time.
How does PunchOut work in e-procurement?
There are two aspects to the way in which PunchOut works: its use and its administration.
Using PunchOut
The electronic catalogue, known as “PunchOut”, is accessible via an interface between a company’s procurement solution and its suppliers’ website.
From this user-friendly and personalised interface, companies can access the offering that has been negotiated with their suppliers. They choose their products and save them in a “basket”, which is automatically transferred to their e-procurement solution as a “purchase order”.
This operation follows the predefined workflow and then becomes an order, which is sent directly to the suppliers.
PunchOut administration
As the catalogue is connected to the supplier information system, suppliers are responsible for:
- Creating the catalogue;
- Publishing it in accordance with the standard classifications and specific company details and policy;
- Updating information;
- Reporting on consumption and price changes.
What are the 6 main advantages of PunchOut?
As with procurement, PunchOut centralises and automates interaction between users, buyers, and suppliers and, more broadly, optimises the process of searching for products. There are 6 main advantages, explained below in detail, to bear in mind.
1. Financial savings
A standard transaction is estimated to cost an average of £82, while an order validated through an electronic catalogue, such as a PunchOut, is estimated to cost around £56[2]. This £26 saving is the result of process automation and reduced labour costs. If this saving is applied to every order placed, the potential financial gains for companies are substantial.
But that’s not all: by further dematerialising transactions (including ordering and invoicing), savings of up to more than £60 per transaction can be achieved!
2. Delegation of maintenance and reporting
With PunchOut, suppliers are responsible for publishing and updating the information in the catalogue in accordance with the contractual conditions. This enables procurement teams to free themselves from low-value, time-consuming tasks.
Suppliers can also set up accurate reporting, giving companies better control over their procurement, as is the case with the Savin’side® method.
3. Access to accurate information
As it is connected to the supplier information system, a PunchOut contains a large amount of detailed data (availability, discounts, shipping costs, etc.). The risk of error is reduced because the updating process no longer requires human intervention.
4. Better management of expenditure
By implementing PunchOut in e-procurement, companies automatically benefit from preferential rates on traded products. Purchases are simplified and centralised through a single solution, enabling companies to better manage their expenditure.
5. Optimising the user experience
PunchOut offers a great user experience, as the interfaces are based on e-commerce sites: automatic login, optimised search engine, dynamic product suggestion, favourites lists, recall of previous orders, etc. Navigation is smooth and intuitive, just like on your favourite B2C sites!
6. Improved productivity
Since a large majority of tasks are either automated or performed by suppliers, procurement teams see improved productivity and can focus on higher-value-added tasks.
PunchOut vs hosted catalogues
There are various kinds of electronic catalogues. Two models with well-defined characteristics dominate the world of e-procurement.
“Dynamic” PunchOut
As explained above, PunchOut is an interface between the company’s e-procurement solution and the supplier’s merchant site. Because it is a dynamic catalogue, the information is updated in real time (stock quantities, delivery times, technical and transactional documents, new products, product range expansions, replacement products, etc.). The supplier is responsible for any aspects relating to the catalogue (publications, updates, reporting, etc.).
“Static” hosted catalogue
A hosted catalogue is a CSV document[3] (or similar) sent by the supplier and stored in the company’s e-procurement system or that of its service provider (marketplaces). As it is a static catalogue, the company is responsible for monitoring, reporting, and updating data.
While PunchOut is well suited to managing long tail spend, a hosted catalogue is more suitable for strategic e-procurement, which involves a narrower product range but more recurring purchases. This type of support requires stability in terms of products, services, and prices.
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