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Industries:  General 

Shop online for Services through e-Catalogs

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By: Beroe Inc

calender16 Nov 2017

By Ipsita Suman, Principal Analyst

Shop online for Services through e-Catalogs

We all have purchased something or other from online shopping portals. Can the same experience be replicated across procurement categories? Especially, when it comes to Indirect Services categories, which are hard to structure or commoditize?
 

Need for e-catalog solutions

Organizations are constantly finding out ways to make the procurement process simpler, efficient and effective. There is a potential to bring a lot of contracts under managed spend instead of spot buying.

Procurement managers usually spend a lot of time in either negotiating for a better price or requesting services from suppliers.

Catalog buying is being viewed as a solution to these procurement issues.

Catalog buying is becoming popular for high volume services, which cuts down the time to procure a service. As tools become smarter, more spend can be brought under management.

Implementing catalog solution is becoming popular with Fortune 500 organizations due to the need to reduce maverick spend/ spot buys and speed up the buying process. Also, improved spend under management helps in achieving greater transparency.
 

Current Scenario in e-catalog industry

Emerging players generally provide SaaS-based solutions, which do not require major infrastructure setup.

Moreover, they are adept at extensive customization and are open to adding extra service modules. This makes them a popular option for organizations who seek customization along with lesser set-up costs.

The below graph depicts the Best-in-Class practice followed by world-class procurement organization towards their organization's total spend.

World-class procurement organization towards their organization's total spend

Categories suitable for e-catalog

The categories, which have a high volume of usage and a standard set of request, are popular for E-catalog implementation. Semi-core and Non-core activities, which are procured on a day-to-day basis, are also majorly suitable for e-catalog buying.

Based upon spend level and impact on business, categories can be bucketed for procurement under:

  • Spot Buy
  • Catalog Buy
  • Aggregator buy
  • Contract buy

Core categories are generally bought under contract. However, for categories which have a high volume and low spend, catalog buy is a better option.

Categories suitable for e-catalog

Source: Beroe Analysis

The figure below provides the detailed list of categories which are considered for catalog buys.


Major channels for Service procurement via catalogs

Fortune 500 Organizations use a combination of Smart Forms and Configurable Catalogs in order to request services via E-Catalog platform.

Most service providers are capable of developing both types of interfaces for organizations.

Smart Forms are mostly used for services that have to be defined by the requester, whereas Configurable catalogs are used when a standard set of variables can be defined for sourcing.

Major channels for Service procurement via catalogs


Categories unsuitable for e-catalog

Categories that involve a greater amount of interaction in Price Negotiation stage or Service request stage, or are one-time buys need not be included under catalog management. Categories such as Management Consulting, Legal, Logistics are procured via RFP.

Implementing e catalog solutions for Services

Things to keep in mind while implementing e-catalog solutions for Indirect Services procurement:

Parameter

Sub-parameter

Description

Consumer-Like Shopping

Easy-to-use interface

Modern web based interface similar to e-commerce purchase tool

Intelligent Fuzzy Search

Full-text search listing items by probability index/ Fuzzy search using elastic search

Parametric Filtering

Filtering and sorting of results based upon multiple parameters

Side-by-side comparisons

Items shown side by side improve ease of purchase

Level 2 PunchOut Catalogs

External catalogs on real time helps show dynamic price

Control/Compliance

Advanced Contract Compliance

Specific approval process should be defined for non-compliant items and checks for contract compliance must be present

Relevance Ranking

Improves ease of purchase

Icons

Icons/images when used makes it easy to identify catalog items

Configurable catalog views

Should be Pre-defined according to each user’s access rights

Supplier Tools

Supplier Portal

Facilitate the self-serve model with additional information available for ordering, e-invoicing, payment management

Automatic Data Validation

Multiple Support Channels

Security / Service

WebTrust Certified

Improves security

Password protected and partitioned data storage

Data Cleansing & Enrichment Capabilities

Data rationalization

Multiple mapping rules allows greater data flexibility

Commodity code assignment

Attribute extraction

Flexible Systems and Integration

Services Procurement support including supplier collaboration

Supplier self-service and Product Inquiry feature facilitate direct contact with Supplier for specific procurement actions

Interface with any eProcurement system including Oracle or SAP

Improves efficiency

SaaS deployment for fast implementation and currency

Increases geographical coverage


Pre-requisites for implementing e-catalog solutions for Services

Winning the confidence of suppliers -- Suppliers are required to share a lot of information with regards to the products/services which would be procured. Hence, bringing suppliers into confidence is also a very important aspect while implementing e catalog solutions for services.

Cross-company cultural differences -- Every department/ team would have different procurement practices -- hence implementation of a standard single tool for purchase requires easing and smoothing down the cultural differences in an organization. A change management team/ executive team would be helpful in motivating users.

Visible executive sponsorship -- Tools implementation should be a top down approach for effective participation.

Motivating end-users -- Tool implementation mean there would be some degree of training involved. End users might resist to the change anticipating more work, hence it is very important to make the end users aware of the importance of the implementation and benefits achieved by the same.

Stakeholder involvement -- Implementing catalog solution for Services require high degree of customization and the attributes completely depend upon how the organization/buyer procures. Hence, buyer inputs are required at each stage -- right from data collection phase to Pilot phase.

Pilot -- A Pilot phase is crucial to identify errors and other functional/logical anomalies and rectify it before the solution goes live.


Case study: e-Catalog implementation for Services

Fortune 500 Oil and Gas organization

The U.S.- based Oil and Gas giant is a $200 billion organization operations. With expansion in business, the organization started its migration to a single global platform.

Implementation

  • The service provider designed processes, tools, and collateral which empowered the organization’s Supplier On-boarding team to scale to enabling 800 suppliers within project timelines.
  • Classified and restructured the organization’s taxonomy to PIDX providing rich content that is usable for improved sourcing, spend analysis and inventory recovery.
  • Matched buyer “free text” POs with existing items by providing buyers with the information they need to buy and transact electronically, thereby reducing procurement costs.
  • Implemented a tool for new item introduction and item maintenance, ensuring that rationalized material master retain product data integrity.
  • Empowered the organization’s Vendor On-boarding team to scale to manage 800 suppliers within project timelines.

The major milestones of the project are as follows:

  • Total Number of Items of about 1. 3 million
  • Avg. Number of Attributes/Item of about 20
  • New Templates Created or modified 3,000
  • Created 3,400 category-specific item templates

Benefits achieved

The organization saw a 20 percent decrease in Purchase Order costs due to data rationalization in the first year.

Data Management team were able to increase workload by 15 percent per year in 3 years with the same headcount.

Time spent in contract negotiation for small spend services reduced by 35 percent.

Spend under management increased from 50 percent to 75 percent.


Conclusion

e-Catalog solutions are a highly convenient method of procurement in organizations. Taking Catalog buying to the next level requires some degree of effort as Services are more complex than products. Also, the prices are dynamic in nature for Services.

However, looking at the increase in efficiency and reduction in negotiation time, more and more organizations are finding catalog buying an effective option to improve procurement efficiency.

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