Supplier participation is critical for the success of any eProcurement initiative. However enabling and managing supplier catalogs have long been the Achilles heel of most eProcurement initiatives, leading to issues ranging from a failed implementation to a significantly lower than expected ROI from the system. Aberdeen Group, in a recent benchmark study of various Fortune 2000 companies concluded that purchasing organizations grossly underestimated the level of effort and budget required to enable and manage supplier content and transactions. The study also found that most procurement executives recognize this issue and believe that supplier enablement is vital to the success of their eProcurement initiatives. This paper identifies the key issues involved with enabling suppliers and suggests a solution that facilitates supplier enablement at significantly lower costs and resource requirements.

In any purchasing organization, approximately eighty percent of procurement in dollar value comes from twenty percent of the supply base. As a result, this twenty percent of the supply base is characteristically considered strategic to the enterprise. Hence the purchasing organization will usually devote additional resources to focus on these strategic suppliers, including working closely with them to electronically enable them.

However such an approach that tries to integrate the twenty percent of the supply base and fails to address the remaining eighty percent of the supply base, will never realize the full benefits of eProcurement. A paper invoice with four line items has the same general processing costs to the purchasing organization regardless of the dollar value associated with the invoice. Hence, the key to achieving the highest ROI and benefits is maximizing supplier participation in the purchasing organization's eProcurement process.

One of the big challenges in expanding electronic connectivity to the remaining supply base is that over half of these suppliers are likely to be small and medium enterprises with a small number of transactions per week. These suppliers lack internal expertise, as well as the funds needed to interface with multiple customers' eProcurement systems. Many may not even have an electronic catalog that can be used in an eProcurement system. In addition, they may not experience the same ROI as high value/volume suppliers in electronically connecting with a purchasing organization.

Similarly, the purchasing organizations face their own set of issues in supplier enablement. The task of contacting each supplier to explain the eProcurement program and completing the integration can be daunting and may need more resources than budgeted. The purchasing organization can impose a fee on the suppliers to recover some of these costs - however they are concerned about imposing any such costs on their suppliers, because the smaller suppliers may pass this cost back to the purchasing organization in the form of higher prices and nullify the savings from eProcurement. In addition, a supplier enablement program requires detailed information about each supplier. Frequently, a purchasing organization knows little about the eighty percent of suppliers doing the smaller number of transactions - except a contact telephone number. Without this detail a concise enablement program can not be structured.

Any approach that addresses the above mentioned issues must:

• Provide a broad range of cost-effective technology alternatives to the supply-base
   
• Enable suppliers (especially small and medium sized suppliers) to easily create and enable electronic catalogs on the purchasing organization's eProcurement systems themselves
   
• Provide optional services to optimize supplier enablement for larger suppliers

Any solution that follows these guidelines will allow a purchasing organization to address supplier enablement issues head-on. We will review each of these topics one-by-one.

Supplier product data should be made available as catalog content in multiple ways, including supplier-hosted, purchasing organization-hosted, software vendor-hosted and third party hosted catalogs. By providing such a wide range of catalog hosting and management alternatives, a buying organization is well equipped to address most supplier enablement issues.

Supplier Hosted: A supplier hosted catalog solution connects a purchasing organization's eProcurement system to a catalog that is managed and 'hosted' by a supplier. Supplier-hosted catalogs are most effective with often-changing commodities such as office supplies, copiers, computers etc and are typically provided by mid-sized to large suppliers. When someone from a purchasing organization shops on the eProcurement system, they transparently get access to the supplier catalog via 'punch out' capability of the eProcurement system.

Purchasing Organization Hosted: In this solution the catalog is managed and hosted by the buying organization. This solution requires catalog management activities from both - the supplier and the purchasing organization. The supplier maintains a formatted file of its catalog items for regular uploads into the catalog management module of the purchasing organization's eProcurement system.

Software Vendor Hosted: A vendor hosted solution is a variation on the supplier-hosted system and is used when the vendor is an on-demand (Software-as-a-service) system. The approach connects a purchasing organization's eProcurement system to a catalog that is 'hosted' by the OnDemand software vendor of the eProcurement product. The supplier maintains a formatted file of its catalog items, which is regularly uploaded into catalog management module of the eProcurement system. Once the system validates the model and gets appropriate approvals, the catalog becomes live and is available for access from the vendor's eProcurement system.

Third Party Hosted: In this framework a third party organization, with expertise in catalog content management, manages the supplier catalog and makes it available to the purchasing organization's eProcurement system. When someone from a purchasing organization shops on the eProcurement system, they transparently get access to the supplier catalog via punch out capability of the eProcurement system.

No electronic catalog: In this scenario, the user enters procurement transactions on a form without using a catalog. These forms are reviewed manually and then sent to the supplier.

Once the user in the purchasing organization has selected the items for purchase from the catalog and requisition approved, the order information is communicated to the suppliers through a wide variety of choices including fax, email, cXML and EDI.

Normalization of data addresses inconsistencies such as different spellings / abbreviations of supplier names, different commodity codes, etc across systems - a key requirement for improving data quality, as well as accuracy of the analysis.

A good eProcurement solution should provide suppliers with easy-to-use spreadsheet like templates using which the supplier should be able to create and manage their catalog. Once the spreadsheet is populated by the supplier, the workflow in the system should guide the supplier to publish the catalog and make it 'live'. The software design should be intuitive and workflow driven so that the catalog can be created activated and managed by a small supplier without any help from the purchasing organization. As a result, with just an internet connection, a supplier should be able to self-author their catalogs, enrich product information in them and easily load them on the purchasing organization's system.

While a supplier should be able to get enabled on an eProcurement system without having to use any consulting services and with limited use of internal resources, additional services should be available to those suppliers who want to deploy punch-out (internet catalogs) connectivity, integrate with internal order management systems, rationalize their catalogs or enhance them with information such as UNSPSC classification, HAZCHEM data sheets, parametric details or images.

Ketera is the fastest-growing provider of an on-demand spend management platform, providing companies with the solutions needed to control and reduce corporate spending. Ketera's closed-loop spend management platform includes solutions for spend analysis, sourcing, contract management, procurement, supplier enablement & content management, supplier performance management, and invoice management. Ketera has developed, according to industry analysts, one of the most compelling solutions for supplier enablement. There are four key components of Ketera's supplier enablement capabilities:

• Ketera Supplier Content Management:
  Ketera Supplier Content Management (KSCM) is an on demand solution that streamlines the content/catalog development and update process. It is designed to allow suppliers to easily upload catalogs in MS Excel template, validate and manage catalogs and related content. It allows multi-party workflows that bring together suppliers, buyers and external service providers to manage catalog content. The catalog, once created in KSCM and upon being approved, is immediately available within Ketera's eProcurement solution. As a result, organizations can increase the number of suppliers that are online and ensure that the suppliers already on-line always have their catalogs and content current. Hence KSCM plays a significant role in accelerating supplier enablement.

• Supplier Enablement for other eProcurement systems:
  The catalog created by KSCM can also be used by other eProcurement systems. In fact, the ease of use of KSCM, the ability to create and maintain catalogs using Excel templates and smart workflow to validate, review, approve and upload a catalog has made it a very compelling solution for supplier enablement for Ariba and SAP SRM environments at multiple companies. Customers can drive and manage their eProcurement process using their Ariba or SAP SRM system, but use Ketera to create and manage their catalogs and accelerate supplier enablement.
   
• Support for various catalog management and hosting alternatives:
  The catalog once created by Ketera can be hosted in a number of ways:
   
  • Managed and hosted by Ketera for use with Ketera eProcurement
     
  • Managed and hosted by Ketera for use with other eProcurement systems such as Ariba, SAP SRM etc. In this case, the catalog is treated as a 'punch out' by these systems
     
  • Managed by Ketera and hosted by customer in conjunction with their eProcurement systems such as Ariba, SAP SRM etc.
     
• Supplier Portal:
  Once the supplier catalog is enabled and active on the eProcurement system, the supplier portal enables suppliers to receive / acknowledge orders and electronically invoice their customers and streamline the day-to-day collaboration and communication between an organization and its suppliers.

One of the biggest reasons for failed spend management deployment is an inability to bring suppliers on-board quickly and in a timely fashion. A solution that enables quick supplier enablement by allowing smaller suppliers to easily create, manage, approve and upload catalogs themselves would address this issue head on. Ketera addresses this issue with its content and catalog management capabilities for its own eProcurement solution and is increasingly used by even Ariba and SAP SRM eProcurement customers for quick supplier enablement.
 

 

For more information on Ketera's Spend Analysis or Ketera's family of solutions for managing and streamlining corporate procurement processes, visit us at www.ketera.com