Electronic catalogs are coming and processing costs will disappear. Well, maybe not quite yet, but most sourcing professionals would agree there are substantial changes coming in the future with how indirect purchases are made. Electronic catalogs are available today at many supplier web sites and internal purchasing catalogs are evolving. Eventually small and large businesses will be using the Internet as a medium to place a substantial portion of their Indirect orders.

Business to business purchasing over the Internet is, and has been, a hot topic of conversation, with much promise for the future. The problem is the solution always seems to be next year, the promised day keeps slipping away from us. I say do not wait any longer, make an impact on how you do business today! While most of us would love to make major systematic changes to how we do business today, I suggest there are incremental changes we can make now while we wait for technology and industry standards. We will eventually catch the "future" and realize an even greater impact, but in the meantime we can examine our current business policies and make some simple changes now.

Today with a robust Purchasing Card program you can take advantage of the ease of access over the Internet and realize immediate return. These will be smaller improvements than fully implemented electronic catalogs, but they will show substantial return for the effort involved with implementation. I would also suggest if your business is not a Fortune 1000 company, these tools are of even greater significance since smaller businesses are less likely to see integrated catalog benefits.

It is not a matter of if larger businesses will have their own internal catalogs, just when. These on-line catalogs will allow employees to search, find and place orders for items/services. The catalogs will display pricing and terms which sourcing has pre-negotiated. Sourcing will not be involved with the placement of the orders, but instead, will work on ensuring supplier contracts return the most benefit to their business. These internal catalogs will integrate into existing purchasing systems, allowing orders to be placed seamlessly. Purchase orders will be placed out of the existing system; allowing for more accurate historical purchasing data to be captured for use during negotiations with suppliers. Standards for catalogs, who will maintain the data, and transactional costs associated with such systems are slowing their implementations. They will happen, but no one knows how much longer it will be for the delivery of fully functional, integrated systems.

A shorter term solution is to utilize supplier web sites to place orders and use Purchasing Cards as the payment method. Sourcing can create links on their internal web page to preferred supplier’s web catalogs. This will assist in funneling the purchases to preferred suppliers, who can build storefronts specifically for your company with sign-on identification and passwords to control access. The funneling affect assists Sourcing with other efforts, such as standardizing company purchases for specific commodities. For your larger suppliers, you can require periodic summary billing to help analyze your purchases. The requesters can simply utilize the supplier’s catalog to find what they need and place their orders using their Purchasing Card. This process maximizes the traditional benefits of the Purchasing Card while easing the search and order placement process for the requester. It is out there available for use today and can return benefits quickly.

Businesses with robust Purchasing Card programs are in the best position to take advantage of this today. They simply need to extend their existing business rules to allow their employees to make purchases over the Internet. Smaller businesses with Purchasing Cards are in a very good position to take advantage of the convenience and competitiveness out there today. Their ability to change quickly is an advantage over larger businesses. Larger businesses can also take advantage of this process, but they have more work involved with educating the workforce on new procedures. This process also can be used to start a cultural change that will be needed later for the acceptance of electronic catalogs.

Businesses without robust Purchasing Card programs should review their existing programs and determine what improvements are needed to ramp up. Front-end control needs to be replaced by responsible use by the cardholders. Those who choose to not be responsible with their cards need to be held accountable for their actions. Often the company auditing procedures for Purchasing Cards are lacking, making this difficult. Purchasing Card providers offer reporting tools and, with some simple spreadsheet work, the auditing concerns can be easily addressed.

There are three main benefits to utilizing Purchasing Cards over the Internet. The first is that the purchasing data allows you to leverage your negotiating position with suppliers. Having the knowledge of what you buy for Indirect materials and services is a distinct advantage. Far too often these purchases by pass Sourcing and most volume discounts and other advantageous terms are lost. This knowledge will also enhance your ability to implement an internal catalog when the time comes.

The Purchasing Card usage also eases the low dollar orders being placed on your purchasing system. The ability of Sourcing to add any value to these individual purchases is minimal. The value add comes when negotiating the sum of all of those individual orders. This allows cost to be driven out of the individual purchases as well as the overhead involved with placing the orders.

The most important, benefit may be getting the requesters what they need as quickly as possible. In the traditional Material Requisition manner of placing orders, the requester does all the work up front and then provides the information to Purchasing to place the order. Utilizing the Purchasing Card allows the requester to place the order immediately. The Internet is a great tool for accessing vast amounts of information very quickly. This also allows requesters to speed up the process of finding what they need. Allowing them to place the order immediately assists in further speeding up the process. Businesses with multiple locations and field offices can realize these benefits even faster.

You can deliver business benefits today without much effort or resource. Utilizing Purchasing Cards is relatively easy and can deliver results. The electronic catalogs continue to be hindered by the lack of industry standards for the catalog data. The large software providers of enterprise wide systems are all promising electronic catalogs, but most likely your next upgrade or implementation will not fully deliver your needs in this area. Not having the electronic catalog available at the time of your upgrade will cause you to revalidate resource for a future implementation and also determine the feasibility of installing an electronic catalog after the fact.

Another immediate reality of electronic catalog implementations is the lack of available technology resources. Enterprise system implementations and year 2000 issues are draining available resources and will continue to do so for at least the next 18 months.

I believe there are many benefits to both internal and external electronic catalogs. Fully functional internal catalogs are a couple of years away from reality, but through the use of Purchasing Cards and the Internet, businesses can realize many benefits today. The industry is changing rapidly and businesses need to keep abreast of the changes. You cannot afford to lose sight of what is happening in the industry, but while this industry struggles through its infancy, DO SOMETHING!