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=Procurement PunchOut=

Procurement PunchOut is a term which defines the electronic communication protocol between a vendor's web storefront and a buyer's procurement application. The buyer leaves ("punches out") their company's system and goes to the supplier's web-based catalog to locate and and add items to their shopping cart, while their application transparently maintains connection with the web site and gathers pertinent information. A vendor catalog that is enhanced for this process is known as a punchout catalog. PunchOut enables communication between the software and the web site so that relevant information about the transaction is delivered to the appropriate channels. Sometimes, buyers and suppliers use intermediaries to ensure authentication and version matching. In 1999, Ariba created the first framework for this software. Their product on commerce XML (cXML), is comprised of a meta markup language and a protocol for data exchange between applications. RoundTrip, Commerce One, Oracle Exchange, and products based on open buying over the internet (OBI) are similar to PunchOut, and are sometimes referred to as punchout solutions.

The History and Development of Supplier Catalog Management for eProcurement
While the buyer side of Procurement PunchOut has been fairly established for the past decade (in terms of eProcurement software), the supplier side has take a long time to develop, thus negating the potential cost savings available for buyers until recent years.

Early Stages
Hosting All Supplier Catalogs

Early in the lifecycle of e-procurement systems, the concept was to bring all of the procurement processes into a centralized location to gain control of many disparate processes. All of the bidding and soliciting processes were conducted on a central software system (i.e. Ariba). The suppliers who were awarded contracts supplied the buyer with their catalog which was loaded into the centralized catalog database and managed in-house. Buyers now had complete control over the buying process, but were also required to manage it all.

PunchOut for Large Catalogs

Buying organizations began implementing punchout catalogs with suppliers who had large or frequently changing catalogs, or products that needed to be configured. Early adopters were the large office products dealers, large industrial suppliers, chemical suppliers and computer supplies dealers. The first suppliers to use PunchOut were large suppliers because they were the only ones who could afford the integration costs.

Growth Stage
PunchOut as a Strategic Initiative

As buying organizations began to calculate the ROI that their eProcurement systems were supposed to provide, many realized that the amount they were spending on supporting the supplier catalogs was cannibalizing the cost-savings they were counting on. Procurement PunchOut became a strategic initiative in organizations looking to take the costs of managing catalogs off their books. Every dollar saved by removing the cost of catalog management was added directly to the bottom-line. Managers reported that they were seeing the financial results they were looking for.

Current Stage
Enterprise Procurement PunchOut

Once PunchOut was identified as a strategic benefit, what remained was a method for organizing, consolidating, and streamlining the PunchOut process. In response to this need, third party consultants created standardized platforms designed to provide the benefits of Procurement PunchOut without the disadvantages seen when every supplier creates its own PunchOut site.

By creating these standardized PunchOut sites, the supplier enablement landscape has opened up. Services like eContract-Compliance, and eCatalog-Compliance are now available. eContract-Compliance restricts buying behavior and enforces contract catalogs. Buyers can now also reduce the audits they conduct to verify contract compliance because eContract-Compliance ensures that the prices included in the Purchase Order are the ones that were negotiated when the contract was awarded.

Procurement PunchOut Process
1. The requester clicks a punchout link to the external catalog site. 2. The punchout from application sends the login request to the catalog site. 3. The punchout to application authenticates the requester or buyer. 4. The punchout from application redirects the requester’s or buyer’s browser to the catalog site. 5. The requester or buyer browses or searches for items on the external catalog site and completes shopping on the site. 6. Via the requester’s or buyer’s browser, the punchout to application returns the shopping cart with the items to the punchout from application. 7. The requester or buyer completes the checkout process for the items in the shopping cart, and the punchout from application processes the order.