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eProcurement & Procure-to-Pay Resources

A Hidden Cost of PunchOuts: Upsells

Posted by BuyerQuest on July 19, 2017 at 10:30 AM

Many procurement executives know that the use of punchouts as part of the buying process presents a risky proposition. If you are a regular reader to the BuyerQuest blog, you've read about eProcurement and the role of PunchOut Sites Parts 1 and 2, and learned that suppliers embrace punchout sites for a variety of reasons including data mining, market improvements, and a captive audience.

Procurement professionals know that once their requisitioner leaves the corporate purchasing application, the procurement organization's control reduces significantly. They expect that their buyer will see items that are under contract and the purchasing process will continue as expected. Unfortunately, we are hearing more often that this is not the case.

Consider a B2C online experience. Visitors to Amazon or some other retailer's site searching for a product often see a "recommendation" for a different product or products that others have purchased during a similar search. That capability is at the core of most modern B2C sites, provides a useful feature for consumers, and often can be a revenue generator for the retailer. In the B2B environment, that type of intelligence can create a challenge for procurement.

The B2B environment is different. Procurement has worked closely with their suppliers to negotiate certain rates for certain categories. As we've discussed previously, limitations with eProcurement systems born from ERP often requires the use of a punchout that the supplier is happy to provide. Requisitioners preparing to make a purchase in that category punch out to the vendor's site. That buyer sees the negotiated product, but the vendor sites also presents another product with which the buyer is more familiar. As a result they buy the product they know instead. That product may not be part of the negotiated rates and result in a higher cost for the business. While the price difference may be nominal, with thousands of employees making purchases every day, those small differences quickly become a measurable increase in costs.

Some procurement organizations have enough leverage with their suppliers to mitigate this risk, but others may not realize this happens until they start to receive invoices.

Punchouts take control away from the procurement organization and should be avoided. Procure-to-Pay technologies like BuyerQuest eliminate the need for punchouts and ensure that control of the corporate purchasing process rests in the hands of the procurement organization and their ability to deliver the best products at the best rates for their business.

With BuyerQuest Marketplace, requisitioners do not punch out. Users search and compare products across suppliers within the BuyerQuest Marketplace, seeing only those items that have been approved for purchasing. As a result, the procurement organization can bring more spend under control, and ensure compliance with contracts.

To learn more about BuyerQuest Marketplace, visit the Marketplace page of BuyerQuest.com.

Topics: Next Gen eProcurement, Marketplace, e-Procurement, BuyerQuest

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