Enterprise Procurement: Purchasing Integration and Automation for Buyers and Sellers Alike

A cube covered with word clouds in which Procurement is the most prominent word

When it comes to purchasing and procurement, distributors face an increasingly complex set of expectations from their customers. At the same time, distributors face their own procurement needs internally.

When it comes to purchasing and procurement, distributors face an increasingly complex set of expectations from their customers. Distributors are increasingly expected not just to provide the customer’s branded items, but to manage them. It requires an increasingly sophisticated set of integrated software capabilities, where the customer’s spend management it is automated between the distributor and the customer and where the customer has real-time visibility to its spend.

At the same time, distributors face their own procurement needs internally. Procurement needs to be managed in an automated, efficient way for the lowest operational costs. Spend needs to be tied back to sales orders and even individual line items to show the true profitability of a sale. There also remains the straightforward matter of procurement simply to have items in stock and/or and available for fulfillment.

Even when the distributor is meeting the needs, the needs evolve as technology and the sophistication of the customer, and the distributor itself, continues to grow. Both internally and for customer expectations, scaleable, extensible, integrated procurement eventually becomes a necessity.

EssentOne is the enterprise-grade, fully-integrated platform designed for the demanding needs of the enterprise distributor and enterprise customer, as well as smaller brands that continue to get more sophisticated in their digital requirements. Distributors and Customers alike are looking more and more for tighter, integrated relationships.

Enterprise Procurement for End Customers

The procurement needs of customers are ever-evolving, with increased procurement expectations in general across almost every marketplace, as well as on an individual customer basis where growing customers require increasingly sophisticated procurement and spend management tools. The tools are best employed when distributor systems and customer systems are integrated.

Cost Centers for Enterprise Procurement Integration

Cost Centers allow improve spend management by setting limits that can be automatically enforced and by improving visibility to procurement spend.

Cost Centers allow companies to assign individual budgets to individual buyers. This improves spend management by setting limits that can be automatically enforced and it improves visibility to procurement by providing a clear picture on what each individual spent and how much is left.

A common use for cost centers is for company stores, where the customer provides its buyers a budget to purchase uniforms, office supplies, promotional items, or any items from an ecommerce website that’s managed by the distributor.

At its simplest, the cost center can be used as a reporting tool: how much of an assigned budget has a purchaser spent and how much is left. It also can automatically enforce spend management rules.

A transaction that exceeds the amount remaining on the budget can be disallowed. Or the remaining cost center budget can be applied with the remaining balance paid another way. The automation provides for tighter control over procurement and spend, without constant manual oversite.

The distributor can also invoice against the customer’s cost centers. The result is that the customer spend is continually sourced from the correct budget, budgets are continually up to date and accurate, and the distributor has the assurance of an established pool of customer spend against which to bill.

PunchOut Websites for Procurement Integration

The customer eprocurement system is directly integrated with the distributor website.

PunchOut Integration connects a customer’s spend management or eprocurement system with a distributors ecommerce website.

A PunchOut website is like a standard ecommerce website but with the special ability to communicate directly with the eprocurement systems most often used by buyers. In other words, the customer eprocurement system is directly integrated with the distributor website.

As a result, customers can shop distributor websites from right within the customer’s own eprocurement system (such as Ariba, Oracle, or SAP, to name some of the popular ones). This way, extra activities for creating and submitting a purchasing requisition are added to the transaction so that purchases can gain approval before moving forward.

For the distributor, PunchOut integration typically represents a large opportunity because it creates a dedicated channel for the customer, typically a large customer, to buy. For the customer, it’s easier to buy; required spend management procedures are already built into the transactions because the customer is in fact working within its own spend management system.

Enterprise Procurement for Distributors

In addition to meeting the enterprise procurement needs of customers, often through integration with the customer systems, distributors face ever-evolving internal enterprise procurement needs themselves.

Consolidated POs for Enterprise Procurement

The Consolidated PO drastically reduces complication and error opportunities by reducing many purchase orders into one purchase order, and may also allow the distributor to take advantage of more quantity-based price breaks.

Consolidated Purchase Orders are used to streamline procurement when items for many sales orders are coming from a single supplier.

For example, an apparel distributor may have dozens, hundreds, or thousands of orders per day, all of which will be fulfilled via procurement from a single supplier. Rather than make dozens or more one-off purchase orders to send to the supplier, the distributor can consolidate the procurement into a single PO.

The Consolidated PO drastically reduces complication and error opportunities by reducing many purchase orders into one purchase order, and may also allow the distributor to take advantage of more quantity-based price breaks. Some distributors will allow their purchase orders to accumulate and then submit them as one consolidated purchase order at an ordering deadline each day.

Linked Purchase Orders for Enterprise Procurement

Linked Purchase Orders allow distributors to associate purchase orders with individual sales orders and individual line items for a clear picture of the cost of procurement and the overall cost of the sale.

Linked Purchase Orders contribute to automated Job Costing; since the PO is linked to the Sales Order, the cost of the Sales Order can be automatically calculated.

Replenishing Rules for Enterprise Procurement

Items that have fallen below the required level of inventory are shown together in Required Purchasing, putting procurement for inventory in a single pane of glass.

To stay in front of purchasing for inventory, EssentOne allows users to set automated rules for replenishing.

When inventory levels for select items fall below a certain amount, users can receive an alert to purchase more for inventory. This is especially useful in arrangements where a distributor has formally or informally promised an end customer that a certain amount of inventory will consistently be available.

In EssentOne, items that have fallen below the required level of inventory are shown together in Required Purchasing, putting procurement for inventory stocking in a single pane of glass where it’s easy to generate a purchase order for each individual item.

Summary: Entperise Procurement and Procurement Integration

Distributors increasingly need enterprise procurement tools not only to satisfy the evolving purchasing needs, but to satisfy the evolving purchasing needs and expectations of customers.

Distributors increasingly need enterprise procurement tools not only to satisfy their own evolving purchasing needs, but to satisfy the evolving purchasing needs and expectations of customers.

Customer-facing enterprise procurement usually involves integration, such as integrated cost centers that allot budget to the customer’s buyers with enforceable automated rules for how to address overages and tools to invoice against the cost centers. PunchOut websites, which makes a distributor website shoppable from within the end-customer’s procurement system, is more enterprise procurement involving systems integration.

Distributors must also meet their own internal enterprise procurement needs, such as with Consolidated Purchase Orders that a distributor to place items from many orders onto a single Purchase Order to a single supplier; Linked Purchase Orders that associate sales orders and line items with the cost of procurement; and replenishing rules that alert distributors when to re-stock products.

The tools are available in EssentOne, a fully-integrated business management system for enterprising companies who need a system that meets the evolving, sophisticated needs of procurement for buyers and sellers alike.

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