Consumer Buying For Business? Beware The Back End

Chris Rauen

In the world of e-commerce, the ease with which consumers make purchases is spreading to the workplace. That can be a good thing, or a disaster.

That’s because buying for business is not at all like buying as a consumer. In business, the scope of spending is many times greater than what we buy for our personal lives. Purchases can be complex, involving a combination of goods and services and hundreds of line items. Or they can involve one-off or occasional purchases from non-contracted suppliers. For an organization doing business with global suppliers, the purchase of the wrong product or service from an improperly vetted supplier can negatively impact business operations, leading to fines or blemishes on a company’s reputation.

To make a consumer buying experience practical for business, attention to procure-to-pay best practices can’t be ignored. As you look to simplify the way you buy goods and services across your enterprise, here are four key capabilities that you’ll need for reliable back-end processing.

Extend the reach of traditional catalog purchases (involving internal electronic catalogs or punchout to a supplier site) to a marketplace featuring thousands of suppliers and tens of millions of items. Consider the purchase of conference room and studio parts, equipment, and repair tools. At CA Technologies, this had been a challenge. With no catalogs for these items, it was difficult to find sources of supply and, when products were found, they were often not suited to the business need.

Employees at CA Technologies are using a marketplace to find these items within budget, and the system can generate a purchase order (PO) within minutes of a product search. “It has saved a lot of time and money, and the ease of the process has been a big help to our mission of improving the user experience,” said Jim Lasher, IT director, CA Technologies.

Ensure proper controls over everyday pack-and-ship items, even for tail spend. Most consumer e-commerce sites can’t provide the controls you need for business. Without them, you can’t effectively manage your spending or maintain control over your supply chain. As you simplify the way your employees buy goods and services, make sure they don’t circumvent the policies and procedures that your procurement organization requires to effectively manage spending. This should extend to both PO and non-PO purchases, and for those one-off or occasional purchases from non-contracted suppliers, also known as tail spend.

Accommodate complex orders that may involve build-to-order or configurable goods and services. While these purchases are often handled by seasoned buyers and procurement experts, new techniques for “guided buying” are masking the complexity of managing these purchases. More often, that means even casual buyers can handle them. You’ll need to assess the capabilities and scope of your guided buying solution and define what types of complex purchases a casual user could handle.

Include a process for vetting suppliers to meet your compliance standards. You can’t compromise supplier vetting as you roll out a consumer-like buying experience across your enterprise. Make sure your newly improved, consumer-like procurement front-end can:

  • Qualify suppliers to ensure that they offer the breadth of coverage in your preferred business categories, can map their items to UNSPSC commodity classifications, and adhere to published ethical standards
  • Effectively monitor your supply base for comprehensive risk assessment
  • Accommodate custom vetted suppliers so you can meet your specific business requirements

Done right, improving the purchasing experience so that casual users can buy like a procurement professional also presents an opportunity to rationalize your supply base and strengthen your supply chain. Now you can also:

  • Consolidate spending for better pricing
  • Eliminate redundant and low value-add suppliers

Finally, when you can combine a consumer-like user interface with a business network connecting millions of global buyers and suppliers, you can improve collaboration, streamline transaction processing, extend the reach of e-commerce, and support a broader digital transformation initiative.

Today, you can make purchasing for business as simple as it is for consumers; just don’t ignore the back-end requirements.

Realize fast time to value with e-procurement and supply chain cloud solutions from SAP Ariba that are always on and easy to deploy.

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Chris Rauen

About Chris Rauen

In his role at SAP Ariba, Chris Rauen educates procurement, finance, and shared services professionals on the business value of accounts payable automation, procure-to-pay transformation, and collaboration via business networks. Chris has addressed these topics at finance and shared services conferences, in articles for trade and business publications, and in blogs for online communities. Chris has more than 15 years of experience in e-payables, and holds a B.A. in Economics from the University of California, Santa Barbara.