Complete Guide to Catalog Management: How to Drive Contract Compliance Through Catalog Usage

As Senior Director of Product Evangelism at Vroozi, Mike Jud brings more than 15 years industry experience in sourcing and procure-to-pay solutions to our Complete Guide to Catalog Management:

Contracts are often depicted as the linchpin between Strategic Sourcing, the processes that generate value and competitive advantage for companies, and Operational Procurement, the execution phase where value is realized. Contract compliance is a top key performance indicator (KPI) for best-in-class procurement organizations because the greater the compliance, the higher the cost savings. Compliance is a best-in-class objective, but is contract compliance too narrowly focused?

Strategic Sourcing and contract creation are often multi-month processes that involve many resources. The associated cost is often reserved for important products and services, which optimize the company’s supply chain, increase competitive advantage, or mitigate downtime. However, there are other cost-appropriate ways that Procurement will influence spend in other categories and achieve the broad goals of right suppliers and cost savings.

The spend influenced by Procurement is often controlled systematically using methods like approved supplier lists or source lists, info-records (PIRs), quote awards, rate cards, supplier-category discounts, pricing for configurable items, and even 3rd party verified items. Often in a Procurement system, these methods need to be maintained in different places and by multiple people. Thus, we have seen in many companies that not all spend is under compliance, or out-of-date information leads to downstream fixes and possibly onerous invoice exception processes. Furthermore, the laborious task for employees to enter information leads to contracts left “in the drawer.” However, the multitudes of pricing arrangements, the fruits of strategic sourcing and managed spend, can be recorded and maintained centrally in the catalog with relative ease.

This central repository for the right price and right supplier (specific to each company) should be accessible from a variety of internal processes and systems to achieve compliance and realize value. Employees throughout the organization are working in a variety of systems in their daily routines such as Purchasing, Plant Maintenance, Project, Planning, Bidding, Contract, and Invoicing to name a few. To perform their jobs and comply with company rules and policies they are generating documents such as:

·         Requisitions

·         Purchase Orders

·         Projects

·         Work Orders

·         Blanket/Limit Items

·         Service Entry

·         Invoices

·         Contracts

·         RFx/Auction

In Procurement execution, catalog integration with all employee systems ensures that employees throughout the company are driving compliance across all spend categories regardless of the process.

Catalogs have come a long way to enable companies to run their processes and customize the user experience to the way the company does business. However, for the catalog to be effective, the data has to be there. Like a contract, compliance doesn’t happen if the contract is in the drawer. The tools to get product content, supplier information, and schemas have become easier to administer, and once set up, can often flow through a workflow as an exception process. Data can often be more integrated to the source systems that generate the data, such as contracts. In addition, the catalog can be administered by the supplier who knows their data and wants to promote their products and services to their customers.

I hope you find this post helpful and come away with some good insights. In my next post, I’ll be discussing 3 Key Ingredients for a Great Catalog Solution. Feel free to contact me (michael.jud@vroozi.com) if you have any questions or comments!