Should catalog management be outsourced?
www.tpnregister.com
By Mark Brunelli -- Purchasing, 1/13/2000
Companies that choose to implement a buy-side electronic procurement system are faced with a choice when it comes to managing the content of their internal supplier catalogs: To outsource or not to outsource?In general, major buy-side e-procurement solutions being sold and implemented today do not offer catalog management services as part of the basic deal. E-commerce providers give businesses the technical ability to purchase from internal supplier catalogs, but keeping those catalogs accurate and up-to-date is another task altogether.
Some things firms consider when deciding whether to outsource catalog content management include the level of information technology talent they have, the availability of that talent, and the total cost of having to restructure operations to provide for ongoing catalog management. Those considerations are then weighed with the total cost of contracting with a service provider that has a proven track record of effective online catalog management.
TPN Register LLC is one such company that provides content-management services as well as an Internet-based marketplace for buyers and sellers of non-production supplies. The company uses the supplier classification data of one of its parent companies, Thomas Publishing, which produces the Thomas Register of American Manufacturers, a longtime favorite among industrial buyers. TPN's other parent company is GE Information Services.
The foundation of TPN Register's TPN Marketplace service is contract management capabilities that enable each buying organization to access a virtual private catalog that can be customized down to the individual desktop, says Terry Welty, the company's vice president of marketing.
The cost of implementing TPN Register's catalog management service varies, depending on size of the company, number of users, number of line items within the catalog, and number of suppliers used. Welty says the average cost for a large Fortune 500 company is in the range of $200,000 to $300,000 a year, although the company has implemented systems for as much as $500,000 a year.
Thus far, says Welty, TPN Register has partnered with Oracle Corporation, Ariba Inc., Clarus Corporation, Intermat Inc. and EC Cubed Inc. to provide companies with comprehensive procure-to-pay capabilities and content management.
Some members of the TPN Marketplace include Seagate Technology, General Electric, Boeing, 3M, Harley Davidson, and the University of Pennsylvania as well as a broad base of suppliers.
Kathy Van Keulen, procurement specialist at 3M, says TPN Register Buyer Services electronic catalog and the Procurement Mastercard were implemented to help simplify buying processes and minimize costs. She says that currently, there are more than 1,600 users within 3M who use the new process for making routine, low-value purchases of frequently used items such as office, lab and maintenance supplies.
"The transition from our legacy systems to this leading-edge technology has been a challenge for 3M," says Van Keulen. "As the buyers become comfortable with this new technology and the functionality provided by TPN Register Buyer Services, they are finding it to be an efficient point-and-click method for ordering supplies needed on a daily basis."
TPN Register claims it can reduce non-production costs up to 15% by eliminating maverick spending outside of negotiated contracts, increasing goods purchased under contract to ramp up negotiation power for future contracts, and reducing rework caused by errors during processing. The company also provides users with strategic information relating to corporate buying trends and practices, enhancing their ability to manage vendors, contracts and resources.
Other features of TPN Register's service include real-time catalog updates when a supplier changes a base price or adds a new product, multiple contract management that is entirely online, buyer-specific product and pricing information, and strategic sourcing tools for seeking out new suppliers or making "spot" buys. In addition, buyer management has the ability to review and approve all contracts and catalog content online before making it available to other users in the organization.
TPN Register says that on the supply side, companies can instantly add new products to buyers' internal catalogs by setting up "virtual private catalogs" for existing customers with contracts and by displaying them in a broader sourcing environment to attract spot buys and new business.
"The buyers' favorite features are the ability to create and save shopping carts, quickly update item quantities, create orders to multiple suppliers, and specify 'ship to' information by order," says Van Keulen. "Use of the TPN Register Buyer Services electronic catalog at 3M is steadily increasing, as the buyers complete the transition to the new technology and tools."
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