Though global supply chains keep becoming more complex, procurement processes today are much more smooth if appropriately handled. The reason behind this increasingly streamlined operation is the incorporation of technology into procurement. The solutions that have resulted due to this integration are powerful indeed.
From automated approval systems to real-time data display, B2B procurement processes are now fast-tracked, centrally hosted, and efficient. One immensely useful development in this regard is Punchout systems, especially by one of the largest marketplaces in the world: Amazon.
In this article, we’ll take you through the nuances of Amazon Punchout, the advantages it unlocks, and its integration with your Kissflow Procurement Cloud. Let’s go:
What is Amazon Punchout?
In procurement terminology, Punchout refers to the process where you can shop from a vendor’s e-commerce marketplace or website from within your own e-procurement application. It essentially integrates the e-procurement system with the purchasing platform so that the purchasing, approval, and tracking processes commence on one platform without breaking.
The Amazon Punchout system enables users from a registered business to purchase business supplies from Amazon on behalf of that business through their own purchasing system. Consequently, authorized employees can buy products that are not covered through contracts from Amazon on behalf of their organization, and the orders are routed directly through their e-procurement solution’s approval workflow.
How It Works
The process, in essence, is straightforward.
First, an authorized user of an Amazon-registered business opens their eProcurement system and opens Amazon.com through it (we’ll explain how that works in Kissflow Procurement Cloud below). Then, they’re taken to Amazon, and they shop for the company’s supplies just as they normally would use Amazon.
As they check out, the process does not end immediately with a payment. Instead, the details of the cart are sent automatically in the form of a Purchase Requisition (PR) to the pre-set approver. The order is only completed after the approver approves it through the eProcurement system. Purchase Orders (POs) are then generated automatically, stored on the procurement system, and sent to the vendor through Amazon too.
Note that every authorized worker purchases through their own Amazon business account instead of a central company account. This provides visibility into who raised which Purchase Requisition.
Other than setting users, businesses can also create parameters for default values, like cost tolerance and payment methods. All this streamlines and centralizes the purchasing process and grants more control to the organization.
Differences Between Item Catalog and Punchout Catalog
Whereas Punchouts take the user to a supplier website, item catalogs in an eProcurement system simply consist of the types, quantities, and sources of items a business approves for purchase. These let businesses track the items they’ve allowed the purchase of, and employees know that they’re purchasing the correct items.
In Punchout catalogs, the user has to compare quotes on the online marketplace or vendor website by themselves. However, item catalogs only store the items that the business has approved. So, here, the purchasing process becomes simple for the employee. However, they have limited choices and rely heavily on the manager or vendor to update information on time.
Businesses need to create and update their item catalogs, and they can do so individually for every supplier or department. On the other hand, Punchout systems require no maintenance on the buying organization’s part and are simply updated alongside the website hosting them.
Do You Need Both?
Although item and Punchout catalogs can appear as alternative solutions to control the procurement operation, you can use both together to enhance it.
Item catalogs can tell employees what to purchase for the products for which vendors have been consolidated. On the other hand, Punchout systems can enable employees to make non-contracted purchases. And given that both of these are hosted on one eProcurement system, they facilitate the centralization of all procurement-related activities.
By combining item and Punchout catalogs, organizations can exercise greater control while deploying enhanced flexibility over their procurement processes. Here, access to item catalogs ensures that employees do not have to wait for PO approval just to find out their purchase was not allowed. And a punchout system lets them compare quotes, find real-time product information, etc., to ensure more efficient purchasing behavior. This results in greater time and cost savings.
Benefits of Purchasing Through Amazon Punchout
Amazon Punchout makes the procurement process straightforward, seamlessly integrating Amazon with the business’s approval routing processes and PO generation. Some significant advantages include:
1. Reduced Responsibility, Enhanced Accuracy
Amazon Punchout catalogs fetch real-time Amazon data. So, unlike item catalogs that your firm will have to maintain and update themselves or wait for the suppliers to maintain and update, Amazon Punchout catalogs do not require any effort on your part.
This unlocks multiple advantages for your firm. For example, you will not have to waste resources on menial, manual updating work. Alongside, the data and pricing will be accurate as it is fetched in real-time, so you can benefit from sales and discounts by identifying them timely. Additionally, the data on the catalog or PRs and POs won’t be prone to human error made on your part when duplicating item information.
2. Better Visibility, Increased Savings
Without Amazon Punchout, an employee would simply use the company’s central account to make a purchase, rendering no visibility on who raised the PR. To find out about the PR and its approval process, you’d have to go through a separate system that hosts information about your approval workflow. Even if your procurement process is manual, your procurement function will be obscure, leading to dark spending and rogue purchasing.
On the other hand, Amazon Punchout offers a smooth, seamless experience where employees use their own Amazon Business accounts and access Amazon’s catalog through their eProcurement system. This centralized process is visible throughout, and since you set the approvers beforehand through Amazon, you can be assured that all purchases go through them.
In this way, Amazon Punchout ensures that the procurement process stays visible. Consequently, you generate savings by reducing errors and eliminating the possibility of unauthorized actions.
3. Centralized Procurement, More Time Savings
In non-Punchout systems, employees have to go back and forth between PRs, approval processes, default order configurations, the list of authorized vendors, and multiple software platforms. This costs them time. The same is true for managers who may have to track order histories, etc.
One of the most significant benefits of an Amazon Punchout system is the centralized, streamlined experience it offers. This makes both the ordering and management process straightforward. As a result, you and your employees both reduce the time you have to put in. Additionally, retrieving past data and analyzing procurement operations becomes much more straightforward, enabling even more time savings.
How Kissflow Procurement Cloud + Amazon Punchout integration works
Maximize the efficiency of your procurement process by integrating Kissflow Procurement Cloud with Amazon. Here’s how it goes:
How to Connect Kissflow and Amazon Punchout
On your verified Amazon Business account, go to Manage Your Business.
Select ‘Register Your Purchasing System’
You’ll be redirected to a screen to enter primary contact data and information about your purchasing system.
Select Kissflow Procurement Cloud from the Purchasing System dropdown. In the unlikely case that you do not see the option, Select ‘Tell us which system you use, and we will contact you.’ More details on that are here.
Your registration is complete! You can send a summary of the configuration settings to yourself or your company’s technical administrator.
Your system will be in Test mode initially – any requisitions you raise or orders you place will not go through to the vendors. This option lets you ensure that your integration is working properly.
After you have made sure everything is in order, you can change your status from Test to Active mode through your Amazon settings. Note that you can not go back to Test mode.
You, as an administrator, can add users by going to the Manage Your Business page and selecting Add User. Otherwise, Amazon will recognize the user through their email address and invite them to create a Business account when they attempt to purchase through the Punchout system.
How the Integration Works
Once your Amazon Punchout is integrated with your Kissflow Procurement Cloud, your users will have the option to purchase through the hosted catalog, non-hosted catalog, and Amazon Punchout.
As they open their KPC platform to raise a PR, they will need to choose Amazon Punchout from the option. This will redirect them to the Amazon Business Account. There, your users will be able to browse just as they normally would on Amazon.
As users select the items they want to purchase and enter the address details, their PR is automatically filled up through details fetched from Amazon. Once they submit the requisition, the system routes the PR to the approval manager.
If the manager approves, the PR gets converted to a PO which is stored in your KPC account with Amazon’s transaction ID and the Amazon Business account, from where it gets sent to the vendor. The payment occurs through the credit card on the PO stage, and with it, the process gets concluded.
That’s it! No other steps. Your purchase is over, you have full visibility over it, and it all happened on one platform.
Facilities like Amazon Punchout will continue to revolutionize the world of eProcurement. If you haven’t yet digitized your procurement operations with robust software like Kissflow Procurement Cloud, you will lose to firms leveraging it to enhance their efficiency and benefit from time and cost savings. Book a free demo with us now and take your procurement to the next level.