Business-to-business (B2B) procurement is a complex process. Buyers have to deal with internally approved products, brands, tech specs, contract catalogs, budgetary limitations, and approval processes, among other things. They must also complete all their purchases within their ERP or procurement system to ensure streamlined procurement and management. The standard e-procurement tool is usually a module within an ERP system or an add-on e-procurement application.
That’s where PunchOut comes in. It makes the e-commerce functionality of B2B sellers available from within the buyer’s procurement system. PunchOut is a solution that allows buyers to access the seller’s e-commerce website, browse and buy products from the approved PunchOut catalog, and do so without leaving their ERP or procurement systems.
Buyers can click a link within their procurement application to visit the supplier’s online store, where they can select and add products to their shopping cart. Instead of going through a standard e-commerce checkout, the buyer selects the PunchOut option, and the cart is returned to the procurement system.
This is possible because PunchOut integrations between the seller’s e-commerce platform and the buyer’s procurement system allow for seamless connection and data flow. PunchOut is now a prerequisite with large buyers, and they may even refuse to do business with sellers who do not provide this technology.
Let’s take a closer look at the Punchout Flow. The process involves several systems: the Procurement system, the Ecommerce system, and the Punchout gateway that connects and ensures data conversion using one of the popular protocols OCI or cXML.
Before Punchout can be used, the seller’s catalog needs to be transferred into the buyer’s procurement system. Here is how the purchase process works:
- The buyer searches for a suitable pre-approved supplier in their eProcurement platform.
- They choose a supplier and are immediately forwarded to the supplier’s ecommerce store.
- Authentication is handled automatically, and the buyer is logged into their account on the ecommerce store.
- The buyer chooses products for their cart as usual. The seller retains control of the ecommerce catalog and can present a custom product selection and personalized discounts to the buyer.
- Instead of checking out when the buyers have finished, they punch out to automatically transfer the shopping cart back into the eProcurement platform for finalizing the order.
- When the order is approved, a purchase order is created in the procurement system.
- Some merchants implement further integrations that allow the order to be transferred back to the Ecommerce store and order status updates communicated to the procurement system.
Using a Punchout Gateway can significantly reduce integration time, as it comes with prebuilt integrations for the most popular procurement and Ecommerce systems. The Punchout integration protocols are defined by two standards, OCI and cXML.
Despite prebuilt integrations and existing standards, merchants must be aware of the cost of establishing and operating each Punchout connection. Punchout gateway vendors price their services per connection, and configuration or even custom development may be required to connect a new buyer.
Therefore, it would make sense to offer Punchout integration only to large customers. Businesses that offer Punchout can maintain control over their inventory, get paid faster, and retain more customers.