Minding the Internal Store – Catalog Practice
If you have been around procurement long enough, you know the catalog’s role for buying from external suppliers. I have discussed in past blogs how the catalog is used in most companies for employees to buy from contracted and approved suppliers. The catalog drives the source determination. But, what if the source is internal stock? What visibility can we give employees to reduce the incidence of buying externally when the product is available internal? For one customer in particular, the catalog gave users the internal visibility to minimize inventories in their internal stores.
Remember that employees “just want their stuff”. Their first instinct when purchasing is to go to the catalog to form the purchase request. This often kicks off a procure-to-pay process where an order will go out to a supplier, the product will be shipped, the employee will receive the item, and then the company will pay based on an invoice. If we want to base our internal use case on an already familiar use case, then the employee should be made aware of internal opportunities to procure a product in the catalog. Thus, companies can divert the user to use the internal stock where available.
Our model company uses product attributes to identify products that are available in internal stores. Here’s how it works. The user performs a keyword search (a cross-catalog search) for the product they need to buy. When the search results contain an item from the internal store, the search results will display a badge and filtering option so that the user can filter on the internal items and display only those products flagged as internal (see screen shot). The user selects the item from the internal store and adds the item to their purchase request. The item is set up with an internal supplier so the order goes to the appropriate contact for that store.
The catalog maintenance is minor. This company in particular wants to display the quantity available to users in the catalog. So when a product moves, the quantity available is updated through a catalog update process (ie: supplier-managed catalog content) to reflect the change in inventory.
Just like the external use case to steer users toward the company’s procurement objectives, the internal store in the catalog is a clever design to reduce internal inventories and save on the number of purchase orders that go outside the company. Taking this to another level, I have seen where companies have created a “virtual inventory” using the internal store practice. As employees buy in excess because of lot/package sizes, the excess can be carried over to the internal store for others.