The typical purchasing process involves the creation of a purchase requisition by whomever needs to buy something; this is used by the purchasing staff to search for the lowest price offered by a supplier, at which point a purchase order is issued to the appropriate supplier. The accounting department then has to match the receiving documentation to the purchase order and supplier invoice before generating a payment. This cumbersome process is being dismantled in many instances through the use of an on-line purchasing catalog.
When a user buys through an on-line catalog, she scrolls through a list of standard products that have been compiled by the purchasing staff, and selects the appropriate item. This automatically places an order on an electronic purchase order, on which is noted the number of the blanket purchase order that has already been negotiated with the supplier from whom the item is being bought. The computer system then sends either an electronic or paper-based order to the supplier, who fills the order. Upon receipt, the receiving department checks off the item in the on-line system, which flags the accounting system to make a payment to the supplier.
This on-line catalog approach has the exceptional benefit of enormously reducing the work load of the purchasing and accounting staffs, to the point where they are simply monitoring the flow of transactions, rather than directly creating them. It also channels the flow of purchases through a small set of pre-approved suppliers, so there is little chance that a new supplier will be foisted upon the purchasing staff by an employee. However, there are also downsides to this approach. The required software is a major programming project that will be quite expensive to create. Also, the time required to set up blanket purchase orders with a number of suppliers will be very time-consuming, requiring a long lead time to complete the project. Finally, it cannot be used for inventory purchases, since these are driven by production requirements rather than employee needs. Nonetheless, a large corporation can experience a dramatic decline in the amount of manual procurement transactions by implementing an on-line purchasing catalog.