Punchout: What is cXML?
When you send someone an invoice, or a purchase order, you’re using certain conventions to communicate exactly what you want. If it’s an invoice, for example, both you and the recipient will understand that:
- It has a date, so you both know when it was made
- It has a due date, so you can set the expectation of being paid
- It has your bank details, so the recipient knows how to pay you
- It has one or more items so the recipient knows exactly what it’s about
The point is that it’s a way of communicating your request where both sides agree on what each part of it means. You don’t need to include a letter explaining that “the due date is when I’d like you to pay the money by”, or “to use those bank details, key them in to your online banking system and…” – people understand what those things mean. It’s a “standard”, a way of communicating in business, to make sure things are understood without you having to explain it in detail to every new customer or supplier.
In technology, a similar thing happens. For example, when you plug your USB mouse into a computer, the two manufacturers agreed on what information would be sent between them. If they didn’t, the mouse might send “I am being moved up with the left button pressed” and the computer might decide it means “move the pointer to the right”! It’s a standard, just the same as there’s a standard way of writing POs and invoices. In the technology world, however, these “standards” are actually written down in fine detail and agreed, because they can be pretty complex.
After you’ve manually keyed in 73 invoices, you might stop to think “why can’t my computer read them automatically?” Those POs and invoices may all contain similar information, but it needs a human being to interpret. For example, is the date in “dd/mm/yy” or “mm/dd/yy” format? Are the decimal points represented by dots or commas? Is the left hand column the quantity or the product code? Without a clear structure, it would be hard for a computer to interpret.
cXML combines these ideas. It’s a “standard” way of writing POs and invoices, but is so specific and clearly defined that software is able to clearly identify which part is the shipping address, which part is the payment info, the delivery date, the product code and so on.
So far so good, but the whole point of a standard like this is so that TWO parties can communicate clearly! So both the sender and receiver need software which understands how to use cXML. In fact, the real benefits happen if a company can deal with multiple suppliers or customers whose software can work with cXML, because then you can really start to automate the buying process!
SAP Ariba, who create software for large corporations to help automate their businesses, needed to make it easy for their customers to trade with each other and with suppliers. They created “Ariba Network”, a marketplace where these large corporations could connect with all their suppliers. A new supplier would sign up to Ariba Network, receive purchase orders via email, and could log in to a web page to submit invoices.
Suppliers could then go one better. At the heart of this network, all the information moves around as cXML, so if a supplier uses software like “Punchout Hub”, their system can understand the cXML, and they can receive POs and send invoices without any manual re-keying of data.
That’s great, but the buyer at the large corporation might put rubbish on the PO, and that rubbish will then be automatically sent into the supplier’s system, meaning we still need an eagle-eyed person looking at every order!
That’s where the “Punchout” technique comes in. The staff at the large corporation can automatically be logged in to the supplier’s website, see stock levels, choose items, then turn that into a purchase order which gets approved on their side, then sent to the supplier – all using cXML.
That helps everyone – the supplier knows that the purchase order contains only correct information, the buyer is able to easily and quickly choose their products, and that order could be sent straight to the warehouse without anyone having to look at it.
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