By now, regular readers of e-procurement blogs will have noticed the “phrase-war” between Tim Minahan of Supply Excellence and Jason Busch of Spend Matters. A quick summary can be found in a recent blog entry from Procurement Central, Dave Stephens’ Blog.
In an attempt to qualify the “laugh factor”, Dave took an interesting approach and graphed the number of recent searches for “purchasing”, “procurement”, “supply management”, and “spend management” using Google Trends. The trends indicated that “supply management” is much more common then “spend management”, but nowhere near as common as “procurement” or “purchasing”, the leader.
But the buck doesn’t stop here. Just for the heck of it, I decided to take the opposite approach to determine the relative popularity of the terms. A Google search for “supply management” yields approximately 3,990,000 pages – not bad, but barely half of the number of pages yielded for “spend management”, which chimes in at roughly 7,530,000 pages at the time I ran my searches. Of course, neither competed with “procurement” at about 216,000,000 pages or “purchasing” at a whopping 374,000,000 million pages!
So which is it? Supply Management is the more popular search term but Spend Management appears to be in more common use, according to the considerable page count disparity.
I’m going to chime in and say both! Then I’m going to stir up the debate even more and say neither! And I’ll probably be correct in both counts.
Why? Well, let’s review the main points and counter points (and apologize in advance for dropping a lot of the context, but you can always refer back to the full posts on their blogs at your leisure).
Tim Minahan defines these terms as follows:
“Supply management is a strategic discipline focused on optimizing the TCO of external and global supply relationships.”
“Spend management is a marketing campaign (albeit a brilliant one) focused on improving internal operations and reducing spend.”
Jason counters that:
“Spend Management is something bigger. It’s about turning a function into a mindset. It’s about transforming business process into economics. And it’s about changing companies and business worldwide, not just purchasing.”
Tim responds that:
Supply Management is more “strategic” with its focus on “assuring supply and mitigating risks” and that “Spend Management’s myopic focus on reducing spend not only overlooks the vital importance (i.e., cost and value) of supplier performance, but it can also expose enterprises to undo risks.”
… and they are both right! But they both miss the point by (over) valuing one over the other. Both terms are relatively common. Both address key points in a supply chain strategy. But neither gives you the whole picture.
Strategic (e-)Sourcing isn’t about supply, or spend – it’s about value. Good strategic (e-)Sourcing focuses on Total Value Management – the right products at the right time at the right price – every time – guaranteed. This requires an equal focus on spend management, to control costs and improve operations, and supply management, to mitigate risks and ensure supply. Both have an important role to play – they are two sides of the same coin – the TVM coin.
That’s my 3 cents. Time to put on my welding goggles and step back.