I have a confession to make. Whenever someone asks me what I do for a living, I invariably say I work for a publisher whose work centers around supply chains. Sometimes I throw in the words “corporate purchasing,” since everyone does a bit of purchasing in their daily lives, but the words “procurement” and “supply management” never cross my lips.
Why would I shamefully omit the name of the noble profession for which Spend Matters lives and breathes, you ask? Because no one ever has a clue what I’m talking about.
I’ve been working at Spend Matters for well over a year now, and I still don’t understand why this profession has such an identity crisis when it comes to deciding what to call itself. The industry association for this career calls itself the Institute for Supply Management (ISM), yet the publications for this field hang on to what, theoretically, should be old terms. At Spend Matters we use “procurement” as our default; other sites in our space call themselves Procurement Leaders, The Strategic Sourceror and My Purchasing Center, to name just a few.
How can all of these publications have so many terms for what seemingly should be the same functional area? Help me out, purchasing/procurement/supply management people. Let’s figure this out once and for all.
From Whence We Came
To gather some context, I turned to our own archives to bone up on the history of the purchasing profession. One of the earliest mentions of the field dates back to 1832, Sheena Smith wrote back in 2010, when inventor and mathematician Charles Babbage recommended that there be a "materials man" within manufacturing businesses, or someone who "selects, purchases, and delivers all articles required.”
The rise of the railroad industry during the Industrial Revolution later solidified the concept of a purchasing function. Manuals detailing the handling of railroad supplies specified the need for and role of a “purchasing agent,” and by the late 1880s companies began to recognize purchasing as a distinct corporate function supported by personnel with specialized experience.
Purchasers later formalized themselves in the U.S. by forming the National Association of Purchasing Agents in 1915, the goal of which was to share information and develop a network for the profession. I found this little nugget of historical wisdom in the January 2015 cover story of “Inside Supply Management,” a magazine published by the Institute for Supply Management, which, incidentally, is what the NAPA now calls itself.
What transpired over the last 100 years is what produced the poor, confused editor writing this today.
The Dawn of Supply Management
The 20th century was a good time for procurement. Through the World Wars and the rise of American manufacturing, companies began to recognize purchasing as a vital part of operations. Interest in the field grew as a profession grew accordingly. In 1933, only nine universities had purchasing programs. By 1945, forty-nine did.
Somewhere along the line, the word procurement started to creep into the business vernacular. It seems to have a slightly more strategic implication. Purchasing is a mechanical, back office activity; procuring is forward-thinking, value-focused undertaking that secures assets for the firm. Or, it refers to “the facilitation or provision of a prostitute or sex worker in the arrangement of a sex act with a customer.” Take your pick. (Thanks, Wikipedia!)
That all changed, however, with a 1983 article in the Harvard Business Review called “Purchasing Must Become Supply Management.” In the now landmark piece, Peter Kraljic, a director at McKinsey at the time, argued that worldwide environmental and economic changes would require purchasing departments to adapt their skills and take on a critical new role in the business.
“To ensure long-term availability of critical materials and components at competitive cost, a host of manufacturers will have to come to grips with the risks and complexities of global sourcing,” Kraljic wrote. “This calls for nothing less than a total change of perspective: from purchasing (an operating function) to supply management (a strategic one).”
In the years following Kraljic’s article, procurement started its transformation to the function as we know it today. And as the profession matured, the term “supply management” started to take hold, apparently, and in 2002, the industry association representing these professionals became the Institute for Supply Management.
“Our members were leaders in their companies, and they were clearly adding value beyond purchasing,” former ISM CEO Paul Novak told Inside Supply Management about the name change. “The term supply management reflected the spectrum of what procurement professionals now do on a regular basis.”
A Change Management Fiasco?
The sentiment of Novak’s statement above makes sense. I don’t need to review all of the reasons why procurement is a strategic asset to the business — we and other publications reinforce this point frequently. What I don’t understand is why the term “supply management,” which apparently captures this sentiment so well, never fully took hold.
I see this confusion constantly in the day to day of my job. When I look for procurement news to write our regular Afternoon Coffee feature, I sometimes run searches for variations on “supply management news.” The top results always point me to news about the Canadian dairy industry — not exactly what our readers are looking for. When I search for information about leaders in the industry, the number of different descriptions and job titles I find rivals the number of galaxies visible in the Hubble Ultra-Deep Field. I’ve seen vice presidents of purchasing, chief supply chain officers and, of course, chief procurement officers — but why have I never encountered a chief supply management officer?
Clearly, we have a problem with user adoption. How do I know this? My love-hate relationship with Search Engine Optimization (SEO) has taught me that readers are far more likely to click on our articles if we use “procurement” instead of “supply management” in the title. Here’s some hastily conducted research to help illustrate my point:
Searches for “procurement” vastly outstrip those for “supply management.” There’s not even a convergence approaching. Stranger yet, the popularity of the term “purchasing” runs neck and neck with "procurement." (To be sure, purchasing is a far more general term, so perhaps its popularity should not come as a surprise.)
So, what to make of this? Who knows. Maybe I contribute to the problem, since our style guide generally indicates “procurement” is the word of choice. Maybe the dominance of certain technologies will make this transition impossible. “E-supply management solution” doesn’t really roll off the tongue.
If anyone out there can provide some clarity on all of this confusion, feel free to enlighten me. But at the end of the day, maybe some humility is in order. We should all remember our place in the world, relatively: