Are Spend Management and Supply Chain Becoming One?

I attended the The Conference Board's Supply Chain Management Conference in Chicago last week. Expecting an agenda that would focus on the operations and demand planning side of the house, I was surprised to find Spend Management components feature heavily on the list of topics to be addressed. Indeed, SRM, procurement, analytics, and sourcing were all integral components of the agenda. They weren’t merely an afterthought.

This Spend Management theme also carried through to the list of attendee practitioners -- over one-third had sourcing, procurement, supply management, or purchasing in their title. This number is a conservative estimate based on a quick glance at the program guide attendee list. It might have even been highter.

According to the guide, the rest of the practitioners attending the event had either "supply chain" or "operations" in their title. But after talking to a number of these folks, I learned that many also had responsibility for a number of Spend Management initiatives, especially the more senior level attendees.

With this data in hand, I thought to myself that the combination of an agenda which weighed heavily on Spend Management, and a set of attendees that blurred the Spend Management and supply chain boundaries, were too interesting too ignore. So I decided to ask a number of questions during the Q/A periods, as well as take informal polls during the networking time slots, that would probe some more.

What I learned might surprise you. This morning, I'll touch on a few of my learnings around organizational structure and leadership.

To begin, while traditionally supply chain has reported into operations, and purchasing and sourcing has reported into either the financial organization or individual business units, many organizations are now changing the reporting and leadership structure to have the head of purchasing also run the supply chain function -- and report directly to the executive committee or the CEO. Want an example? Look no further than Shelley Stewart of Tyco. While Shelley came from a purchasing background at UTC and Raytheon, he now runs both procurement and supply chain at Tyco. There are other examples I could site, from Royal Caribbean to Lucent, which also show a similar leadership trend that brings together the two areas into a more senior role. And it's interesting that those assuming these combined leadership positions often have more experience on the Spend Management side than on the supply chain side.

In addition, based on my recent observations, I'd argue that the "CPO" title is irrelevant when it comes to seniority. I had the chance to meet many extremely senior practitioners at this event and Ariba Live, of late, who reported into the CEO or executive committee yet only had "VP" in their title.

But whether they're a "CPO" or not, the head of Spend Management and supply chain is now seen as a much larger -- and more senior -- role inside organizations. And it's also becoming viewed as a launch pad to company leadership. Just ask H. Scott Lee, President and CEO of Wal-Mart, who used a logistics and operations background to launch himself into one of the most powerful executive roles in the world.

Stay tuned this week as we continue to explore more of my learnings from the event in more detail. What's up next? We'll dig into technologies and processes that intersect Spend Management and supply chain and discuss what they’re about and who should own them inside an organization.

-Jason Busch

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