Round Two: Spend Management vs. Supply Management

My jovial colleague, Tim Minahan, has decided to accept my challenge to a literary dual to the death that debates the merits of Spend Management vs. Supply Management. Alas, before I present my rebuttal, I must first take Tim to task for advertising his blog by announcing it via a traditional newswire service. Come on Tim, what about making blog-related announcements via RSS, and letting the viral word rule? Old syndication will go the way of the Model T in the next decade. Let's work together to hasten it's demise.

But I digress. As Tim danced around the ring in round one of this debate, he spent too much time swinging for the KO, rather than building up a base of blows to tire his opponent. To wit, Tim distills his logic into the following statement: "Spend management is a marketing campaign (albeit a brilliant one) focused on improving internal operations and reducing spend ... Supply management is endorsed by the leading professional association. Spend management is endorsed by a software provider and its partners."

Some of his statement is in fact true -- just not the part Tim wants to believe. Ariba did come up with the term -- and it is very smart marketing -- but it is now widely used by hundreds of organizations, including dozens of vendors and scores of users, to argue for an entire buy-side transformation, not merely improving the procurement function by enhancing what is already there.

Tim argues that "supply management is a strategic discipline focused on optimizing the TCO of external and global supply relationships." A logical statement, but it falls short of changing the business, not just procurement. And it's also overly tactical. Listen, I'll be the first to admit that "Supply Management" is a great term. In fact, I was a member of a three person team that came up with FreeMarkets "Global Supply Management" positioning, following the reverse auction craze. And I remember the analyst briefing when I ran the phrase past Tim to get his feedback. And he liked it even back then.

But I helped to come up with the Supply Management positioning for FreeMarkets back when I worked for a vendor that was razor focused on a single area. And given this, I'll support Tim by agreeing that Supply Management works to describe an incremental improvement to an existing function.

But 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. ISM changed its name because it was tired of sounding like an association of AP clerks. It needed to sound more strategic. "Supply Management" is more strategic. But it's not game changing outside of purchasing, nor will it capture the imagination of the C-suite in the same way that Spend Management will.

Back to you, Tim.

Jason Busch

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