"Supplier Management" by Any Other Name Would Still be As Descriptive
With apologies to the Bard, who famously commented on the name of a rose not affecting its attributes, I've been struck lately by the naming around an emerging area of interest to Spend Matters readers. That area is called ... well, that's the problem, isn't it? What is the name of that group of buyer-side processes that manage the information, risk factors, performance, certifications, etc. of their suppliers?
There are vendors with solutions in this area like CVM Solutions, Aravo, D&B, Hiperos, Ariba, Emptoris, etc. Players in the space claim they do "Supplier Management" when others with only slightly overlapping capabilities also claim they are doing "Supplier Management". So we have a problem of defining the wider borders of this thing as well as the salient components lying within those borders.
The simple favorite for naming the whole space, "Supplier Management," is also problematic because it is so easy for the uninitiated to presume they understand. That is, even if all us experts agree on what Supplier Management is, the wider audience will need a lot of education to disabuse them of misconceptions coming from the use of two very generic words like "Supplier" and "Management". It may as well be named "Content Management" (which suffers from the same problem)!
I do think it should be named and defined. Scratch that -- perhaps its best to define and then name the space in question. Define by listing out the bill of materials included in "it" and then perhaps a name will arise clearly out of the mix. In the hope of using the Spend Matters readership as an open-source audience of experts (and making this blogging thing more interactive), how about we try a two step approach? 1) Fill out the Indented "bill of materials" for the space (with definitions of the components if necessary), and 2) debate the larger terminology encompassing the whole area (and there's no skipping ahead to #2 before we're all reasonably satisfied we've covered #1).
As a straw man for step 1:
"That which we will name eventually" includes:
- Supplier Information (where information is data that is relatively static)
- Supplier Owned and Maintained Information (name, dba, address, contacts, tax ids, etc.)
- Buyer Owned and Maintained information about a supplier (ERP id, preferred status, internal manager, etc.)
- Third Party Owned and Maintained infromation about a supplier (DUNS, SIC, NAICS, Certifications, etc.)
- Supplier Risk (where information is dynamic)
- Credit Risk
- Supply Chain Risk (interruptions, quality, safety, etc.)
- Competitive Risk (they become a competitor, serve your competitors better or leak IP to competitors)
- Performance Risk (on-time, quality, etc.)
- Cost Risk
- Legal Risk
- Performance
- Quality of Service
- Ease of doing business
- Price Competitiveness
- Transactional
- Sourcing (how the supplier is represented in sourcing processes)
- Contracts (status of existing supplier contracts, effectivity dates, content, pricing, etc.)
- Content (catalogs, punchouts, service level agreements, line card pricing, SOWs, etc.)
- Orders status
- Invoices status
- Payments status
- Paul Noël
Tweet
TweetBacks
In the Supplier Information section I'd like to see relationships called out. What does that suppliers supply chain look like? Who do they partner with? Who is on their board and what other boards do they sit on? (For example).
However, is the supplier what this group of professionals is there to manage? Are we managing suppliers or are we concerned with the supply chain? Alternate materials. Market consolidation. Sourcing. Strategy.
It's not that the borders are stretching, it had the wrong name since day one.
AECsoft started offering "Supplier Management" and "eProcurement" solutions in 1999. Then we changed to "Total Supplier Management" solutions in Year 2001. 2 years ago we changed to "360° Supplier Management" and "Sourcing" solutions. Yes, there are overlaps between those terms you listed. Some may view Supplier Management as supplier serformance management centric, some view as supplier information management - which are all too narrow.
Now we have more than 200 customers (with over 120 supplier portals) -- some call our solution "Supplier Relationship Management" or SRM, some call it "Supply Chain Relationship Management" or SCRM, most are calling it AECsoft "Supplier Management System".
I guess more and more have realized that "Supplier Management" is more inclusive.
I think this is because the profession is relatively young and much misunderstood. So it's natural that the "taxonomy" is somewhat under-developed.
My conclusion is that you can spend too much time trying to define these things when terms such as "supply management", "procurement", "purchasing" etc mean essentially what you want them to mean.
One example: the distinction between "purchasing" and "procurement". For a long time I treated these as interchangeable (as did many other people, probably still do).
Then I discovered after some time that the CIPS dictionary makes the distinction that "purchasing" is all about buying and paying for items outright, while "procurement" covers all forms of acquisition including, for example, leasing, bartering etc.
It's a potentially useful distinction, but in everyday discussion, does it really matter?